Enhancing the Sell Channel

For many traditional businesses, the Internet is an additional sell channel that helps them improve the effectiveness of their demand management. These businesses can redesign and automate processes and reduce the costs they incur on selling and providing customer service. They can use the Internet channel to learn and develop the capability to handle channel partners (customers), develop long term relationships with them and emerge successful in the long run.

Businesses, which maintain both the Internet and traditional channels simultaneously, may face channel conflict. In many cases, the electronic channel may cannibalize the sales of traditional channels rather than creating new business, If the additional business from the electronic channel is marginal, then the return on investment (ROI) may be low. The other problems faced by companies adopting an e channel are integration with other systems (the existing ERP system) in the organization; and the scalability (ability to handle large volumes) of the channel. Some companies take orders on the web but re enter them in their traditional system and process the orders in traditional way. This reprocessing work increases costs and is a constraint on handling large sales volumes.

To take advantage of web technology, companies should either try to move gradually to become a pure e player or use the technology to strengthen their existing distribution network. The effectiveness of a company's web enabled sell channel can be judged by its ability to generate sales in markets where the company does not have a physical presence.

Global markets

In some countries or some parts of a country, the cost of hiring sales staff is high or the potential for business is low; a web enabled sell channel is very effective in reaching such markets. Thus, organizations can serve the global market by using an electronic channel. However, lo increase the volume of business transaction through this channel, sellers need the assurance that buyers can pay, while buyers want the assurance that sellers can deliver. In North America and several European countries, the Internet is a widely accepted channel for purchasing goods and services. The infrastructure, business environment and culture play a vital role in determining the success of an e commerce company. The Internet companies in developed countries with well developed infrastructures enjoy competitive advantage over those in developing/under developed countries.

However, even in developing countries, governments are now coming forward to provide infrastructure and extend required support to the Internet based companies. Internet companies need to win the confidence of customers. To achieve this, they should not focus narrowly on creating a web site with advanced technology, but should offer quality products and customer service of a high standard. This will help these companies build their brand and attract more customers. bn.com was one of the e business players that realized the importance of brand for an online company and spent heavily on it.

From markets to communities

Earlier, companies segmented customers on the basis of demography. But now, companies are interested in forming virtual customer communities who share similar product interests, so that the customers' tastes and preferences can be better understood. By encouraging such communities to develop, companies can obtain feedback on their products and services and take their customers' help in developing new and innovative products and services. Many 13213 and 132C companies encourage their customers to join such virtual communities. Virtual communities are groups of people with common interests and needs who come together online. Most of them join to share a sense of community with like minded people regardless of where they live. These communities enable companies to understand their customers better than ever before, through inter customer and customer company interaction. The online companies can use technology to collect and analyze valuable customer data available from customer communities and sell this knowledge to other companies for a fee and make a profit from the information.

Sell side value proposition

The Chief Financial Officers (CFOs) of companies are often skeptical about the recovery of the huge investments made in e nabling the sell channel. Moreover, the echannel does not always increase revenue but more often helps the company cut costs. Hence, it is difficult to sell the concept to CFOs if they focus solely on the revenue aspect. An e channel is highly cost efficient when used in high technology industries such as electronics, communication equipment and personal computers. Nowadays, an e commerce sell channel is an essential channel for a firm without which its business is considered incomplete. E business technologies also help companies aggregate valuable customer information, which can be used to enhance relationships with customers and serve them better. The company can enhance customer loyalty and benefit in the long run.

Components of an e nabled sell site

A well designed website helps customers and business partners find the information they want as quickly and easily as possible. When designing a website for selling goods and services, a seller should ensure that the site contains following the components: catalog, merchandising, configurator, shopping cart, tax calculation, shipping/logistics, and payment system.

