Small business internet strategies

Making internet-based technologies a strategic part of your business

Chris Hutchinson, Hutchinson Software, Janene Carey, Hutchinson Software

Defining e-commerce

E-commerce is more than buying and selling goods and services via a web site. It is using internet-based technologies as tools that help you do business. This covers a wide range of activities beyond online sales, for instance:

What are the business benefits?

Using this broader definition, e-commerce is more than just a new way of selling small, shippable commodities like books and music. Almost all businesses can benefit from an e-commerce strategy designed to deliver productivity gains and cost savings in the following areas:

Communicating

Time and money can be saved using e-mail instead of other channels such as telephone, fax, postal services, or face-to-face discussions. Businesses with more than a handful of employees can benefit from using e-mail and web publishing for internal communications as well, as it is a less disruptive and reliable way of moving information around the organisation.

Marketing

Using your web site as a business brochure saves on printing and postage costs and allows customers to research what you have to offer before they contact you. Information delivered via the Web is location-independent, available 24x7, and saves time for your staff because they don’t have to repeat the same basic details about what you sell and what colours it comes in to each new person. It’s relatively easy to keep current, as changes are made in a single place, rather than reprinting and mailing out multiple documents.

Transacting

Online banking is a great way to reduce transaction costs. You can use it to pay staff and suppliers without the hassles of producing and posting cheques, transfer money between accounts, and do reconciliation. Most small businesses find that online banking frees up between two to ten hours of staff time per week.

Another good area for transaction efficiencies is procurement. All the steps - researching what’s available, comparing features and prices, negotiating terms and conditions, placing orders, making payments - can be done much more cheaply and quickly online.

It’s notable that the big corporates, such as BHP and Coles Myer, have established systems for transacting on the Internet with suppliers. They’ve recognised the efficiency gains in Internet-based transactions. As an example, BHP expects to reduce procurement costs from $60 to under $3 per order, leading to savings of $500M (report). What’s also notable is that if you’re a supplier, and you don’t participate in online transactions, then you could find yourself at a loss if these organisations decide that these will become their only means of dealing with suppliers.

Case studies from the real world

NOIE, the National Office for the Information Economy, released a research report in September 2001 which details the experiences of 34 small businesses who have invested in e-commerce. It found that on average, just over half the gross benefits came from increasing the efficiency of business operations; with the rest coming from increased revenue resulting from online marketing or online selling.

Some examples:

Texcel is a Brisbane-based company employing 26 staff which provides systems, services and products to the infrastructure, mining and engineering industries. In 2000 their operating benefit from e-commerce was $51,000.

 

Freedom Pools is a pools and spa business, based in West Gosford, NSW. It has two owner-operators and employs six additional staff. In 2000, their operating benefit from e-commerce was $84,000. (NOIE case studies)

Making your web site effective

Here are a few key ideas to consider when planning the site with your web developer. There are taken from the Hutchinson Software Web-Tune package, where we work with businesses to revise and improve the usability and focus of existing web sites.

Tune it up

Promote it

Check the results

Think strategically

You don’t need to target global markets to see your sales revenue increase as a result of your e-commerce strategy. A virtual (Internet) presence teamed with physical (local) presence can be a powerful combination, because you get the cost savings and productivity benefits highlighted in this talk, plus competitive advantages in making sales. A key threat of the Internet is lost customers to suppliers in another country, or even just in another region. If you supply a commodity that can be shipped, then you could be at risk from an Internet-based competitor.

Work with your local strengths:

TRUST Customers know of your business as an entity in the real world and are happier to provide credit card details and more inclined to believe that the goods will be delivered and that they will have some recourse if the product is faulty or wrong in some way. Emphasise your physical location on the web site: if your ‘offline’ business is in Armidale then put ‘Armidale’ prominantly on your site.

LOCAL KNOWLEDGE You can leverage your knowledge of local custom, culture and history when developing your Internet marketing content. Include endorsements by members of the local community.

TOUCH AND FEEL FACILITIES Many customers like to browse on the Internet but ‘feel the quality’ before they buy.

Further information