E-commerce can be defined in many ways, but the gist of the term is the exchange of information across electronic networks.

In its broader sense it can encompass e-mail and fax. However, narrow, ‘transactional’ definitions focus on online trading – the buying and selling of goods and services over electronic networks, whether between businesses or between businesses and consumers.

E-commerce is also used to describe how electronic networks are being harnessed to make efficiencies in the way information is processed within or between businesses. This is sometimes known as ‘e-business’.

IT’S HAPPENING NOW…
E-commerce is growing at tremendous rates – with much more forecast. Andersen Consulting calculates that in the past five years the Internet has grown from three million users, mainly based in the United States, to more than 100 million, now worldwide. Online trading is projected to grow to £250-300bn within the next two years. In Europe alone, Forrester Research predicts that online business and consumer trade will grow at triple-digit rates over this same period. The EU’s online population now matches that of the United States.

WHY IS EVERYONE TALKING ABOUT E-COMMERCE?
In a recent survey of executives throughout Europe, most told Andersen Consulting that they expect e-commerce to bring far-reaching change to the ways they currently do business. A study from KPMG goes even further, suggesting that e-commerce is set to revolutionise supply chains as high-tech ‘pioneers’ begin to prove that the Internet is more cost-effective than traditional channels for making purchases.

Some of these pioneers are big, well-known companies – Dell Computers and Amazon.com, for example. But many other, and far smaller, companies are finding considerable success in online trading. The case studies included in this booklet are all small and medium sized enterprises – and all are winners of 1999 ISI/Interforum e-commerce awards.

As the experience of e-commerce pioneers demonstrates, there are good reasons for doing business electronically. Trading on the Internet promises greater market penetration, increased responsiveness to customers, more flexibility and lower costs.

Another benefit, building on e-trading, is the opportunity to forge closer relationships with trading partners, both customers and suppliers. Electronic links can add substantial value to these relationships, facilitating easy, fast, effective communication. That, in turn, opens the way to continued development of the relationship, as well as innovation both in products or services and in delivery, along with enhanced operational efficiency. All of this should be felt on the bottom line.

In other words, e-commerce, pursued with the same good practice commitment as any business strategy, offers important opportunities to cut costs and increase income.

GETTING STARTED
The opportunities of e-commerce are very real, but no company should go into it expecting overnight success.

The decision to move into e-commerce is a strategic one. You need to be satisfied that it falls into line with overall business objectives, that it will work as an integrated part of your business plan and that you have the resources to meet any new demand you generate.

Research is essential. You need to understand how the Internet works and how you can work with it; how your customers use it – or why they don’t; and what the options are for setting up and running your own e-commerce operation. It may involve re-engineering your business processes.

One good approach to deciding the right way forward for your business is to become an e-commerce customer. Electronic procurement is a route being examined, and increasingly taken up, by many companies seeking to increase efficiency and cut costs. You can buy almost anything on the web, including office supplies, furniture and fittings, as well as a vast array of more consumer-oriented goods and services.
One thing you will learn through growing familiarity with the Internet is that simply putting a brochure online does little to promote your company. In fact, it can be counter-productive. If a site does not provide potential customers with what they want, whether it is supply of products or services, access to knowledgeable people or simply up-to- date information, they will go away frustrated. And if that happens, they are unlikely to come back.

E-commerce implies a commitment to securing your Internet connection, maintaining your site, and keeping it ‘alive’, in order to give customers what they want time and again. It also implies commitment to the complementary functions of promoting the site, maintaining regular customer contact, managing the record-keeping processes and fulfilling the orders efficiently.

Getting up to speed on all this and beginning to implement new systems can seem a daunting prospect. Remember that your local UK online for business adviser can guide and support you through every stage of the process.

THERE ARE A NUMBER OF PRINCIPLES THAT CONTRIBUTE TO SUCCESSFUL E-COMMERCE OPERATIONS:

• Build trust. People are more likely to do business on a site that inspires confidence.
• Explain your commitment to security and the controls you have implemented to protect your systems and information, your guarantees of product quality, procedures for delivery and policies on returns.
• Show visitors that they have come to the right place by making it very clear what your business does and how it can help them. This means understanding what your customers want, of course, but perhaps also knowing what they can’t get on a competitor’s site.
• Make sure your site is fast to load and easy to navigate.
• Never leave visitors wondering what they are supposed to do next.
• Confirm all orders promptly by e-mail. This gives the customer extra confidence in your efficiency.
• Offer a choice of ways to pay. Many customers will be comfortable using credit cards, but some may prefer to send a cheque.
• Stay in touch by offering after-sales service and support.
• Consider producing a periodic e-mail newsletter or update on new products and services.
• Always provide physical contact details. A mailing address together with telephone and fax numbers provide extra ways for customers to be in touch.

DIFFERENT LEVELS OF INVOLVEMENT
An e-commerce initiative can be launched in several ways, presenting the opportunity to start with limited investment and expand as your success and confidence grow.