Catatogs: Catalogs are documents that contain information about goods and services offered for sale or auction. E catalogs can provide more information about products than traditional (paper) catalogs. Paper catalogs generally provide a brief description of products, their prices and item numbers (to facilitate placing an order). E catalogs provide links to additional information such as the photographs of products along with their technical and commercial specifications and video demonstrations. Some ecatalog software providers offer additional features like cross and up selling capabilities, real time inventory status, special pricing structures (that provide incentives for customers buying in bulk and bringing referrals) and other custornization features (Refer Exhibit 2.2). However, sellers have to be very careful in selecting the software package because a wrong selection can cause inconvenience to buyers and result in the loss of sales. Thus, a seller should choose the package that is functionally compatible with his company's business goals.

Merchandising: This is the process of promoting sales by advertising, displaying and making special offers like discounts for frequent buyers. In e commerce, sellers can send electronic discount coupons via e mail to their customers and encourage them to make repeat purchases. The online book store, bn.com (Barnes & Noble) made extensive marketing efforts to promote its site and sell its products as it had to face competition from a well established player amazon.corn (Refer Exhibit 2.3).

Configurator: A simple product without any complicated features can be demonstrated easily using a simple e catalog. Books fall in this category. However, for complex products such as high end servers, telecommunications equipment, automobiles and mutual fund investments, a catalog cannot supply all the information that a customer wants to obtain about the product before purchasing it. They contain many interconnected elements, which are assembled according to the customer's choice and are priced accordingly.

A configurator is a special purpose software that enables users to define a product that meets their needs, access information about products, compare prices and purchase them, without the assistance of experienced personnel. Configurators. enable buyers to compute the price of an assembled product (with and without various features), compare costs of products (with a particular feature) and their utility, differentiate between leasing and buying, and buying and repairing, and thus help buyers take appropriate buying decisions.

Shopping can: In the physical world, customers move around the shop, choose items of their choice, collect them in a shopping cart, get the bill and purchase goods by making the required payment. A similar facility is offered by an e shopping cart. A buyer can select items of his choice one after another, add them to the cart, reduce the quantity of an item or remove some items from the cart. Some shopping carts allow the buyer to select the items he wants in one session and purchase them in another session (a few days or weeks after the,, previous session). The carts have software to retain the selections made by a particular user in the previous session. Such shopping carts are called persistent shopping carts.

Tax Calculation: Sellers have to pay sales tax at various levels like local, state, etc. They transfer a part of the tax to buyers. Tax calculation software enables ecommerce merchants to calculate quickly and accurately the amount of tax they are required to pay and the amount they are required to collect from buyers. Several software vendors offer software with international tax calculation, audit and reporting capabilities. Sellers should select a package that can be easily embedded in their companies' existing commerce servers and integrated with back office system.

ShippinglLogistics: Shipping charges are generally determined on the basis of the number of products purchased, their weight and price. International sellers should have access to real time global shipping charges to collect the appropriate charges from global buyers. They should also be able to provide the status of order on the customer's demand. In e commerce, sellers assign a tracking number to the shipment once a customer places an order. Because of the wider connectivity that the web offers and its ability to integrate discrete systems, e nabled sellers can access shipping charges in real time and estimate precisely the time taken to deliver the product to the specified destination. Buyers can keep track of the status of the order processing and sellers can provide the real time status of the shipment to customers. FedEx, for example, enables its customers to track the real time status of their shipment (Refer Exhibit 2.4).

Payment system: In e commerce systems, credit card payments are common. Sellers need to adopt high security standards to prevent the misuse of customer information. They have to implement Secure Sockets Layer (SSL) or Secure Electronic Transaction (SET) security standards and acquire fraud detection software. To avoid these complexities, some sellers choose to outsource the payment function. The seller should ensure that the payment system is absolutely secure because it is one of the biggest barriers in making e commerce a big success especially in the 132C segment.

Commerce platforms

Commerce platforms provide the framework for building and maintaining an ecommerce site. They are suitable for the e commerce sites which require custornizations and flexibility. These platforms also help in customizing the design of the site to suit the requirements of buyers and sellers. They offer application program interfaces (APIs) and facilitate interactive sessions with users. They help in integrating various functions like receiving orders, payment, security, etc. that are required by e commerce applications in managing web sites.

