Commerce - - E-Commerce Sourcebook 1

Although there are some questions pertaining to landscape, technology standards, and the ultimate

M-device, it is clear that for those companies that are involved in the process, M-commerce is going to be a reality, and sooner rather than later.

Overall, there is a fairly clear sense of direction on the purpose, benefits, technology, and markets as-sociated with M-commerce. M-commerce is going to be a global practice, yet in different parts of the world it might take different shapes.

Younger, active, mobile, and higher-income people are likely to be the first to experiment with M-merce, they are being targeted by M-commerce com-panies. Moreover, travelers and mobile professionals are at the forefront of this market segment.

Money can be made from M-commerce providing that companies apply lessons learned from the intro-duction of e-commerce on the Internet. The focus should be on value added rather than on discounts and freebies.

MAPPING OUT THE EARLY M-COMMERCE MARKET

The demographic and lifestyle profile of the M-commerce early adapter, according to the Cap Gemini Ernst & Young Center for Business Innovation, will include the following elements:

T Young. The range of ages vary according to the analysts, but in general it will be people in their twenties and thirties who drive M-commerce in its early years.

T Active and mobile. The more active the person, the more likely he or she is to use M-commerce.

In particular, this includes mobile professionals.

T Higher income. New technology tends to be rela-tively expensive in the introductory stage of its cycle. Therefore, it is reasonable to assume that early adapters will have higher than average in-comes to acquire it. Over time, however, the price of the technology will go down, and as a result, people with lower incomes will be able to acquire such technology. A successful M-commerce strat-egy will try to jump on the emerging market, but with an eye toward long-term stability.

T Risk takers. New technology can be intimidating to the average person. Especially in its early stages when it is still complex and not optimally user friendly. Therefore, a characteristic of the early adapters will likely be a high degree of risk taking in terms of trying new technologies.

FOCUS ON MOBILE PROFESSIONALS AND

‘‘TECHIES’’

There are two groups of people that were identified as target markets more then any other groups:

T Travelers. The value proposition of M-commerce has a high correlation with the needs of business travelers, and therefore the business travel segment will be the first to adapt to the M-commerce trend.

Naturally, those people who are away from their

‘‘permanent’’ environment will appreciate the need to stay in touch, receive information, and conduct transactions while on the road.

T Techies. As a group, Techies cut across demo-graphic lines. Yet, they have one major attribute in common: the urge to acquire and explore new technologies. To attract these customers, you neet to demonstrate why your particular m-commerce service will be both useful and exciting.

REVENUE MODELS FOR M-COMMERCE

As an infant technology, there are few tried-and-true revenue models to base your business on, but a few models were emerging in the early 2000s that seemed poised for stability.

One type of revenue model is push advertising.

Advertising revenues can become a valid revenue model providing that it will be used in a localized-short-wave environment. For example, when a cus-tomer is in a regional area utilizing your particular m-commerce service, he or she could receive an ad or coupon for a local restaurant, and directions for how to get there.

A different revenue model involves a transaction fee. iMode of Japan charges users a transaction fee whenever he or she plays a game on their mobile device. Transaction fees will take the form of ‘‘micro payments,’’ whereby a charge is applied to the cus-tomer only for what he or she uses. Thus, if a user plays a game for ten minutes, they will be charged only for those ten minutes.

M-COMMERCE STANDARDS

Many of the wireless protocols and platforms that exist today are suitable to serve as a standard platform for M-commerce. Nevertheless, the many entities (car-riers, device makers, enablers, etc.) can’t agree on which standard to adopt. This is the main reason North America is lagging behind the European Union and the Asia-Pacific region in its ability to provide ad-vanced M-commerce applications. In the meantime, it becomes slightly risky for your company to dive too strongly into any particular form of m-commerce service that utilizes one or another protocol or plat-form, as the standardization of others may render your service oboslete.

‘‘HowTo’’TopicsinE-Commerce

M-COMMERCE SERVICES

It seems that M-commerce services will be intro-duced in stages. The first stage will be the information-based services, which are relatively easy to implement because they do not require the infrastructure and sophisticated technology needed to purchase actual goods through mobile devices. Purchasing of goods and e-cash functionality will follow at a later stage.

Information-based transactions, rather than pur-chase of tangible items, will be the first to reach critical mass on mobile devices. These information-based transactions include messaging, usaully short messaging and e-mail involving pagers or mobile tele-phones; limited financial information, such as up-to-the-minute stock-trading or bank-account informa-tion; and travel-related information, such as flight schedules, weather reports, directions to specific desti-nations, along with the ability to review and modify travel itineraries.

CUSTOMER PRIVACY

Protecting and respecting the privacy of consumers is a major issue in e-commerce, and was in fact an imediment to faster e-commerce growth in the 1990s and early 2000s. On the one hand, m-commerce ser-vice providers need to know where customers are at any given time in order to provide effective location-specific information based on that knowledge. On the other hand, providers must be careful not to project an image of intrusiveness. Wireless providers will have to find ways to give consumers almost total control over their degree of privacy. Security, quality, and ease of use will have to find the right balance.