LEVEL 1 – MESSAGING
Exchange messages and data files quickly and reliably with your customers, partners and suppliers. All ISPs offer basic e-mail facilities.

LEVEL 2 – PUBLISHING
It is easy to make your marketing material available on the Internet. Most ISPs offer free space on their servers, and this can be used to create a company web site which functions as a shop window to your business.

LEVEL 3 – INTERACTING
Using your site to provide an ‘electronic catalogue’ offers more than just a ‘shop-window’ to existing and potential customers. You can enable them to browse through product images, descriptions and specifications, offer after-sales support and progress with goods on order.

Queries and requests can be handled via e-mail. At this point, you may require more than the standard web space offered by your ISP, but they will normally be happy to provide it for an additional charge. Moving on a stage in sophistication, you can provide a ‘shopping cart’ function that will allow customers to compile and submit an order by e-mail. Receipt of the order and delivery arrangements can be confirmed by e-mail, with the order itself – along with payment – being fulfilled through established offline procedures.

LEVEL 4 – TRANSACTING
A transactional web site covers the whole process, from product or service selection through ordering and confirmation of delivery arrangements to online payment. You might even work via an ‘extranet’ with outsourced or allied companies.

If goods can be dispatched by post or electronically (eg, software), then the ability to handle transactions online may boost the value of your web site and your company’s total sales revenue. A transactional web site is a simple but effective way of entering foreign markets. Many credit card companies and ISPs will handle credit and debit card payments online; costs vary according to your company’s financial track record.

LEVEL 5 – INTEGRATING
Ultimately, you can integrate IT into all of your business activities. Such an approach can have a significant impact on the efficiency of your business and its ability to compete with competitors. For example, it is possible to automate your supply chains so that your business is tightly integrated with those of your customers and suppliers, with supplies being automatically replenished when they run low.

Whether your customers are local or overseas, remember that a large part of your commercial success depends on efficient back-office systems. It is not enough to create an eye-catching web site that pulls in order after order – you must have the resources and systems in place to process those orders, manage the accounts, deliver the goods or services, and – ideally – follow up from time to time with news or advice that encourages customers to remain loyal. Remarkably, as many as two in every three online purchases are never completed because of poor service.

ONLINE CATALOGUE
This forms a large part of your selling campaign, just as it does in the offline world. Give all the information about your products or services that you know customers will need in order to make a decision. Drawings or photographs are essential in most cases.

The opportunity to ask questions or obtain additional information, via a simple click to e-mail button, should also be included.

SHOPPING CART SOFTWARE
This is a common feature of e-commerce sites, and you will be familiar with it through your own experience as a customer. Its obvious purpose is to allow customers to select items, keeping a running total of the cost, calculate delivery charges and any taxes, and amend their order as they move through your site. Its less obvious purpose – though equally important – is to make buying as quick and simple as possible.

CREDIT CARD FACILITIES
As most buying over the Internet is done by credit card, you will need to enter into a merchant agreement with a bank or credit card company to be able to accept payment in this way.

The authorisation process protects the credit card holder and credit card company, but it does not guarantee payment for the merchant. Should your application for merchant status be refused by a bank (as sometimes happens when a business does not have a proven financial track record).

ORDER FULFILMENT PROCEDURES
You must have mechanisms in place for the delivery of your products or services to the buyer. Most customers will want to know how and when to expect delivery. It may seem obvious; but a lot of companies found they could not cope with late demand for Christmas presents in 1999, for example – some big-name retailers among them. Disappointed customers rarely return. The point here is that e-commerce is not just a simple bolt-on to your existing systems, but has practical implications for the way your business is organised.

CUSTOMER SERVICING
The ‘softer’ side of your business needs to be emphasised, too. Customer care principles should be conveyed in what you say about how you operate and in the assurances you give about product quality. Building in a mechanism for feedback, or for queries as noted above, can go some way towards building customer loyalty. If you can also offer an order-tracking service to customers, they feel more secure and you save yourself the time involved in taking anxious customer calls. If your web site generates a lot of enquiries, you have to be able to field them – which may mean taking people on to answer calls and e-mail. Alternatively, anticipate queries by putting the answers on your web site.

LEGAL ISSUES
The laws governing trade differ, of course, from country to country. In addition, the legal framework for e-commerce is still evolving. Many national governments and broader bodies, including the EC, OECD and the UN, are still developing policies to support, manage and control electronic trading. The Electronic Communications Act 2000 and Explanatory Notes can be viewed at www.uk-legislation.hmso.gov.uk/Acts.htm The Act contributes to making the UK the best and safest place to do electronic commerce. A guide is available on www.dti.gov.uk/cii The European Union is also legislating on e-commerce, and member states are implementing a Directive which ensures the validity of electronic signatures. See www.dti.gov.uk/cii for more information. Hard on the heels of this comes the E-Commerce Directive, which should be implemented across the EU by the end of 2001. This will clarify, among other issues, advertising rules and the liability of intermediary service providers. Other Directives in development include Copyright and the Information Society (online copyright); E-Money (electronic money through smartcards etc); and Distance Selling of Consumer Financial Services. Further information on the E-Commerce Directive can be obtained from www.dti.gov.uk/cii/ecomdirective/index.htm.

