are you web ready?

BY THE EDITORS

Business strategies to ensure e-commerce solutions and increase online profits

THE OPPORTUNITY TO GENERATE E-COMMERCE revenues has enticed many companies to set up online storefronts. Consumers are able to find just about any product, including books, movies, mortgages, and live lobsters, on the Net. However, those companies concerned with speed-to-market, often fly headlong into disaster because they tend not to think through a strategic plan for integrating e-commerce solutions into their overall operations. If you want to ensure that your aspiring e-business is a success, don't make the same mistake.

The digital economy still offers untapped markets for cyber-explorers, giving birth to new business models almost overnight. With the rules constantly changing, it is premature to say which models and innovative strategies will flourish on the Net.

Most of the hype has centered around business-to-consumer (b-to-c) e-commerce, namely e-railers such as Amazon.com; online auctions such as eBay; and communities like iVillage. Now Amazon--once the darling of Wall Street--has analysts wondering if its model is flawed. The dotcom has yet to turn a profit, despite a huge customer base and $1.6 billion in annual revenues.

The new gold rush on the Net is business-to-business (b-to-b) trading, which outpaces b-to-c e-commerce--S157 billion in revenues compared to $22 billion in 1999--according to Merrill Lynch. Jupiter Communications predicts that b-to-b commerce will mushroom to $6.3 trillion by 2005, while b-to-c should top $184 billion.

Some b-to-b sites are horizontal marketplaces, bringing together buyers and sellers from different industries. Most are vertical or geared toward a specific industry, like emerging player Rooster.com (where farmers will be able to buy supplies), B-to-b marketing also encompasses exchanges, auctions, catalogs, and community.

Sites engaged in b-to-b marketing differ from those involved in b-to-c, as they generally require private networks restricted to specific business partners, and a standard platform for the exchange of information between businesses. Payment is usually by predetermined credit terms versus verified credit card payments, and transactions are conducted using electronic data interchange (EDI).

More importantly, consumer loyalty tends to be higher in the b-to-b environment. It is more expensive for online retailers to keep consumers coming back to their sites, than it is for them to ensure repeat visits from other businesses. B-to-b models generally require a large cash outlay and excellent technology skills. You don't have to know about farming to sell fruits and vegetables to consumers online. But you do need to understand the industry if you want to create an e-marketplace for farmers and suppliers.

With e-marketplaces, the key is being able to streamline the purchasing process, reduce transaction costs, create efficiency, and improve delivery time, says Jeannie Diefenderfer, senior vice president of procurement for Verizon Communications, who is responsible for purchasing $20 billion in goods and services each year, some of it from online suppliers.

There are some fundamental principals that apply whether you use the Web as an alternative channel to sell products, provide services to consumers, or facilitate trading between businesses. Your site must be easy to navigate, require minimal wait time, and provide valuable content or essential information such as product description and price. Personalization, customer service, and globalization are critical factors in reaching a wider audience and increasing brand awareness.

"Prolonged success online is rooted in an old line company practice: keep profits flowing in. If your site doesn't have a real revenue generating model, it will fail," warns Karen Lake, founder and CEO of StrategyWeek. com, in Portola Hills, California. There are different revenue sources, including equity, transactions, licensing, advertising, and sponsorship. How quickly you achieve results may well depend on whether you're a pure dotcom or a clicks-and-bricks site (marriage between online and brick-and-mortar).

The first order of e-business: Assess which e-commerce model best suits you. The following e-businesses illustrate the wide range of possibilities and opportunities.

E-tailing Cushcity.com

As the mother of a 3-year-old daughter, and an avid reader and shopper Gwen Daye Richardson had a hard time finding children's books, games, and toys with an African American theme. In December 1998, she and her husband Willie decided to open an electronic storefront--Cushcity.com--which was a lot cheaper than building a brick-and-mortar bookstore. "We used a free Internet software called Bookware, an online shopping cart that let us interface with potential customers," says Gwen, who is the Website manager.

Cushcity.com focuses on a wide range of products, including Afrocentric books, videos, calendars, Greek paraphernalia, collectibles, toys, clothes, software, and educational items.

After launching the dotcom on a shoestring budget, the e-tailers were able to secure private investments totaling $200,000 in their first year of operation. By the end of 1999, Cushcity.com generated $160,000 in total sales revenue. A Cushcity catalog, which is published twice per year, usually produces higher sales figures than the Website--mostly from repeat orders--for a few weeks after publication. The Richardsons expect the site to do $1.2 million in sales this year, although the company won't make a profit until the year 2001.

In the beginning, customers had their pick of some 650 books and 50 different videos, but they began to ask to see other products on the site. "We had a very responsive e-mail system. We responded to people (queries) in two hours. Customers were very impressed," she explains.

The couple's entrepreneurial endeavors actually began six years prior to Cushcity, when they published Headway, a monthly, national, public affairs magazine. Then came their interest in the e-tail business. "The first day we got online, we began to get a lot of orders and in three months time we stopped publishing the magazine [to concentrate on the online venture]," says Gwen. Today, Cushcity is one of the most heavily-trafficked African American e-commerce sites, aver. aging 1,000 hits per day.

Netpreneurs, like the Richardsons, who are willing to constantly update their sites in response to consumer demands and needs, will fare better online. Even the best Websites need periodic updating to correct mistakes, reflect company changes, and keep the site interesting.

--Tanisha R. Hopson

Business-to-Consumer E-Service: ClickRadio.com

Imagine having the option to skip that song you hate that is played on the radio 10 times every hour on every station. With ClickRadio.com, you can request that a song be played more, or less often, or nix it altogether. The free, advertiser-supported, Internet-enhanced, digital radio service allows listeners to choose music from 25 genres, and then have the CD-quality tunes downloaded onto their computers.

