Advice from the trenches of e-commerce

By T.K.MALOY, UPI Deputy Business Editor

CHICAGO, April 6 (UPI) -- What does the new e-commerce landscape look like -- and how does a company survive it profitably? That was the question being asked by many of the attendees at the 2001 Spring Comdex technology trade show in Chicago.

Michael Drapkin, chair of e-commerce management at Columbia University's Advanced IT Management Program, speaking at Comdex about his new book "Three Clicks Away: Advice from the Trenches of eCommerce," published in April by John Wiley & Sons, said that while there is much to be skeptical about regarding dot-com excesses, there are also some pioneering lessons that brick-and-mortar companies may find valuable to emulate.

Where the dot-coms went wrong, Drapkin said, was that many of the pure-play Internet companies "did not have a viable business model behind them," in terms of revenues, making a profit, and, ultimately, staying in business.

"You've got to figure out your financial end," Drapkin said. "They (dot-coms) thought they were going to become an industry unto themselves."

He added that those dot-com business that "grew organically -- off of their own profits -- now seem like geniuses," versus those whose growth was propelled by massive stock market overvaluation.

Drapkin, who also heads Drapkin Technologies, which consults on e-commerce issues for business, gave the following short overview of tips for those whose business is using e-commerce for sales or considering a jump into e-commerce:

-- Strategy First. E-commerce strategy is not the old corporate strategy that has long been the domain of market analysts and management consultants, Drapkin said. He added that there have been millions of dollars "literally thrown away by old-guard strategists who were arrogant enough to think that their analytic techniques would translate successfully to e-commerce."

In general, these techniques "don't translate," Drapkin said.

-- Performance Measures. Drapkin said that while it's easy to mock dot-com pioneers for ignoring traditional business channel markers like profitability -- those in business should not swing too far the other way and assume that traditional measures are adequate to plan and grow an online business.

-- Flat Organizational Structures. Drapkin said though there is now widespread skepticism about the nonhierarchical structures that the dot-com companies popularized -- "in spite of the foosball-type excesses, the core principles of close collaboration between different teams is an essential in tech-heavy, fast-changing businesses."

-- Channel Harmony. According to Drapkin, one of the fundamental principles of e-commerce is disintermediation: reducing to zero the number of intermediaries between a business and its customers. "However, disintermediation can be the beginning of an internal nightmare known as channel conflict," he said.

Drapkin gives the example of Gateway Computers where initially Gateway's phone-sales representatives were sabotaging Web orders.

According to Drapkin, Gateway partially solved the problem but never went the next step so that general sales reps were willing to cannibalize their own business and tell their customers, "Use the Web site. It's great."

His final piece of advice to those in selling through e-commerce -- "Be smart, learn from the experience of others."


Copyright 2001 by United Press International.

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