INTERNATIONAL IMPLICATIONS
The Internet has no boundaries. It is highly likely that at some point your web site will attract visitors in other countries, and you need to be prepared for handling this. If your business already exports, the systems and knowledge of procedures will be in place. If not, you can get help and advice from your local UK online for business adviser.

Your site should make your policies on international trade very clear. If you expect to do a lot of overseas business, a multi-lingual, multi-currency site may be worth the extra investment. This need not be too difficult if the pages are planned so that text can be cut and pasted without affecting pictures or other content.

DEALING WITH OVERSEAS CUSTOMERS
The same good-practice principles as with any new customer apply. For commercial customers, take up trade and bank references. Credit ratings are available from sources such as Dun & Bradstreet and Infocheck – but remember that such information is historic, and may not reflect the current status of a company. Some sort of credit insurance might be an effective solution.

If you operate in a retail environment, customers may appreciate being able to pay in the local currency. Commercial organisations may be comfortable doing business in foreign currencies. Remember that any trade with a customer abroad is liable to exchange risk – if you invoice in sterling, you’re simply passing this risk on to your buyer, making your total sales package less attractive.

Remember too that while money is travelling from your customer’s account to your own, it is effectively lost to both parties. As part of your settlement strategy, make it easy for your overseas customers to pay you by putting your transfer instructions on every invoice. Request an Urgent Transfer and quote the name and branch of your bank, its sort code, your company name and account number. This should cut transfer delays to a minimum. The Department of Trade and Industry’s ‘cyber park’ for exporters – www.tradeuk.com – provides advice and contacts for a wide range of international business issues.

TRUST
The Consumers’ Association, through its Which Online web site (www.which.net), runs the Web Trader Scheme. Registered e-commerce companies abide by a code of practice that provides their customers with assurances on standards of service.

Companies that meet certain standards will be able to display a hallmark that indicates customers can feel confident about trading online with them. Trust UK (www.trustuk.org.uk) will be a new body to accredit e-commerce codes of practice.

Consumers can shop with confidence where traders show the TrustUK hallmark on their web sites. TrustUK is being developed jointly by the Alliance for Electronic Business and the Consumers’ Association, in consultation with Government and the Office of Fair Trading (www.oft.gov.uk).

Of course, trust cuts both ways. If you are operating in business-to-business markets, you will want to establish confidence in new customers and in their local business conditions before committing to any transaction. This is especially true in international trading.

In any case, it is important that your payment terms are structured to protect your business. The options available range from cash in advance, which is certainly the most secure method of settlement, to open account terms, which are the least secure from a merchant’s perspective.

Some companies are not able to pay until they receive a quotation. Since this is essentially an invoice without payment, it is a good idea to ensure that your system can produce these automatically, just as it does order confirmation and final invoice.

Remember to display your business terms and conditions on your web site for viewing before customers commit to a purchase. This makes clear the principles under which you will accept a transaction. Make it a condition of the order that the customer accepts those principles.

SERVICES TO CUSTOMERS
Many web sites offer the possibility for regular customers to create their own accounts. The customer simply puts in all the details, including credit card number if he wants to store it online for his next purchase, and he then doesn’t have to enter these every time he shops online.

In order to protect these details, a password is usually created. This will be requested when the customer enters the site, telling the system that he has the authority to proceed. The customer should ask the web site owner what security protection he provides.

SECURITY
As the Internet is a public network with no central control, many people are still uneasy about the concept of e-commerce. Concerns typically arise in two areas. First, buyers and sellers are involved in a transaction that can feel one-sided because there is no one else present as the commitment is made. This unease is minimised where sites provide thorough information about products or services, the supplier and the terms of business.

Prompt acknowledgement of queries or orders will also help reassure customers that they are dealing with an efficient, professional organisation. The second common concern is with giving out account details over the Internet. However, the growing scale of e-commerce and the rapidly increasing number of companies doing business over the Internet, including banks, suggest that the risks can be significantly minimised.

It is vital to understand that, if your business is using the Internet, you are responsible for the security of your business’ network, systems and information. You must be aware of the security risks associated with trading online; assess the risks your company may face; develop an information security policy for your business; and see that the security controls relevant to your business are implemented from the outset. Your staff too must know about the security policy you are implementing. You will need to monitor the effectiveness of your security controls, and review them if necessary.

A STRATEGY FOR WEB SITE PROMOTION
When considering the resources you need to commit to developing an e-commerce strategy, you will need to budget for promoting and maintaining you web site, as well as for the initial set-up cost. Your web site and what it has to offer needs to be promoted actively and regularly. This will involve a mix of online and offline steps. ensure your site is easily found through search engines register your site build links join alliances put your URL (web address) in print