What lessons can be learnt from those who survived the carnage
on the Infobahn? How can you rate a successful e-business?
The outward signs of a robust and
thriving business are:
- Revenue increases
- Ability to generate profits
- Success in creating meaningful alliances
- Success in expanding into new markets
- Differentiating itself
What are the key areas that a profitable
web site needs to concentrate on?
- Develop a unique web site
- Control the product line
- Introduce new products on a regular basis
- Ensure easy and reliable credit-card payment methods
- Provide customer-friendly policies
- On-time delivery
- Keep promises
- Develop a clever marketing strategy
- Be the best in your field
Being ranked among the top 5 in a search engine is only a part of the e-commerce
puzzle, your web site needs to satisfy customers once they get there. With new and
nimble competitors springing up by the dozen, it is easy for a customer to opt for
a competitor who may be easier to do business with. One sure way to avoid this is
to adopt new technology. The goal should be to automate all processes as much as
possible while maintaining personalized human interaction at the same time. Implementation
of technology following conventional time-tested principles like dedication and
expertise in an adaptive, dynamic environment is what is required.
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Existing business models are of many kinds:
- Advertising - banner and direct marketing
- Subscription sites
- Customer services
- Directory services
- Content providers
- Product sales
Most successful companies pursue several related but different models concurrently.
They defy easy categorization by diversifying revenue streams and becoming hybrids
in a cost-efficient way.
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E-Bay
A company that has emerged unscathed from the recent dot-com bust with profits soaring
to almost 400% and revenues doubling in the past one year. It has transformed auctions
that were limited to garage sales and flea markets into highly evolved e-market
places. Selling just about anything, from antiques and jewelry to computers, automobiles
and even auto insurance, it has 29.7 million registered users today.
Adopting an amazing and unique culture, where buyers and sellers of all items are
allowed to post their comments online, where credit-card payment facilities are
secure and easy, the company projects a trustworthy and reliable image.
Apart from bidding, certain high quality goods can be sold at prices fixed by the
seller. This site also offers professional services for all kinds of business needs.
A widespread global reach makes its easy for a buyer in Hong Kong to bid and buy
a product from a seller in Paris while the regional sites in North America are able
to offer hard to ship merchandise.
Person-to-person trading and a barter economy have established the company on a
secure B2B and B2C platform. Other companies like Yahoo! and Excite have been quick
to catch on and incorporate auctions into their sites. Priceline.com, a site
that offers airline tickets on discount has begun experimenting quite successfully
with this business model.
To summarize, their business model can be elucidated
thus:
- Automation of traditional methods of selling unique items
- Reliability in mode of payments
- Customer friendly company
- Professional services in addition to just plain selling of goods
- Global reach
- Regional diversification
- Successful advertising
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HOMESTORE.COM
Statistics have revealed that realty sites account for about 9.6% of all online
visitors. A Company that has dominated the real estate field with 3.28 million customers
in January 2001 and listed among the Fortune top e-50. It registered a growth of
252% at one stage.
Homestore.com allows prospective buyers to review properties before buying. Is that
all? No, they also offer financial advice, online loans, and buyer's guides to homes
and household items, home improvement tips, remodeling, and safety and security
aspects. Useful advice when moving home and tips on resettling has ensured user
satisfaction to the core.
Their main revenue came in from subscriptions (52%) and the remaining from advertising.
As a subscription site they picked a specific topic which a segment of the population
would be passionate about and marketed their services through strategic advertising.
Subscription sites that allow users access to a regularly updated online database
of any kind for a fee are fast evolving into healthy and strong e-businesses. Why
have they become so popular? Yes, free stuff is available anywhere on the Internet,
but most of it tends to be disorganized and chaotic. This makes customized information
worth paying for.
Useful tips for a wannabe subscription site:
- Pick a specific target that niche users may be passionate about
- Market the site through banner ads and direct marketing (newsletters and e-mail)
that offer a few tantalizing freebies regularly
- Offer the complete content to members only
Links worth looking at are:
- Thestreet.com - A financial journalism site that offers timely news and analysis,
market trends, ratings, expert consultancy services, conferences and newsletters.
- Christiansciencemonitor.com - The electronic edition of this famous 90-year
old newspaper.
- Preachingtoday.com - Services like illustration of biblical quotes and facts
that preachers can incorporate in their sermons.
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ORACLE
This software and service provider entered the digitized world only in 1998,
and metamorphosed into a digital pioneer in the span of two years. Innovative products
and services and integration of these services have brought them into the forefront
of web innovation today.
Products like Biz Online Initiative that deliver simple and complete online services
and a host of other tools that customers require in setting up an e-business have
made them a one stop shop for e-biz today. Their built-in self-service system for
customers, employees and suppliers improved productivity and accuracy and brought
down costs by 100's of millions of dollars. Consulting services with major firms
like Sun Professional Systems have established their reliability with customers.