Sell side packaged E commerce applications

Software vendors provide packages containing pre integrated solutions to companies which lack the resources or expertise to develop their own solutions. These packages can be divided into entry level and high level packages. Entry level packages carry out primary functions like cataloging and merchandising. These packages are not generally very costly and can be implemented rapidly. However, the scalability and customization capabilities of these packages are limited. High level packages help companies carry out advanced functions like transaction management, integration with the company's ERP system and development of the company's EDI (Electronic Data Interchange) capabilities. High end packages offer a high degree of personalization and scalability. IBM, Microsoft, Netscape, and ConnectInc.com are some of the major providers of high end e commerce software packages.

E-selling process

Customers interacting with e sellers to buy goods and services usually have to perform three activities e browsing, e buying and e customer service,

E-Browsing

This process is similar to window shopping. Many web sites publish e catalogs describing the products and services available at the site. Customers browse through these catalogs before making a final purchase decision. E catalogs are published for the convenience of customers (both business and individual). It is an additional cost for the seller because e catalogs do not replace traditional paper catalogues but only supplement them.

It is not enough for companies to post e catalogs on their own sites. They have to post them on some popular portals as well. Portals serve as intermediaries to most of the ecommerce activities for consumers as well as businesses. They are similar to weekly or monthly markets held in the center of towns and villages where the sellers of different products gather for the convenience of buyers and are equally effective. Hence, e sellers should not ignore portals.

E-Buying

In e buying (as well as e selling), the following steps are carried out in the given sequence: Provide e-catalog: Customers go through the e catalog to find desired products.

Configure solution: If required, customers can customize the product to suit his requirements.

Determine price: Depending on the type of product chosen by a customer and the level of custornization, the setter determines the price of the product.

Accept order: As soon as the customer places the order, the seller accepts the order and acknowledges the same to the customer.

Check Inventory: Customer can access the real time status of product inventory. If the product is not available, the components are assembled according to the specifications given by the customer.

Process order: Once the product with the desired specifications is ready, the seller packs it for shipment and assigns a code to it. The code is also provided to the customer.

Order tracking: The customer can access information about the real time status of the shipment by using the shipment code.

Payment: The customer is given the product invoice along with the shipment and on receiving the payment from him, the seller immediately mails the bill back to the customer and updates the status of his account.

Enhancing the customer service channel

E customer service is a primary activity in e commerce. E commerce players should automate as many help desk functions as possible. Their websites should be designed in such a way that the customers can solve their problems using the simple help menus provided for the purpose. They should not feel the need to talk to customer service representatives unless they face a complex problem that requires assistance from an expert. An e commerce player may have to employ data mining and data warehousing technologies to implement e customer service effectively. Data warehousing is a process of organizing data extracted from various databases of a company to set up a systematic and easily accessible repository of known facts and related data for the convenience of employees and management. Data mining is a process of searching through a company's historical data to identify the existing patterns and relationships and predict future trends and opportunities based on that. Data warehousing simplifies the process of data mining by indexing and aggregating operational data (Refer Figure 2.1). Though data warehousing and data mining are usually used as sales tools, they can also be effectively used for managing post sales customer relationships.

E enabled customer service

An efficient website helps customers (an individual, a family, a small company or a corporate) customize products and services. A seller's site should provide continuous online support and service to the customers. If the setter site helps customers solve their problems themselves, it can attract more customers to the site. When the number of transactions made through e nabled sell channel increases, the per unit cost of order processing and support services decreases. Using the Internet technology, the sellers can provide customers access to real time information which was earlier available to employees alone. Web technology allows customers to interact with the company throughout the sales cycle and access a wide range of information about the company and its products and services. A website can have different sections/web pages to serve the different needs of customers. The contents page should provide customers with information regarding the products and services of the company; the FAQ page should list various queries made by customers in the past and the corresponding responses of the company's representative; the knowledge base page should help customers access corporate databases and systems; the interactive page should allow customers to discuss problems (online) with each other and the company's representatives; the troubleshoot page should enable customers to call company's service engineers to solve their problems.

