Any company that’s getting its toes wet in the field of e-commerce knows it’s not a simple process. But Malcolm Hutchinson says it shouldn't be that costly.
E-commerce means not only setting up a shopfront to the internet, but business-to-business applications like automated stock control, invoicing and re-ordering. For larger organisations it means integrating their back-end business systems into the website, and allowing their suppliers, customers and partners access to certain parts of their computer systems.
So what do you need to set up an e-commerce website? Obviously you need a web server of some description, which implies a cost. But you needn't go out and buy an expensive Unix box, and employ more people to look after it. Web hosting services in New Zealand are well advanced, and there are any number of companies out there offering a variety of products, from simple space on a web server to fully e-commerce enabled environments.
The online store
Most business-to-consumer e-commerce operations, at least in New Zealand, work like a mail-order company. Customers choose products from a catalogue, place an order by filling out a form, post it away along with payment by cheque or credit card, and wait for all their groovy new stuff to arrive by the mails.
Apply this model to the web, and you have a picture of what a lot of Kiwi businesses are doing with e-commerce. The requirements are simple: a hosted website with a catalogue companies can update when they want and some sort of ordering application - some packages simply fax web orders to the dispatch office, while some integrate with legacy database applications.
Timewarp Antiques and Collectables (www.timewarp.co.nz) is an example of this. Owner Teles Duprez sources items for the small trading business from around the world and trades by mail order with customers up and down the country.
"We could see the benefit of having a website, as long as it was one you could change yourself," says Duprez. "We thought [the internet] would open our market up globally. It makes it easier for trading. When we started up our mail-order business we could see that our customers were scattered up and down the country."
Early investigations in 1998 revealed the prohibitive cost of commissioning a dedicated e-commerce solution. Duprez believes his thinking was a little before its time. It was a chance meeting with Stephen Power of eForSale (www.eforsale.co.nz) that gave Duprez the opportunity to seriously consider having a trading site online.
eForSale's online product, eD.I.Y, enabled Duprez to set up a catalogue and credit-card processing facility online. Low cost and ease of administration were key attributes. "It's so simple, you don't need great skill to operate it," he says. "From inserting a digital photo, half a dozen clicks later you're loading images and descriptions on to their host page."
Marketing the site takes the form of traditional print advertising in the New Zealand Herald and local newspapers. Duprez says banner advertising on other sites is not cost-effective for Timewarp Antiques.
"[The] cost of banner advertising is too high for the return," he says. "They seem to be charging a lot of money for small exposure."
In what some might consider a startling move, Timewarp Antiques and Collectables shut its doors last November, and now trades entirely online. Duprez is confident the business will not only continue to thrive, but that it will release time for him to go fishing more often.
"We've made a commitment to shutting our doors," says Duprez. "You want higher turnover with lower overheads. If you can get your customers to buy online, then it's going to free up some of your time. We don't need a retail presence, therefore we're not tied into set hours of trading. It's going to be exciting watching things pan out the way they do."
Different businesses require different solutions, and e-commerce is not restricted to the corner store metaphor. The internet can be a powerful marketing tool, without having to conduct paying transactions through a website. The real estate industry provides an example where detailed information presented online can reach customers in places they never would have dreamed of before the internet.
Grant Shackleton, an agent with real estate company Harcourts in Hamilton, set up a website last year to market the residential properties he deals in. He uses WebWidgets, a website administration package developed by Hamilton contractor Reuben Jackson.
"The website is a marketing medium," says Shackleton. "It's a tool within my business. Because we don't hold any stock, it's not a retail outlet. There are negotiations to be made and contracts to be signed for every sale. With 3D views and movies online, people from the UK are starting to buy houses without seeing the property."
Users visiting www.soldby.co.nz want to know more detailed things about home ownership than what is provided in real estate listings, says Shackleton. This reflects the higher level of knowledge buyers are approaching the market with, having armed themselves with internet research.
"In our industry, information is the key," says Shackleton. "Until now, [real estate agents] have held the information. Now, people can bypass you and get the market information themselves."
WebWidgets (www.webwidgets.co.nz) is a webhosting service that includes an administration application, which enables the client to update and alter information on the site. Shackleton says the application is easy to use, and the package comes at a sustainable monthly cost. "It enables me to be a real-estate guy, not a computer guy," he says.
WebWidgets is a collection of web management solutions for small to medium-sized businesses. WebWidgets services help businesses create a standard template design for all pages in their site, web content which can be updated by ordinary people and a range of database-driven applications like online shopping and direct marketing.