SELLING YOUR M-COMMERCE SERVICES The main value proposition of M-commerce in the short run isn’t the type of features or services that it provides, but its ability to provide these services to people while away from the home or office. M-com-merce provides value added in the form of greater time efficiency, which is a strong proposition these days. Time is the single most precious commodity, and M-commerce is one way people can utilize their time more efficiently. Thus, you should position your m-commerce services in such a manner that it high-lights these key advantages, rather than trying to com-pete in the m-commerce realm directly on the turf of established e-commerce services.

FURTHER READING

Bluetooth. ‘‘The Official Bluetooth Web site,’’ 2001.

Available at http://www.bluetooth.com.

The Cap Gemini Ernst & Young Center for Business Innovation. ‘‘Scanning the Future,’’ 2001. Available at http://

www.cbi.cgey.com/cgi-bin/pubs.plx?sort=topic.

WizBizWeb, LLC. ‘‘Interviews with M-commerce Executives,’’ 2001. Available by request from http://

www.wizbizweb.com.

❚ 46

MANAGING CHANGE

The Internet revolution of the late 1990s challenged the change management capabilities of businesses of all kinds. Many existing companies began to develop Web sites as marketing tools, while others began to sell their products and services via the Internet. Some companies even abandoned their ‘‘bricks-and-mor-tar’’ operations altogether to focus solely on online activities. In addition, dot-com companies like eBay, Amazon, and Yahoo! began to garner significant atten-tion as their Web traffic exploded and stock prices soared. When the dot-com industry began to collapse in 2000 and the North American economy weakened, many of the firms that had wholeheartedly embraced Internet technology were forced to scale back their e-commerce operations and rethink management strate-gies. At the same time, however, the Internet contin-ued to present opportunities for companies able to identify and serve various niche markets. The busi-nesses that proved the most nimble at responding to these rapidly evolving market conditions tended to be more successful than those that struggled to implement changes.

CHANGING STRATEGIES

The e-commerce industry remains a highly unsta-ble one. Whether you are creating a brand new online business, simply developing a Web site as a marketing tool for your existing business, or planning to offer your existing products and services via the Internet, the one thing you can be certain of is continual change.

To best handle the volatility of the e-commerce arena, you should consider carefully how the rapid pace of change in this industry will impact the following activ-ities:

T Developing and modifying a business strategy T Training employees

T Adopting new technology T Handling customer relationships

DEVELOPING AND MODIFYING A BUSINESS STRAT-EGY. To create an effective e-commerce strategy, you must first develop goals. What do you wish to achieve via online operations? You should decide why you are going online and what benefits the Internet can provide to your business. You also need to identify your target market. Are you going to target existing customers or try to attract new ones? Other topics to consider include advertising methods, competition, and market conditions. One of the most important, and often overlooked, issues in developing an effective e-commerce strategy is how to manage change. A small business might follow a business strategy that proves successful during the first year of operation yet be-comes obsolete shortly thereafter. A study done by Andersen Consulting and the Economist Intelligence Unit in July 2000 predicts that by 2005, more than half of Web-based initiatives will operate on plans that last no longer than 12 months, a practice that forces companies to revisit their strategies on a regular basis. At the same time, however, implementing too many changes can exhaust both employees and man-agement. Being able to link planned changes directly to concrete goals is a key component of effective change management, as is the ability to clarify exactly how changes are going to be implemented.

TRAINING EMPLOYEES. The most successful e-com-merce ventures have employees who are open to change and able to learn new skills quickly. If, for example, your company has decided to sell products online for the first time, employment issues to consider include deciding whether to use existing staff, hire new information technology (IT) employees, create new departments, or outsource related tasks. In each case, employees must be able to work effectively in a continually evolving environment that might include having to work with new short-term independent con-tractors or taking on new responsibilities themselves.

ADOPTING NEW TECHNOLOGY. No matter how many individuals you employ, or plan to employ, their abil-ity to adapt to new technology is crucial. As your company grows, the adoption of new technology will likely prove critical. In some cases, this might mean upgrading from an analog modem to a high-speed Internet connection. In other cases, you might decide to begin utilizing wireless technology. To manage changes like these effectively, you will need employ-ees willing and able to undergo necessary training.

While finding qualified IT employees proved difficult in the late 1990s, by the early 2000s, the bankruptcies of numerous dot-com firms had helped to fuel unem-ployment, particularly in North America. As a result, businesses found it easier to recruit individuals used to working in a fast-paced, high-technology environ-ment. According to Tracy Tang in a July 2001 article in Entrepreneur, savvy business owners could take

advantage of this abrupt change in the e-commerce landscape via online recruitment sites like Mon-ster.com. ‘‘These unemployed workers are flocking to the Web to find you—and you should, too, to find experienced employees for your Web business.’’

CUSTOMER RELATIONSHIP MANAGEMENT. Change management is also important to consider while devis-ing customer service strategies. As Web consumers demand higher levels of customer service, enterprises that offer products and services online must be able to quickly and effectively respond to customer demands.

