A Few E-commerce Strategies

OVERVIEW [top]Many of the Internet’s biggest enthusiasts are entrepreneurs who find they can quickly compete on an equal footing with older, larger companies thanks to the Web and e-commerce. But it is no longer a novelty to market on the Internet, as an estimated 38% of small businesses have Web pages [“Fast Facts,” report on a Dun & Bradstreet survey, Entrepreneur(November 2000),30]. Increasingly, entrepreneurs must rise above the e-clutter by developing effective strategies to reach and motivate their target customers.

In this Quick-Read you will find:

• Twelve key strategies that will help your e-commerce site grow.

SOLUTION [top]

Here are twelve creative e-commerce strategies that have worked for both small and large businesses:

1. “Re-engineer” information to keep it fresh.For example, offer 10% off a product one month, then offer a 1-in-10 chance of receiving a free product with orders the following month. The net result is the same, but it keeps customers interested in returning to your Web site for new information and offers.
2. Auction something.As eBay’s runaway success demonstrates, few can resist an online auction. If you sell relatively high-ticket items in business or consumer markets, auction one once in awhile to generate interest, or to move an item that’s not selling. For a change of pace, try a “Dutch auction” in which you start with the regular price of an item and keep reducing it until the first person commits to buying it.
3. Use computerized information gathering to provide exceptional service. While some online grocery-shopping agencies are struggling, Streamline has succeeded by using its ever-growing customer database to record customer preferences and broaden services. Its tracking system “remembers” customer preferences for everything from a brand of tuna to the ripeness of bananas. It can even add a regularly purchased item to the list at prescribed intervals automatically.
4. Sell products online before you manufacture them.This technique, pioneered on the Internet in 1996 by Dell Computers, has been applied successfully by other entrepreneurs who have set up their manufacturing processes to take orders online, and then quickly custom-assemble products to meet specifications.
5. Be an online middleman. While the Internet threatens the agent function in such industries as travel and real estate, it is creating new online opportunities for people who can creatively bring buyers and sellers together. Two former restaurant operators, frustrated with the inefficiencies of procuring food, created Instill Corp. and put an “e-store” on the Web. Consolidating the catalogs and price sheets of hundreds of food service supplies into a one-stop research and buying source, Instill charges a small flat fee for each order processed. Orders totaled more than $1 billion in 1999. The company has recently added value to its services with software that enables users to massagedata to create customized research and cost scenarios.
6. Exploit customer intranet opportunities. Some companies, especially large ones, are adopting intranets, private internal information networks used to standardize and simplify the ordering processes. Developing and maintaining an intranet for your customers, and displaying your products or services, could help lock in your company as a preferred supplier.
   • Provide information that is useful to your customers: In addition to your product listings, provide user guides for your products and FAQs (Frequently Asked Questions & Answers) on topics related to your products. Trouble-shooting FAQs not only add value to your Web site and encourage revisits; they save phone tag and consulting time for both your customers and your staff.

    

7. Leverage someone else’s mailing list. Reach a highly segmented audience at low cost without “spamming” by sponsoring, or advertising on, an existing discussion list whose participants have agreed to receive notices such as yours. Check www.o-a.com for more helpful information on such opportunities.
8. Recruit affiliate partners to market for you. One of the most prominent exponents of this type of arrangement is amazon.com, which is listed as a link on thousands of other relevant Web sites. If a customer reaches amazon.com through such a link and buys, amazon.com pays the affiliate a commission of 5%-15%.
9. Consider alternatives to ad banners, the Web’s traditional advertising choice. Check online ad networks, such as www.doubleclick.com. These ad networks can deliver your message to potential customers based on highly targeted demographics. If a particular site matches your target audience perfectly, use your ad budget to buy a high-impact page on that site instead of banners on several marginal sites.
10. Conduct focus groups on the fly.Interactive chat capabilities enable online focus group research for a fraction of the cost and time frame of conventional methods. Be aware that when you start asking for feedback online, you may get more than you bargained for. Volvo was among the first to solicit customer input by e-mail and received hundreds of unexpected complaints about specific car problems. The company had to answer all these promptly under federal “lemon law” requirements.
11. Hold online media briefings.This is not only less expensive, it is attractive to journalists who can get breaking news without the travel time required for customary media events.
12. Spy on your competitors. There’s no way to get a quicker take on the competition than to investigate their Web sites. Consider using an anonymous e-mail address to receive rivals’ newsletters and any other information they offer to customers and prospects. Also, conduct name searches on the competition to see what turns up by typing your competitor’s name into the different online search engines. One entrepreneur discovered a marketing presentation made to one of his customers, and he was able to contact the customer quickly to counter the rival’s selling points and win the business.

