The Internet is far cheaper than most other methods of placing a business order — and it’s secure, says Rob Mayo, Telecom’s Internet services business-to-business manager.
Mayo, speaking this week at the Electronic Supply Chain Conference in Auckland, felt somewhat constrained by his superiors from giving an exact figure for Internet ordering costs, but says it would definitely be less than $5 per order. He estimates it costs between $100 to $200 to send a representative out, and around $10 to $15 to take a call via an 0800 number, over the phone or via fax, factoring in maintenance and other overheads.
He says two years ago he wouldn’t have used the Internet for e-commerce because of security fears, but now he doesn’t believe it is an issue.
“Now I would say: ‘it’s here now, we’ve got no choice, it is the future and it’s much better than anything else that’s around’.”
However, many people do still perceive that it isn’t safe, and that perception needs to be updated.
“It is safer, arguably, than sending a fax from A to B.”
E-commerce has existed for some time, and the focus has been on electronic data interchange (EDI) — the transmission of standardised documents. Mayo differentiates e-commerce using the Internet by calling it Internet electronic commerce (IEC).
He says EDI is expensive to implement, based around point-to-point connections and uses proprietary, closed (but thus secure) networks. It requires large volumes of transactions to be economic.
In contrast, says Mayo, the Internet is an open platform, supports a many-to-many model, can be linked to other systems such as banking, and is cheap and easy for all sizes of business to use.
Mayo says the Internet allows businesses to interact with their customers at a lower cost, much more quickly. It is particularly useful for small to medium-sized businesses who find EDI unsuitable.
He says IEC has been described as the “killer-app” for businesses. He believes that in the past businesses didn’t realise that all the things they wanted to do came under IEC, but now they realise they can use the Internet for all parts of business.
Mayo says the profit to be had from using the Internet over the next few years will not be from increased public sales, but from enhancing existing business relationships.
It will be important not to give a: “Thou shalt deal with me electronically or die” message, he says.
It is better to point out the benefits of dealing electronically, and find out what suppliers and customers want.
“It’s got to be a two-way street like any business venture.”
He predicts that in future even more products will be available online, and that distribution models will change or even collapse.
There will be new start-up companies with new ideas and non-traditional businesses will evolve. Meanwhile, some traditional companies will lose out, he says.