Their business formula:
- Innovative products and packages
- Integration of internal processes
- Exemplary customer service - a user friendly web site that connects customers easily
- Fast online e-business services
- Expert consultancy services
Another company in this league is Exodus Communications, an Internet data center
that offers a range of web hosting services, bandwidth on demand, security monitoring.
Their servers host leading web sites like Yahoo!, e-Bay and Merril Lynch. They allow
these firms to deliver content and applications online round the clock without fail.
35% of their revenue comes from a very successful e-business consulting firm whom
they have partnered with (Sapient). They are expanding from 19 data centers to 34
data centers this year.
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CISCO
Cisco develops switches and routers for Local Area Networks (LAN) and Wireless
Area Networks (WAN) and the related software. They have become the worldwide leaders
in networking for the Internet today.
90% of their sales are conducted over the Internet. They offer expertise in planning
and executing Internet enabled solutions.
The company has grown in the past 7 years with 71 acquisitions to its credit, the
latest being its investments in an optical equipment company and speech recognition
software makers. Their business model could be termed an acquisition one!
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AMAZON.COM
The customer is King here! Amazon pampers their customers, tracks their tastes
and uses this information to create a unique customer experience. This e-tailer
cultivates relationships that lead to customers liking and trusting them. This kind
of service surpasses the most brilliant technology in use today. Amazon brought
in the world of successful one-to-one marketing, a personal touch from another era.
Recently though, they have suffered heavy losses, proving that any successful e-business
strategy will survive provided it is based on a solid brick and mortar foundation,
a la Barnes and Noble, another famous online bookseller. Although barnesandnoble.com
and Barnes the Noble Ltd. are run separately, a customer tends to associate trust
and comfort in a known and established brand.
To summarize, exemplary customer service, successful online advertising and special
discounted offers made Amazon and books synonymous terms today.
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DOUBLECLICK.COM
This Fortune e-50 company offers a collection of premium sites for custom ad-buys
and sponsorships in various fields - Business, automobiles, entertainment, technology,
travel and health. They help markets build brands, increase sales, maximize revenue
and build one-to-one relationships with their customers. They offer agencies plans
to manage online campaigns.
Their direct marketing strategies use customer data to refine marketing messages
and increase investment returns. One of their divisions, Abacus is one of the largest
databases of buyer behavior in about 90 million households in the United States
itself. Another division, www.diameter.net conducts online research to evaluate
and understand online campaigns and strategies. Some of their clients include www.macromedia.com,
www.nasdaq.com, www.networldsolutions.com and www.palm.net.
The web has proven to be an amazing vehicle for advertising and reaching millions
without spending a dime on postage and printing. Stu Heinecke Services, an advertising
solutions company used personalized cartoon direct mail and achieved response rates
as high as 100%.
Online ads possess tremendous communication powers. Banner ads placed on sites like
CNN, Lycos, CompuServe, Pathfinder and The New York Times showed that:
appropriate placement of the ad on specific targeted sites, using a search component
or a woman's face in a banner ad, using odd-shaped attention grabbing banners, including
trading links with other sites, and hosting online chat are a sure fire way to get
a response. Online advertising is international advertising that gets a 24X7 exposure
for much lesser costs.
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YAHOO!
The "operating system" of the net and a site for evolving search engines, free
news and information services, online ads, banner ads, sports and news, video and
audio, clubs and auction stores has become the most popular directory in the web.
Its value lies in its unique and easy categorization of all pages and subjects -
a completely professional looking web site in all.
But, a BPI (Buying Power Index) report reveals that more online buying and popularity
of a site don't go hand in hand. Other search engines like Altavista, Excite and
Juno seem to have raked in more profits recently.
Online advertising was the main revenue for Yahoo!, but they didn't really check
on what kind of ads worked online. Immediate success stopped them from evolving
and developing other important aspects of e-business. As a result, this year they
have been forced to cut budgets and ads, showing that generalized media doesn't
work compared to specialized media. Also, all of Yahoo's content is owned by other
sites and only licensed for their use.
Among the other successful dot-coms, trends revealed that online e-brokers offer
the best economic models among consumer-centered Internet companies. Instead of
spending on physical infrastructure they concentrated in increasing the volume of
transactions.
1-800Flowers.com blended telephone and Internet technologies, Reflect.com, a beauty
customization site outlasted other higher profile e-tailers in the business, thus
proving that the basic B2C business model is valid.
So, what we have seen is that a combination of strategies, smart thinking, brilliant
business plans, great and innovative promotional ideas are an integral part of any
e-success. There is no doubt that in the near future, an average person anywhere
in the world will surf the Internet more often than he or she watches television
or uses the telephone. As a result, it makes sense for entrepreneurs of all kinds
to come up with ideas of generating income by marketing their products or services
to these surfers. Competition in cyberspace may become even fiercer in the future
and therefore the right business plan is what will eventually ensure long-term success.
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