Dale Tweedy knows about taking risks. In 1995 he traded in his job to pursue a dream. Five years later he is beginning to realize that dream as president of System 5 Technologies, Inc. Headquartered in Charlotte, System 5 provides corporations with the ability to implement IT/IS strategies quickly and successfully.
System 5's success has been acknowledged by such key corporations as Hewlett-Packard, Oracle, Mercury Interactive and CITRIX. Chris Rutherford is Oracle's channel manager for System 5 Technologies and touts that "Dale and System 5 know how to get the job done." Their recent awards include Deloitte & Touche's "The Tech Fast 50" and another award from KPMG, which ranked System 5 as number 14 in the top 50 privately held companies in the Carolinas.
Tweedy is an excellent reference to guide traditional (non Web-based) companies referred to as "brick and mortar" in the process of going online.
What are the fundamental differences between a dot com and a traditional brick and mortar company when looking for a Web strategy?
There is one very big difference. That difference is the dot coms use the Web portal for 100 percent of their revenue stream, which is essentially their lifeline to stay in business. The brick and mortar companies use their Web presence as pure marketing or as an additional revenue stream.
Do all brick and mortars need a Web strategy?
I truly believe anyone who is in the business of selling a product or service in today's economy must have a Web presence or strategy.
What should be their first step towards an e-commerce solution?
When considering an e-commerce solution there are many questions that need to be asked before the first dollar is spent.
- Evaluate who your audience is. Will they purchase on-line? The adage "if you build it, they will come" does not always hold true. Items that are in a commodity state such as books, office supplies and tickets of any type generally are items that need little or no customization and can be easily implemented into an e-commerce solution.
On the other hand, items such as custom clothing, homes and other high-ticket items are generally more difficult to sell on the Internet because the buyer generally wants to touch and feel the product prior to buying.
- Evaluate and research how large of a response you will get to your site when it goes live. If you build a great site and you are overwhelmed with a consistently large response, make sure your system design will scale to the load. There is nothing worse than building a great e-commerce site and having your potential customer driven away due to either a slow response or no response. This is when your customer clicks to another site and buys from your competition.
- Have a sound business model. Even though building a great e-commerce site or implementing an e-business strategy is considered the hot new way of doing business, keep in mind that all the principles of the "old economy" companies are still very solidly in place. You will still need a good marketing plan, a good supply chain model, to be price competitive, and to have a great customer service plan. Above all you must have a very realistic plan for making a real profit from the blood, sweat and tears (and money) that you put into this project.
What are the different components of an effective e-commerce solution?
The obvious are the key essentials: marketing exposure, a good product and, in many instances, attractive pricing and delivery. Some of what is not sometimes obvious is having the engine for an e-commerce solution reside in the bulletproof system design (hardware, software and the design methodology used to glue all of the components together). Also, a main component of an e-commerce solution is vision and value proposition! I truly believe for a successful e-commerce solution that creators must differentiate themselves from everyone else and have a uniqueness that attracts people to their site and keeps them returning.
Is it possible for a classic brick and mortar without a current Web presence to create an e-commerce site that ties in with their traditional point of sale? What are the benefits and the potential pitfalls?
There are many variables here. Size, product, branding, marketing and existing channel/distribution models all have a big say so in how a classic brick and mortar can turn into a "brick and click." The following are two examples of wrong and right.
These are examples of methods of what is not the best way to marry the two together and what is a proper way of tying the two together.
For example, what if Ford Motor Company suddenly made an announcement that it would sell all Ford products over the Web. What would happen? Ford dealers would be out of business, Ford's cost of doing business would skyrocket, their stock would plummet and there would be thousands of people nationwide who would be unemployed. This is an extreme example, but it is for this reason that Ford only has an informative Web site, which can actually assist their current point of sale partners.
On the other hand, a model that I have seen that works well is one in which a manufacturer actually has a Web site and can take orders via the Web. Even though they also sell through their network of distributors they will credit the distributor in that geographic region with the sales and the distributor will realize the profits they normally would have.
Why do this? The main reason is that most items sold may need service and support, and it is generally the distributor that the customer will go to for this service. Since it is in the best interest of the manufacturer to have local support, they want to make sure the distributor is a healthy profitable business that can maintain the quality that the manufacturer demands.
What concerns should a company have when choosing a solution provider(s)?
Experience, experience, experience! Keep in mind that a successful e-commerce solution can be a potentially huge revenue generator for your company if designed correctly. A poorly designed and/or unsuccessful implementation will be nothing more than a very expensive business lesson.
How important is it to get the Web portion up and running? Should a client wait until the entire solution is ready or deploy in phases?
I am an advocate of getting the site in a bulletproof state before deploying. When the first customer clicks onto your site your reputation in the e-business world begins. First impressions are golden!
With this in mind, the product or service offerings can definitely be rolled out in phases. Amazon.com is a great example of this. They first took on the book market and they have done very well. As they gained success in that venue they rolled out the next one and the next one. Ultimately they hope to be your one-stop-shop for anything you could possibly buy on the Internet.
When a company makes the commitment to create a total e-commerce solution should it try to integrate to its current (perhaps legacy) back office systems (order entry, purchasing, shipping, billing, etc.)?
Yes, keep in mind that just because it is called e-business it is still business. The basics are all the same. An e-commerce strategy is just another way to reach customers and realize additional revenue. Orders musts still be placed, products purchased, products shipped and billing/invoicing or payment by credit card must be realized. If the e-commerce solution is not tied into the legacy system, business efficiencies are not being met and a company will end up running dual systems. That defeats the purpose.
In your experience what is the typical time frame for profits for a dot com or an ROI for an e-commerce solution with a brick and mortar company?
This is definitely a trick question. Venture capitalists will expect a pure dot com to be profitable in 18-36 months depending on size and complexity of the business model. I think since the pressure on tech stocks in March and April, many of these VC firms have really raised the bar and are expecting the dot coms to have profits in even shorter time frames.
Existing businesses that implement an e-business strategy may realize a positive ROI because many of the infrastructure components and support staff may already be in place. So the ROI could be a little as six months in some cases.
As a total solution provider what has been your greatest challenge with assisting brick and mortars in their quest for piece of the e-commerce pie?
Many of the brick and mortars are very open to adding a new aspect to their business model. With that said, there are some companies that just don't have the urgency that a pure dot com has. This is due to the fact that the brick and mortars are already typically running a profit and their immediate business is not fully dependent on getting the e-business strategy in place quickly. This is quite the opposite for the dot coms who are pressured with very aggressive deadlines by investors to get the site up and running and making a profit.
In your opinion how important is this? Is it really "click or die"?
I am in agreement with a comment made by Andy Grove who is the CEO of Intel. "If you do not have an e-business strategy in five years you will be out of business." Of course this does not mean that everyone must go out and build an e-commerce site. I do believe, though, that a business that offers a significant product or service must have some form of an e-business strategy in place just to streamline business practices in business-to-business scenarios or to capture untapped markets to continue to grow.