This article focuses on early commerce explorers on the Internet, and tips for on-line marketing.
Commerce has come to the Internet. It's too soon to know whether the worldwide computer network will be a boomtown or a bust, or how best to sell yourself on-line. But somebody has to be first
QUICK START
Challenge: How to explore the Internet as a possible marketing channel for your company's goods and services
Solution: Getting in on the ground floor of the myriad services that are growing up around the country, using them not only to get business going over the Internet but to do so in a manner that's as painless, risk free, and cost-effective as possible
Resources: Electronic malls, books, and newsletters (See page 3.)
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When Randy Adams and Bill Rollinson opened their computer-and-software superstore, last spring, they erased almost every traditional cost of doing business. Scratch the storefront, the salespeople, and the warehousing space. Forget the displays, the lighting, and the inventory. Those were quaint anachronisms. Mail-order retailing, with its attendant costs -- operators, 800 numbers, and warehouse space -- looked only marginally more efficient. To avoid all that, the partners went on-line.
Adams and Rollinson opened a computer "store" on the Internet, the worldwide computer network. Their enterprise, Internet Shopping Network (ISN), comprises several computers and fewer than 10 people in a cramped office located in -- actually, the location doesn't matter, since foot traffic is completely irrelevant to on-line commerce. ISN's customers need to know only the Internet address: http://shop.internet.net. That string of letters opens ISN's doors to the 25 million people with access to the Internet. Once the ISN catalog is up on a customer's screen, he or she can browse through 20,000 computer hardware and software products; and with a few keystrokes, that customer can gain access to the latest product reviews published in the computer publication InfoWorld.
When customers make a purchase, their orders travel electronically to ISN's computers, in Menlo Park, Calif. "Orders go through the system without human contact," says Rollinson, ISN's vice-president of marketing. The computer checks inventory, debits the customer's credit card, and sends the order electronically to a distributor. The customer gets confirming messages via the Internet and receives the order within two days. Prices for most items, Rollinson claims, are the lowest in the industry, thanks to the elimination of most usual selling expenses.
Welcome to the brave new world of sales and marketing on-line. Although companies have advertised products on private computer networks such as Prodigy and CompuServe for years, commerce came to the Internet only in the early 1990s. Developed in the 1960s to aid defense research and development, the Internet has evolved into a massive system connecting 20,000 computer networks run by universities, businesses, and the government. The number of users grows at a rate of about 5% a month, according to some estimates.
Experts versed in both business and technology argue that the Internet represents the most significant new sales and marketing channel in years. The value of goods bought and sold via the Internet already amounts to roughly $10 million a year and is growing by as much as 10% a month. And the network is especially significant for small businesses.
The Internet, which blankets the nation and the world, gives small companies an unprecedented opportunity to expand their reach. An electronic storefront on the Internet -- open round-the-clock, seven days a week -- costs as little as $1,000 a year. "The economy of scale is enormous," says Kitty Weldon, an analyst with the Yankee Group, a telecommunications research and consulting firm based in Boston. "Where else could a small company afford to advertise to more than 20 million people?"
Such a breakthrough in the ability of small companies to reach broad markets boosts their position relative to larger competitors. "The Internet has capabilities that put small companies on the same playing field as large international companies," says Mary J. Cronin, professor of management at Boston College and the author of Doing Business on the Internet. "Small companies can look for customers overseas and across the nation. They can look much bigger than they are."
The Internet also eliminates prohibitive costs of entry into many industries, enabling small companies to gain a beachhead in industries dominated by large companies. Without the Internet, Adams and Rollinson could not have competed against established computer retailers like CompUSA because of the capital required to open many dozens of superstores. But electronic networks enable entrepreneurs to enter business without acquiring expensive physical assets. "We're already selling all over the country," Rollinson says. "To expand, all we have to do is add a new server for about $25,000. But they have to build a new store in a new location."
Though on-line commerce looks promising, impediments remain. By far the most serious is the security problem posed by dishonest hackers, the masked highwaymen of the information age. They occasionally make the evening news after using their home computers to rove the Internet and break into corporate and government computers. Companies are understandably wary about sending purchase orders over unsecured computer networks, and consumers often hesitate to send their credit-card numbers.
Another problem is the numbing complexity of using the Internet. Even though new indexing and searching tools have been developed over the past few years, using the Internet requires a high level of skill and knowledge. Small companies often lack that kind of expertise.
