As promised, today we have a special report from list member Walt Boyes. Walt is a B2B guru and his writings are very well done. Please feel free to comment on this report.
Walt will also be doing an innovative web-seminar entitled "Marketing on a Shoestring" on September 14, 2000! Looks very good.
George Matyjewicz, C.M.O.
Moderator, E-Tailer's Digest
"Making End-to-End eBusiness Transactions Work"
The latest craze in eCommerce website design is “live help.” That is, an integrated text or VoIP (voice over internet protocol) “chat” client, so that a confused or timid customer can be “talked through” the purchase process. Taken by itself, “live help” seems like a great idea. It is, after all, analogous to talking to a salesperson in a store setting…right?
But really, “live help” is a symptom of a serious problem besetting computer-mediated purchasing and eCommerce sites in general. That problem is the site is usually too difficult to use to shop for anything but the simplest of items.
This is especially true if the items in the eStore are “configurable.” This is more often found, granted, in business-to-business eCommerce, but exists in nearly every market niche imaginable.
It is simpler, at some point, to call the manufacturer, or even (God forbid!) to get in the car and drive to the nearest brick-and-mortar outlet, than to try to complete the transaction online.
You can buy books, CDs, and other simple, single SKU items easily on the web. You can even make a profit selling things like this, because the cost of development of a webstore is low enough that you can do it on Yahoo’s store client, or many others like Vista.com. The key is that each entry in the store’s database is a separate SKU, which does not require configuration. You want to buy a copy of a book; you go to Amazon and voila! you buy the book. So far, everything works.
What doesn't work…
However, if you want to buy a variable speed drive for a pump motor, you have to enter many pieces of data that the website needs to give you the correct SKU (which is really a product configurator end-item number, not a true SKU). This can become complicated and unwieldy, if there are more than one or two levels of information required.
If you think this is an isolated case, try buying a set of sockets online from, say, Snap-On Tools. You can, but it is complex and wonderful. In addition, the website cost well over $1 million to build, and costs a significant fraction of that to maintain.
This can also take much more time than it would to simply call a vendor. Therefore, the exasperated web customer grabs the phone and calls the vendor, who helps him get through the specifying of the required product, and takes an order. Is this a web-based transaction? Only partly.
What does the data show?
Data from Thomas Publishing shows that B2B purchasing is very rarely end-to-end, except in certain market segments, like electronic components. Even things like computers, and test and measurement instruments are running at way less than 50% end-to-end automatic web-based transactions. What the data shows is that in the B2B marketplace, we have been able to provide a significant product research tool, but the typical online storefront is not yet ready for prime time. Thomas’ data indicates that 65% of engineers do their specifying online, but only 25% of purchasing agents buy online. Other privately collected data indicates that this is almost universally true.
Moving toward hybrids…
We are therefore moving in the direction of “hybrids” for webstores. Lands’ End and the other large catalog merchants are now used to calls that start, “I'm on your website, and I can't figure something out about item 24J3145. Can you tell me…?” The problem is that this isn't saving money for the retailer. You still have to maintain the telesales operation that you had when you were strictly a paper catalog retailer, and now you have the expenses and overhead of a website to add to the expenses and overhead of distributing a paper catalog. Eddie Bauer makes it very easy to get their paper catalogs. All you have to do is order them over the web. This must indicate that Eddie Bauer (and their parent company) believe that there are more orders coming from the catalog than from the web.
Even Lands’ End’s fabled modeling service takes a very long time to use, and learn to use, especially on a low-bandwidth connection.
For years, now, we have been hearing that all this will go away as soon as everybody has (select your favorite high speed Internet connection). Simply getting cable modem, or DSL, or ISDN or even fractional T-1 (as some hot apartments and condos are now offering) does not, in and of itself, make the average eCommerce site more useable.
If you based your business model on completely end-to-end automated transactions on the web, you are probably under performing your forecasts consistently. Unless you have implemented some sort of easy-to-get-to intervention strategy, this will continue for the foreseeable future. You may be under performing your way out of business. It is happening a lot. It just happened to
ValueAmerica. It can happen to you.
Integrating marketing and sales channels…
Hybrid eBusinesses require all of the old skills at harmonizing and integrating marketing and sales channels that the brick-and-mortar organizations do. It becomes necessary to use outbound advertising and even telemarketing to “push” people to the website, teach them how to use it, and overcome their frustrations and learning curves. It is not simple, and it is not cheap. But unless you expect to target a specific niche where all of your products can be purchased online without a configurator, this is what you will have to do.
Even in the online grocery business, this has been the case. I personally stopped shopping at HomeGrocer.com because of the inability to ask questions in real time and also because of the huge dollar amount required for free delivery. It was just easier to go to the store, and while I was there, browse the aisles.
Browsing an eStore is not at all analogous to browsing a real store, because of the inability to truly convert 2D into 3D tactile sensory experience.
An eBusiness is fundamentally different…
So what can you do with an eBusiness? Well, you can make an extremely efficient purchasing engine out of it. Even a product that needs a human intermediary to configure can be entered on the web, and can be tracked through production and shipping much more easily and in much more integrated fashion on a website than by phone, fax, or email. Sales people can use the web to store information, make presentations, do collaborative work, and so forth, permitting a much more virtual organization. Virtual organization, coupled with supply chain efficiencies can do much to make up for the necessity of having human interaction as part of the selling process.
Walt Boyes--MarketingPractice Consultants
21118 SE 278th Place - Maple Valley, WA 98038
425-432-8262 home office - 253-709-5046 cellphone
eFax: 801-749-7142 - email: wboyes(at)ix.netcom.com
+++++ [Moderator's Comments] +++++
Thanks Walt. Great report.
Folks, Walt is also doing an online marketing seminar that should be of interest to you...
eAttend "Marketing on a Shoestring" on September 14, 2000!
This innovative web-seminar using PlaceWare technology will present proven techniques to "market on a shoestring" by providing a case study of a company that was forced by its very small size and limited financial resources to produce innovative ways to create and disseminate a brand image, support a distributor network, produce integrated marketing communications, achieve media coverage, and produce a web presence. During a four-year implementation period, the company grew sales by 250% while spending an average of only $50,000 per year on marketing, excluding salaries and overhead expenses.
For more information, and to register, visit