Ask the Expert: Shopping Around

Gordon Jones, former senior vice president and CIO of Santa Clara, Calif.-based Beyond.com Corp. (now CIO and CTO for Toysrus.com), answered readers' questions on CIO.com about his area of expertise, online retailing.

Q: I am currently working for a dotcom, and I have experience in merchandising and inventory controls. How can my company manage customer satisfaction (efficient customer response) without inventory?

A: I suggest you take proactive and reactive approaches. Proactive--try to be better than your competition in terms of uptime and response time. Ensure that your site has a high "stickiness" and measure users' activity (what percentage use the search feature, for example). Before launching a new design, get user feedback and make modifications accordingly.

Reactive--conduct surveys to measure your customers' happiness, identify ways that customer service can be improved, know the FAQs and post them on the site. Drive projects to continually improve the customer experience--over time this will be the key differentiator.

Q: What are the positive and negative implications of the Internet revolution on our society, and what technology future do you foresee?

A: Positive: The Internet is becoming a ubiquitous cornucopia of knowledge and a global trading vehicle. Companies are reducing costs by providing information through a publish-and-subscribe model and reducing the amount of paperwork, as well as enabling Web transactions. The Internet is also encouraging people to communicate more remotely with friends and family around the world (IT helps me communicate with a former boss and friend who is unable to speak because of Lou Gehrig's disease).

Negative: It behooves all of us to ensure that we minimize the number of people who are digitally disadvantaged. We should encourage the proliferation of public Internet kiosks, in the same way telephone call boxes were set up in communities that could not afford individual phones. There is also a fine balance between controlling the Internet and privacy, security and protecting children from inappropriate material.

As far as affecting the future, I believe we are only at the tip of the iceberg. More demands will be placed on companies to make their information available in real-time over the Web. Most of the barriers to more widespread use of the Internet will not be because of technology or expense but will be caused by political debates concerning security, privacy, international, cultural and taxation issues.

Q: What do you envision as the future of e-tailing?

A: Branded brick-and-mortar companies will move online and will be even more successful because they do not have to spend a lot of money to build a brand, like most of today's large dotcom e-tailers have had to. These branded manufacturers will likely outsource their e-commerce functions.

Q: What should brick-and-mortars do to prepare for e-tailing?

A: Many manufacturers are realizing that e-tailing is not their area of expertise or their core competency, so they are evaluating outsourced solutions. Companies have to weigh the costs of spending their IT time and resources on building and maintaining a site against outsourcing it at a minimal cost. One should leverage an outsourcer's experience rather than reinventing the wheel. In addition, when making that outsourcing decision, be sure to look for someone who will be your partner through the entire process and provide ongoing support.

Q: How do you go about evaluating an e-tailing website?

A: A great Web store has two components--a great front-end user experience and a fully integrated back end that provides for a seamless buying experience. The front end includes site design, navigation, marketing and merchandising, international language and currency capabilities. The back end involves transaction processing, fulfillment, distribution, customer support, reporting, security and fraud screening.

Q: What is the hardest part of starting an online retail operation?

A: Making sure the back end--the processing after the order is taken--is well integrated and functions smoothly so that the customer has a positive buying experience. This involves everything after the Buy button, including credit card processing, fraud screening, tax calculations, fulfillment, physical or digital distribution, customer service and reporting.

Q: For a traditional brick-and-mortar company that uses a direct-sales approach (marketing to customers directly in their homes), what would you suggest for addressing the channel conflicts that selling via the Web presents?

A: We have been building Web stores for traditional brick-and-mortar companies through eStores by Beyond.com. Although we're not directly involved in the channel decisions, it is important for each company in the channel to ensure that they are adding value to the process. The Web may become the only order-processing vehicle for many companies, whereby discounts are established up front based on volumes, purchases or special services provided.

Q: How do you get customers to your site, and then how do you keep them coming back to you and not someone else?

A: More established brands are leveraging their name recognition--visitors go to their site because they are already familiar with the company and the products. We have learned that these companies can do much more targeted ad campaigns to draw people to their sites.

To improve customer repeat rates, it is imperative that users have a positive customer experience. This involves the complete trading cycle--a fast response time on all searches and a fully integrated system that can extrapolate information. A robust, fully integrated back end is critical. The site needs to maintain a high uptime and be fully functional when customers visit, the order must be processed and delivered correctly, the credit card information must be captured securely, and customer service should be readily available to clients.

If you would like to recommend an expert for this column or suggest a topic, e-mail Senior Writer Daintry Duffy at dduffy @cio.com.

ASK THE EXPERT Have a question about ERP? Barry Wilderman, vice president of application delivery strategies for Stamford, Conn.-based Meta Group, will be available to offer insight and advice on how to get the most from your ERP system and how to avoid the many pitfalls of an ERP implementation. Post your questions for him through Sept. 15 at www2.cio.com/CIO/expert or e-mail questions to asktheexpert@cio.com.

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