The ClickRadio program connects to the company's server whenever the user is on the Net and then uploads and downloads files compressed with Lucent Technologies' ePAC (enhanced perceptual audio coding) system--a proprietary technology. Old songs are pulled out of cache and new ones are played based on user preferences.

ClickRadio differs from popular types of music sites, such as MP3.com or Launch.com, in that an entire cache of songs is actually downloaded on to the computer. Sites like MP3.com are not digital radio services, says ClickRadio founder and CEO, Hank Williams. "Launch.com provides a radio service based on streaming, which has poorer quality." More importantly, ClickRadio has licenses to distribute music from big distributors, such as BMG and Universal Music Group.

Williams, 35, came up with the idea for ClickRadio with co-founders David Benjamin and Ed Bialek Williams previously served as chairman of the now defunct Cybersonic, an Internet-development consulting firm that provided Webcasting services. The revolutionary concept for ClickRadio was devised in 1998, and thus far, the company has secured $10 million in seed money from private investors.

ClickRadio is in the process of marketing to consumers--particularly college students--in the top 10 markets nationwide. Although ClickRadio plays two-thirds fewer ads than conventional radio (five minutes of ads per hour), the New York-based company has developed a cooperative relationship with advertisers. The interactive ads can't be interrupted or skipped by the user.

There are deals in the pipeline which could mean that ClickRadio would come prepackaged in various PCs. By the end of this year, Williams hopes to expand the service beyond the Net by having the software installed directly into personal stereo component systems. Charlie Kendall, the company's vice president of entertainment programming, says ClickRadio is, "the most exciting thing to happen in radio since the move to FM."

--Nicole Richardson

Business-to-Business E-Service ForSalePeople.com

Three years ago, Eric Womack and his wife Anita, left corporate America to launch CSG Recruiting and Staffing in Columbia, Maryland. Clients included such firms as Chevy Chase Bank, Lucent Technologies, and Pfizer Inc. Instead of trying to figure out what CSG could sell on the Net, the Womacks looked at what problem they could solve. To automate the search process for both recruiters and candidates, they created CSGRecruiting.com in 1998.

As the company grew, they began to get several inquiries about career services and advice. "We decided to survey our clients," says Eric, who serves as president and CEO. "We asked them, if we created a Website, what would they like to see?"

Using a list server, the Womacks polled some 5,700 recruiters and salespeople (entry-level, middle, and senior management) to come up with the right content mix to create ForSalesPeople.com. Launched January 2000, the site is a b-to-b e-commerce and information marketplace for sales professionals and small business owners. Feedback from the survey revealed that potential users wanted an online resource center that was easy to navigate. Womack says it is important, in the initial planning stages, for companies to reach out to existing customers and ask them how they use the Internet to purchase goods and services.

ForSalesPeople.com provides sales leads, business management, training articles, a directory of recruiters, company research, travel center, and a shopping mall (products offered via affinity programs with major retailers such as Staples).

The site averages a little over 90,000 hits per day and contributes 25% to 50% of the company's total sales revenues. Computer Solutions Group Inc.--the holding company for CSG Recruiting and Staffing and ForSalesPeople.com--expects to earn $2.7 million in revenues this year from banner ads, recruitment fees, the e-commerce mall, affinity programs, and partnerships.

"We are a value to recruiters by making it easier for them to find and place salespeople," says Womack. "For salespeople, we are a one-stop shop for them to find employment, news, and career advice."

ForSalesPeople.com is a prime example that Net enterprises can provide services more easily than traditional businesses.

--Carolyn Ail. Brown

Clicks `n' Bricks Urban Cool Network

How do you define urban? According to Jacob Miles III, founder and CEO of Urban Cool Network Inc, "what really defines urban is lifestyle." UCN encompasses a network of Websites--Urbancool.com and Urbancoolnet.com. Urbancool.com, designed for consumers, is an Internet portal offering free e-mail, search engines, and channels concentrating on family-focused entertainment, sports, politics, fashion, and finance. Urbancoolnet.com is a b-to-b e-commerce site that provides partnering companies with various Internet tools and services, including content development, Web hosting, research, and data mining.

In addition, local businesses and franchises can get UCN to erect one of its NetStand kiosks, which are placed in high-traffic urban locations--such as shopping malls--and contain computers with Internet access and a variety of other services. Now access to the Internet may be as simple as a trip to your neighborhood McDonald's.

UCN approaches small businesses with the plans to set up the kiosks, at no cost to the companies. Advertising, access fees (to Internet Service Providers, for example), and value-added services generate all revenues (figure could not be disclosed due to SEC rulings).

Miles, a 25-year veteran of the technology, entertainment, and toy manufacturing industries, founded Urban Cool Network in 1998. As vice president of operations at Tonka, he was part of the team that launched the Sega Game Systems in the U.S. and put an Internet browser into a game machine for the first time. Miles was formerly president of Cultural Exchange Entertainment Corp., a toy company specializing in electronic learning aids and cartoons, which has since closed.

Initially financed by family and friends, UCN flied an Initial Public Offering this past May. The common stock will range between $9 and $11 and the company is listed on the Nasdaq Exchange (Nasadq: UBN). Miles should continue to own a substantial portion of UCN, with venture capital and the Wilhelmina Modeling and Talent Agency making up a portion of the minority shareholders.

The UCN chief understands the challenges of emerging e-commerce sites. He says virtual mails and b-to-c models "must sustain a critical mass of traffic to survive." With respect to b-to-b operations, he says "it's important to start and manage these sites now in the [new economy], because your business will reap the benefits as this segment explodes in the future."

--Duane A. Bourne