REAL-LIFE EXAMPLE [top]

One summer break, Harvard economics student and golf team member Amar Goel tried to sell name-brand golf clubs for less over the Internet, but prestigious manufacturers, such as Callaway and Titleist, wouldn’t deal with him. So he and two classmates decided to sell their own golf clubs. They spent a year tearing apart the name brand clubs, learned how to clone them, and then prepared to manufacture and sell lower-cost customized clubs over the Web. The problem was, such customization required an enormous inventory of components for each club.

Goel’s solution: outsourcing the manufacturing to a local assembly plant. In this way, the assembly plant carried the cash-consuming, golf-club-component inventory, and Chipshot.com became a virtual company. They were soon offering 150,000 different club combinations from orders taken online. Overhead dropped from 22% to 5% of revenue, which was in the “mid seven figures” for 1999 according to the company.

DO IT [top]

1. If you aren’t marketing on the Web, get moving. Every day you delay, you miss opportunities to beat your competitors to new customers, and your already-online competitors lock more market share in that could have been yours.
2. Involve your sales and marketing forces with the design of your Web site. Their familiarity with customer wants and needs will help focus your design, and their understanding of site objectives can help reduce the threat they perceive to their commissions. Consider commissions to salespersons for sales made using Web pages to customers they found, to reduce the threat still further.
3. Make sure your Web site loads quickly, is easy to use, and makes your most important points upfront. Keep it current.
4. Try out your competitors’ Web sites. What features are appealing? Emulate them. What features are not? Make a point of avoiding them on your site. What can you offer to counter the appeal of your competitors’ Web sites to your customers? Do it.
5. Invite visitors and customers to let you know what they like and don’t like about your Web site, and act on their suggestions for improvements.
6. Maximize opportunities to link people to your site. Use keywords that search engines will identify, and seek cost-effective affiliate linkages, banners and other site-directed marketing.
7. Offer customers incentives in the form of information, service, price or other benefits for using your Web site.

RESOURCES [top]

Books

Clicking Through: A Survival Guide for Bringing Your Company Online, by Jonathan Ezor (Bloomberg Press, 2000).

E-Profit: High Payoff Strategies for Capturing the E-Commerce Edge, by Peter S. Cohan (AMACOM, 2000). This E-business management guide for the CEO of a large public company provides a framework for action that also can be used by small-business executives.

The E-Commerce Question and Answer Book: A Survival Guide for Business Managers, by Anita Rosen (AMACOM, 2000).

Net Profit, by Peter Cohan (Jossey-Bass, 1999).

Make Your Web Site Work for You: How to Convert Your Online Content into Profits, by Jeff Cannon (McGraw-Hill, 2000). A nuts-and-bolts primer more than a management guide.

Net Success, by Christina Ford Haylock, Len Muscarella, and Ron Schultz (Adams Media, 1999).

e-Loyalty: How to Keep Customers Coming Back to Your Website, by Ellen Reid Smith (HarperBusiness, 2000).

Internet Sites

“The Seven Deadly Sins of E-Commerce,” by David Geller. E-Commerce Times. Reprinted by inc.com.

“A Fine and Private Page” by Jim Sterne. Inc.(November 16, 1999): 144+.

“How to Sell Online,” (Yahoo! Store)

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Article Contributors

Writer: John Duggleby