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Globalization: Does it make sense to be on the Web?

By Michael Drapkin

Since the dot-com start-up orgy turned into a starvation diet of lost balance sheets and revenue, many people have been watching to see how other firms were going to pick up the slack. Corporations that watched the dot-com boom from the sidelines have been gobbling up the leftovers, and the used Web hosting equipment market is booming.

The real players emerging from this morass come as no surprise to anyone over 30 years old. Anticlimactically, many of today's movers and shakers have turned out to be members of the Fortune 500 who have expertise in very uncool (and low calorie) things such as customer relationship management, shop floor management and supply chain management. The active term here seems to be "management."

Yet most agree that the Web is not going away any time soon, and substantial opportunities exist for those with the skills and wherewithal to capitalize on what the Web does best: Reach a global audience. Managers need to consider whether the Web will generate more revenue globally, or merely create a huge cost center. Here are a number of points to consider when looking at e-commerce as an avenue to globalization.

  1. Geographical reach. The Web gives businesses unprecedented access to audiences and markets in a way that was previously difficult or expensive. Firms such as eBay would not exist if its community of users didn't have access to a Web browser. The question to consider is whether your offering can take advantage of that access. If your company decides to manufacture a product that is well suited for an overseas market, using the Web becomes a very cost-effective way to reach those customers. The alternative would be to start advertising and opening sales offices, which can be infinitely more expensive. On the other hand, if you run a string of gas stations in a local metropolitan area, customers are highly unlikely to drive in from surrounding states to get your product, website or not. Make sure you are a good candidate for geographical reach.

  2. Personalization and localization. The concepts behind personalization and localization are simple, but implementation is very difficult and resource-intensive. Most people think of personalization as what they see when they visit a site such as Amazon.com ("Welcome back, we have recommendations for you."). However, personalization and localization methods often involve far more subtlety. In order to sell in a foreign market, your website will need to wear multiple skins - multiple language versions, multi-currency capability and the ability to accept foreign-issue credit cards, for beginners. You may have contracts with your suppliers that only allow product sales in certain geographies. Software such as BroadVision helps personalize these factors to the local customer, but careful planning and management is still required. Be prepared to buy lots of servers to handle the many permutations of Web pages you will need. Offshore hosting may also be required to allow reasonable response time for foreign clients.

  3. Fulfillment. Once you receive that product order from overseas, the order will need to be fulfilled. You cannot simply deliver from home, as shipping and handling charges will boost the price to non-competitive levels and slow delivery. This problem may be overcome by setting up fulfillment centers in the foreign countries or continents where your product is selling. This can be expensive, and the alternative, using third-party fulfillment houses, has its own inherent problems, risks and costs.

Clear sailing in the e-globalization process is by no means guaranteed. Look at your core competencies and how your product line will be sold, fulfilled, shipped and supported. Otherwise, without proper planning, going worldwide may inadvertently become the cause of your firm's undoing.

Michael Drapkin is founder and CEO of business and technology consulting firm Drapkin Technology. He is chairing the session "E-Globalizing Your Business for the Second of Third Time", part of the comdex.biz Conference, on Tuesday, November 13, 1:15 p.m. at COMDEX Fall 2001.



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