Businesses with effective change management prac-tices in place will find it easier to adapt to evolving demands and run less risk of losing customers. Ac-cording to Jeff Pulver, an E.phiphany business devel-opment executive quoted in an October 2001 issue of CRMDaily.com, companies ‘‘must undergo a transfor-mation that places the customers at the center of all activity. Core business processes must be reconfigured to reflect the new strategy.’’ To make such a change, businesses must change with the needs and wants of their clients, and how they manage this change is crucial to their success.

FURTHER READING

Enos, Lori. ‘‘Study: CFOs Not Ready for Commerce.’’ E-Commerce Times, 26 July 2000. Available from http://

www.ecommercetimes.com.

Hendricks, Mark. ‘‘Don’t Go Changing.’’ Entrepreneur, March 2000. Available from http://www.entrepreneur.com.

McDonough, Dan. ‘‘How CRM Can Save the Economy.’’

CRMDaily.com, 22 October 2001. Available from http://

www.crmdaily.com.

Tang, Tracy. ‘‘Finding Employees for Your e-Business.’’

Entrepreneur, 30 July 2001. Available from http://

www.entrepreneur.com.

❚ 47

MANAGING AND EVOLVING A GLOBAL PRESENCE

When the Internet began to evolve into a medium for commerce in the 1990s, businesses gained access to a new international marketplace. A simple Web site could bring together buyers and sellers from all over the world. Some industry pundits predicted the Internet would break down the last barriers to a truly globalized market across nearly all industries.

‘‘HowTo’’TopicsinE-Commerce

Indeed, the rise of e-commerce did help to foster the globalization of many markets. However, despite certain gains globally, the majority of online buyers lived in the United States. In fact, the United States accounted for nearly 75 percent of global e-commerce in 2000. And while e-commerce become more com-monplace in Western Europe and Japan in the early 2000s, online shopping had yet to take hold in many less industrialized parts of the world. The reasons ranged from weak economic conditions and the lack of necessary technology to cultures and traditions that place less emphasis on consumerism. Still, industry analysts predict e-commerce will continue to grow and reach new parts of the world, albeit at a slower pace than many had previously anticipated.

INTERNATIONALIZE YOUR SITE

Opportunities via the Internet do exist for small businesses wanting to expand their borders. Globaliza-tion experts recommend that a business first ‘‘interna-tionalize’’ its Web site and then localize versions of it for each culture the company plans to target.

According to Inc.com writer John Mulligan, interna-tionalizing a site means preparing it for translation into different languages. If you have yet to design your site, it may be worthwhile to spend time and money up front to ensure that it will be able to handle multiple languages, even if you do not plan to expand internationally for several years. Creating an interna-tionalized site from scratch is typically much less expensive than changing an existing site to handle international operations. If your site design is being done in-house, you will need to consider how format-ting and wording will impact translation. If you are outsourcing, be sure to select a designer experienced in creating international sites.

LOCALIZE YOUR SITE

Once your site is internationalized, you can turn your focus to localization, which means modifying your site to the extent that it ‘‘takes into consideration cultural and linguistic conventions, translation, changes in graphics, adaptation of documentation, re-sizing of dialog boxes, resolution of hot-key conflicts (hot keys are keys or key combinations that cause some function to occur in the computer), quality assur-ance of user interface, etc.—all geared to a specific country,’’ says Mulligan. To gain an understanding of how other online companies have localized opera-tions, you can visit their sites and look at how the pages are linked together and how similar or different the design is for each page targeting a different country.

Along with ensuring that your site will function in different countries around the world, you must also

consider how your site will be received by different cultures. Many countries, including Germany, the United Kingdom, and Japan, use credit cards less frequently than the United States. If credit cards are the only type of payment your site accepts, you will reduce your prospects in certain areas dramatically.

Also think about what kind of an impact various graphics, like flags and symbols, will have on potential customers. Even color can be an issue. Some cultures associate certain colors with things like death or war.

PLAN FOR LEGAL REQUIREMENTS

Selling merchandise abroad can also be complex from a legal standpoint. Even the most diligent efforts to understand laws related to things like taxes can leave a business owner uncertain, or simply unaware, of his or her legal obligations. For example, some countries do not allow online businesses to use

‘‘cookie’’ technology to track visitors, a common practice for Web-based operations in the United States. Other countries do not allow the sale of certain controversial products, an issue plaguing Yahoo!, which came under fire in the early 2000s for selling Nazi-related merchandise to customers in France. Ac-cording to Global Cyberspace Jurisdictional Project chairman Thomas Vartanian, as quoted in a November 2001 issue of E-Commerce Times, ‘‘The problem is that there are an infinite number of laws that might be applicable to any given Web site, and most of them you don’t even know about.’’

LOCALIZATION SERVICES

One option for small business owners wanting to localize their site for specific country is to hire a localization service, such as Accurate Translation or Excel Translations. Firms like these will not only help you to translate your Web site and modify it to make future translations easier, they will also help you en-sure that your site appeals to the culture you are tar-geting. Many localization experts also understand the legal issues surrounding international sales from one country to the next and can help you avoid pitfalls.

However, services like these, particularly translation, can be quite costly, so you should weigh the pros and cons of globalization before investing considerable resources in such an effort.