What is eCommerce?


Turn to any paper or trade magazine and you are almost guaranteed to find an article on eCommerce. Politicians see eCommerce as the way forward and essential in making the UK business community compete successfully around the world. The benefits are put forward as being so obvious for both large and small companies that everyone should move into this new way of doing business. Small and medium sized enterprises (SMEs) will be able to compete with their much larger competitors on a world stage. However, in reality, the situation is somewhat different and possibly over-hype and over-sell of eCommerce has been detrimental in the overall adoption of modern trading practices by Welsh SMEs.

A typical definition used for eCommerce is as follows - "eCommerce - The buying and selling of products and services by businesses and consumers over the Internet."

The Opportunity Wales project takes a much more pragmatic view, arguing that eCommerce is much more than selling from a Web site. eCommerce covers any form of business, or administrative transaction, or information exchange, between the company and the outside world, that is executed using any information and communication technology (ICT). The use of eCommerce within SMEs will vary and any implementation should be driven by business needs rather than by technology.

• For one company, an on-line link to its bank in order to check the latest financial position, may be the ideal use of such developments and the extent to which it wants to venture into eCommerce.
• eMail is a very powerful business tool, often underestimated and undervalued. The rapid growth of low cost Internet access and related services has certainly been the major driver of this new business revolution, offering many SMEs the opportunity to venture into eCommerce at a price they can afford and at a level they can relate to.
• Another company might make effective use of a Web site to provide increased levels of customer service, or might simply use the Internet as a valuable information source.
• There are plenty of cases where Welsh SMEs have increased sales by attracting new customers through the use of a Web site. Products don't always have to be sold on-line although, in certain cases, this might be the most effective way of providing the service.

"I used to respond to fax enquiries in clusters when things were quiet or not at all. Now I respond to eMails immediately." - Graham Waters, MD, Pentwyn Splicers - small manufacturing company.

eCommerce can open up radically new ways of working, but most Welsh SMEs should start by using eCommerce to improve the effectiveness of what they currently do, such as providing an improved approach to marketing, communications and customer service, improvements which they could never afford if using conventional methods. This is the eCommerce vision which they should work towards, rather than the get-rich-quick, sell-from-a-Web site approach - the vision which so much of the UK press would have us believe is the way forward.

eCommerce shouldn't be seen as a development which always reduces staff numbers. There are several examples of Welsh SMEs that have increased the number of staff they employ, attributing this expansion to the increased business that eCommerce has brought them.

"What we do know is that we have never been busier and although it is difficult to attribute this all to eCommerce, we are certain that this is the most significant factor. Before the project we employed 30 out-workers and due to our constantly full order book we now employ 52." - Len Taylor, MD, Trophy Miniatures Wales - model soldier manufacturer.

eCommerce is not applicable to all SMEs although that might change as more organisations in the public sector make use of these developments. Opportunity Wales feels strongly that the majority of Welsh SMEs need support with eCommerce, especially as they move from awareness into implementation, or from 1st to 2nd generation solutions. They need the type of support which gives them confidence that they are moving in the right direction.

Many seek reassurance that they are taking an eCommerce route which matches their business need and budget, rather than following the hype of Web selling, or the creation of a dot.com company. As the companies mentioned earlier demonstrate, profitable national and international sales can be made and supported with the help of eCommerce, without high investment in technology.

Much of the initial hype relating to eCommerce was in the area of business-to-consumer, particularly in the selling of products such as CDs, videos, computer-related products and travel services. There is now a realisation that in the scheme of things this is a limited area, and whilst there will still be tremendous growth, the future will be in the application of eCommerce in a business-to-business environment.

Most companies that succeed with eCommerce will be founded on a firm business footing. New innovative services will be offered by some SMEs but most will use eCommerce to improve the effectiveness of what they do now. Certainly new dot.com companies will feature but these are typically driven by entrepreneurs who will succeed in their own right, with or without eCommerce. The dot.com scenario is not a vision which many SMEs could or should strive to emulate.

Several terms are used to describe developments in the world of electronic trading and their use often causes confusion within the SME community:

• eCommerce - one of the first terms to be used as a generic title for all electronic trading activities. For some it is synonymous with selling from a Web site, but the broader definition is more applicable to most SMEs.
• eBusiness - widely applied to business-to-business interactions using the Internet and other solutions, but also used by companies such as IBM as a generic title for all electronic trading activities.
• mBusiness - an emerging term which applies to the use of mobile communications and their interaction with the Internet. Not a term that most SMEs will need to consider at the present time.

There is considerable hype about eCommerce that would lead many SMEs to believe they are lagging behind if they are not part of the new trading revolution. Much of the hype relates to success stories on Internet selling but other types of eCommerce relationships exist which can bring their own benefits:

• Business-to-Consumer (B2C). Where much of the initial success was generated as companies sold selected consumer products to an Internet-literate audience, willing to buy on-line. SMEs can also succeed in this area without an on-line selling capacity, simply by improving the marketing of their products to potential customers.
• Business-to- Business (B2B). Interaction between businesses either in an established supply chain, or with new trading partners. An area which didn't get as much publicity as the business-to-consumer activities, but one now gaining more recognition and which is more important to small businesses in the manufacturing sector.
• Business-to-Government (B2G). A third category of eCommerce, still in the early stages of development, in which the business community interacts electronically with public sector organisations. Submission of planning applications, VAT returns, income tax, or patent registration, all come within this category and B2A applications (also known as eGovernment) have the potential to bring even more companies into the world of electronic trading.

Typical Applications

eCommerce applications vary between SMEs and there is no one single solution which meets everyone's needs. eCommerce can be used to support and improve various areas of an SME's business activity, as well as provide new business opportunities not possible before eCommerce. In most companies it should be the business needs that drive any investment and not the technology. eCommerce has provided SMEs with tools which previously were only available to larger companies and these solutions are at a price which most can afford. For as little as £10 a month a company can have access to very powerful business tools. They can be used for:

• improving communications;
• extending and improving marketing activities;
• providing a new selling mechanism;
• improving the quality of customer service;
• improving access to information and quality of information.

The Future

eCommerce will continue to  impact on the SME community, although it may not be in the form that is currently portrayed. eCommerce will not be a matter of achieving competitive advantage, but of increasing a requirement for competitive parity, simply to keep an existing customer base. The growth of business-to-administration eCommerce and pressure for SMEs to deal electronically with their small suppliers, will influence even the most intransigent SME.

There will be increasing technology development with improved speed of access to the Internet, new ways of presenting information and new means of accessing information. SMEs must not be driven by technology developments; their future priorities will be to acquire the resources and skills to deal with pragmatic uses of eCommerce.

"eCommerce is seen by many SMEs to be something which is just not applicable to them. It is too much of an unknown. I am convinced that long term, the World Wide Web will become an accepted marketing tool at an affordable price and will bring far greater benefits to SMEs than can be achieved via traditional marketing means." - Richard Bramley, owner, Farmyard Nurseries - specialist plant nursery.