The e-commerce alliance created by Telecom, EDS and Microsoft, esolutions (www.esolutions.co.nz), is offering an entry-level website development package which seems similar to WebWidgets. For a monthly fee, customers get space on a web server and a number of design templates to choose from. The deal includes a "web-wizard" application which enables the user to update content.
Anna Lundon of esolutions says the product, called Launchpad, was launched at the end of 2000, and demand has been good. There are plans to provide an online trading capability, with credit-card billing facility, soon.
Integrated business systems
Australian property broker Pacific Eastcoast has taken a bold approach to its internet e-commerce strategy. Using FileMaker Pro's latest database product, the company has folded its business database into its website - the site forms the kernel of the company network and knowledge base.
The website is formed from three databases: a listing of client details; general information on each development; and detailed information on each individual property. General visitors can browse the Pacific East coast site and view a range of investment properties in Sydney, Melbourne, Canberra Brisbane or Adelaide, along with purchase and projected return details. There are internal and external views of each property, floor plans, and even some navigable 360-degree images.
Pacific Eastcoast marketing manager Neil Shewan developed the company's system using standard FileMaker Pro tools, which are simple to use and don't require programming skills. "I've used FileMaker for years because you can get things done without knowing the code that sits behind it. I just couldn't have achieved this with Microsoft Access, FileMaker's nearest competitor - it's way too complex."
Pacific East coast employees can update information using templates designed by Shewin, and the company's accountant and financial planning customers can dig down to a much greater level of password-protected detail and in-confidence information to assist them in advising clients. Searches can be conducted using a range of criteria - starting at type of property, value and location.
The website is hosted on a modest 100MHz Compaq server which also runs the company's email program. The size of the FileMaker Pro database is around 100Mb, largely because the site houses many photographs of investment properties.
If you're sick, see a doctor
Finding an out-of-the-box solution to your web-trading dreams may not be as simple as it appears. While there are many products that will help you to build and maintain an e-commerce website, many of them are high-end development tools best wielded by people who know what they are doing.
"If you have a toothache, you see a dentist," says Shackleton. "If you have heart trouble, you'd probably want to see a cardiologist. If you want a professional website, go and see a professional web designer."
It pays to shop around though. Jackson says the web development market doesn't work on a competitive model, simply because demand for skilled developers so far outstrips supply. Instead, a community of independent people works with and around each other, often swapping work, or coming together for short-term projects.
"There is too much demand in the IT market for competitors," says Jackson. "Everyone is a customer or a subcontractor of each other. Currently I'm a sole trader with no employees. But I have access to a number of designers and developers who are in similar situations. We all subcontract to each other as necessary."
One interesting trend in online retail is the evolution of digital marketplaces. Just like the mall, a digital marketplace is a business which leases online real estate to merchants. The marketplace company provides services like disc space and server capacity, online booking and billing and a variety of other infrastructural components.
Mike Lowe, e-business solutions manager for iPlanet, the Sun-Netscape alliance, believes digital marketplaces will grow in popularity as businesses within industry groupings realise the benefits to be had from developing a shared community, a one stop shop for all customer requirements.
"Take the building industry for example," says Lowe. "There are builders, there are manufacturers of fittings, people who do framing and fencing, there are people who have flooring, appliances, there are people who do plumbing plastering, there's a whole swag of people involved in actually building anything.
"Now if you provide a community whereby all of those people can come in and visit, share knowledge, share ideas, share opportunities, share pricing. Say the hall of a particular development, for a new shopping mall was looking to buy a whole raft of window fittings, then by bringing all the various people together who will be involved, they will essentially consolidate their order, getting better discounts, better pricing. It's a case of using the economies of scale to provide an environment for people to share and trade and to share information."
Is e-commerce taking off?
Network access times have got to improve before e-commerce for SMEs is really going to take off, says Jackson. That, and computers and network access devices have to become easier to use.
"Booting a computer up and dialling an ISP is a big negative," he says. "It's not really going to make great changes until the internet becomes instantly available at all times. It's still faster to look in the newspaper for movie times and TV, and use the Yellow Pages book for most people who don't have a permanent LAN connection.”
Further down the line, electronic commerce is likely to afford growth to infrastructure players at the expense of traditional retailers.
"I think some traditional retailers and distributors will lose out, says Jackson. "The manufacturers, infrastructure and content providers will become the key players in the new economies. It's really about making the distribution process more streamlined. There will always be a need for some retailers like dairies and clothing stores, although they may themselves decide to purchase direct from the manufacturers or supermarket.co.nz, cutting out the middle distributor."
Hutchinson is a Wellington-based writer.