It sounds simple, but many enterprises fail to focus on the business side of their e-commerce venture and, as a result, their e-business projects flounder. In fact, a recent study by GartnerGroup predicts that as many as 75 percent of e-business projects will fail.
Here are some all-too-common mistakes that you should avoid if you want to keep your project off the casualty list.
Taking care of business
“E-business is real business on steroids,“ said Todd Wood, a partner at Deloitte & Touche who has worked with customers on e-business strategies. His advice to CIOs and CEOs is, “Don’t do stupid things you wouldn’t do otherwise, but do [everything] real quick.”
Dave Reibstein, William S. Wood Professor at the Wharton School, believes the things that are important in traditional business—managing customer relationships and managing inventory—are also the most important in e-business. Companies err when they put their own egos ahead of customer needs. For example, a book publisher may think a customer will shop on its site because of the well-known name, but it is more likely the customer will go to an online bookseller where the service and selection are better.
Why e-companies can’t win for losing
Other big mistakes companies make when it comes to e-business:
- Failing to think e-business projects all the way through. Wood suggests asking these questions:
- Will you still support your current distribution channels?
- If you are a manufacturer that’s beginning to sell directly to consumers, how does that affect suppliers?
- If you are a retailer, will you still carry products in your store that suppliers also sell over the Web?
- Is your infrastructure ready? If you’re now selling 1,000 units, what will happen if sales suddenly jump to 10,000 or 100,000? Also, are you prepared to answer questions directly from consumers that may have previously gone through retailers?
- Which companies should you align with to form virtual companies? Businesses are used to competing or acquiring, but in the e-business world they need to get used to forming strategic alliances where both parties are equal and independent.
- Underestimating the degree of culture change that is required.
Don Peppers, co-founder of Peppers and Rogers Group and co-author of many one-to-one marketing books, believes the Web can help companies’ “own relationships with their customers.” But as businesses truly begin to focus on one-on-one dealings with their customers, they often need to change their organizational structures. In fact, a change toward trying to find more products for your customers, rather than the more traditional idea of finding more customers for your products, can transform an organization.
- Thinking of competitors in the old way.
“A company that develops an e-business plan using a list of existing competitors runs a substantial risk of being blindsided,” according to the GartnerGroup report “CEO and CIO Alert: Five Mistakes That Will Derail an E-Business Strategy.”
- Mismanaging the mix.
The GartnerGroup report said that the traditional business model and e-business model must coexist. The report advised companies to develop a road map to be implemented in stages and to look for ways to innovate select processes.
Reibstein suggested another way is to find synergies between your traditional business and an online one. His example is Barnes and Noble, which has a brick-and-mortar store and an online one that don’t blend. If you order online, you can’t go to the store and pick up the book, for example. The company’s rationale is that they don’t want to confuse books, but that rationale is hard to support, Reibstein said.
- Failing to “protect the brand.”
Wood cited examples of companies that have different Web sites for each of the company’s divisions, with different tools. Creating different Web sites means creating multiple messages, forcing you to run the risk of losing or confusing your audience.
- Thinking technology is a panacea.
Wood’s example is in procurement. “Executives think that a new procurement software will let everyone order from their desktop and save money, but it’s not that easy.” Suppliers may not have their descriptions ready, and, ordering everything online may not always be the best way. If a worker just wants a pencil, it’s probably easier to go to the supply cabinet to get one than to order online. He advises, “Don’t just implement the new technology as the vendor says. Think it through.”
- Don’t be so afraid of making a mistake that you do nothing.
Of all the mistakes made with e-business, most experts believe the worst is entering the field too little, too late, or not at all. Cited often is the failure of Barnes and Noble to seize the opportunity presented to them by the Internet. When Barnes and Noble finally decided to enter the market, they spent heavily to create an online presence but will still “always be just a shadow to Amazon’s success,” Peppers said, referring to the online bookseller.
Experts acknowledge that many e-business strategies are high-risk, which often goes against the risk-averse tendencies of executives.
“As paradoxical as it may sound, the most effective way to manage the risks of becoming an e-business is to take more risks than you might think is safe,” said Peppers. Because of market volatility, those who become market leaders now will get the greatest financial return.”
His advice: Be bold enough to invest aggressively.
Reibstein agreed that e-business is essential. “You must bite the bullet. Inaction is, in many cases, more of a risk. In all cases, it’s better to make a move now than later.”
Randi Hicks Rowe is a writer and communications consultant in Washington D.C. She specializes in business-to-business communications, including financial services and technology.
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