Interactivity and Personalized service

An effective e commerce website should be highly interactive and flexible, and provide high degree of personalization. In the cases of print and electronic media (radio and television), all the customers receive the same message. However, in ecommerce, web technology can be used to customize messages as well as information As soon as a user logs in, the website can address him/her by name. If the user logs in as the employee of a company, a B2B catalogue is displayed. If a particular product configuration and Volume discounts have been discussed on a previous occasion, the user will see that the particular product and its price after discount. If an individual user enters the site, he will see different products and their prices (without discount).

The customer should be able to navigate through the site easily, choose the options of his choice and obtain information on them. Further, customers should be able to place the order, edit (add or delete items) it, if required, send the order, receive confirmation and track the status of the order from time to time.

Some websites keep track of the users as they visit the site and observe their browsing behavior to identify their tastes and preferences. They use the data to create targeted messages for these users. The data regarding user behavior is stored in a data warehouse. Using data mining technology and pattern (of user behavior) recognition software, rules are devised to determine which message is to be offered to which user, what information should be supplied to counter his resistance, and when to attempt to close a sale.

Collaborative filtering is another technology used in personalization. Using this technology, websites can observe the decision making pattern of regular customers and make a record of it. If a new user exhibits similar browsing behavior as does one of their regular customers, the site uses the information to recommend products and services matching his tastes and preferences. Amazon is one of the websites that uses this technology.

In rule based personalization systems, a user's profile data is compared to a set of predefined rules and assumptions and the content to be delivered to the user is determined. In case based personalization system, the problem posed by the user is run as a query against the central database (containing queries made and solutions offered in the past) and a suitable solution is mailed back to the user. This system is generally used to automate query handling transactions.

Call centers

Call centers form an important point of contact for any company whether a brickand mortar company or a new economy company. Agents at the call center of a company provide in depth information about the company's products and services. They recommend products that suit customers' tastes and preferences. If customers report problems, call center representatives attempt to resolve them or refer them to a higher level in case they cannot solve it. They keep track of the progress made on customers' requests, and inform them about it on request. Using Internet Protocol (IP) telephony technology in call centers, a company can enable its customers to talk to company employees/agents from its website. A customer, who needs technical support from the company, can click on the call button displayed on a web page, to get connected with a suitable expert.

If a company uses high end Customer Relationship Management (CRM) software, after providing the necessary assistance in solving the customer's problem, it can utilize the call made by the customer to upsell products. The customer provides his customer ID number after clicking the call button. Using this number, the call center agent accesses the customer's purchasing history. Based on this information, the agent suggests products that could be of interest to the customer and tries to up sell products. Many players like AT&T, Sprint, Ericcson and MCI offer CRM IP telephony packages.

If a customer's system is protected by a firewall, and he cannot use IP telephony, he can access the company's site using one telephone line and give the call agent the number of a second telephone line. The call agent calls back on the second line and talks to customer.

If the customer has a slow connection that does not allow IP telephony, customer service representatives of the company can use web based text chat to interact with customers and give real time responses. Some websites offer live guidance to customers in navigating their site. An agent escorts the user as he moves from one web page to another and answers all his queries.

Field service

When call center agents cannot resolve a customer's problem posed by him, they forward it to service engineers who attend the customer personally and solve the problem. Using Internet technology, service engineers can access all the necessary details about the customer and the product. The service representative can obtain details like the design of the product, the number of times the product was repaired and the types of problems for which it was repaired. This information gives him a better idea as to how to handle the problem. As he solves problems, he can update the status of the problem from the field. E nabled field service can save the time and money spent on telephone support and field service to a considerable extent,

Internet Enhanced dealer service

Customers may not be willing to order a motor bike or a car on the Internet without having a look at them and taking a test. ride. However, dealers can use Internet technology to check the status of new requisitions, order cancellations, customer accounts (installment payments), and inventory of products and accessories. Manufacturing companies can enhance their relationships with dealers using this technology. They can process reimbursements for repair work undertaken by dealers during the warranty period efficiently, and assist them further in improving customer service.

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