Platform: Getting Serious About E-Commerce

When it comes to e-commerce start-ups, there have been far more failures than the industry would wish - in fact, it sounds as though there are more failures than successes, which begins to explain why the whole sector has been receiving such negative coverage in the press.

The recent bad publicity over dotcom start-ups has mainly related to the amount of money being lost, combined with the novelty factor that makes almost any story about e-commerce newsworthy as far as the media is concerned.

But that same "newness" means that many of the issues associated with e-commerce have yet to be explored in depth.

When dotcom start-ups were the "in thing" to invest in, anybody who was a real wannabe player, lured by potential of high returns and often with bad advice, was prepared to throw money at almost anything with a dotcom tag that moved or had a sexy sounding idea. Now they have been burned, lots of people are bagging the whole new industry of electronic business.

Get real!

The world of investment advisers has much to answer for, as do the media and our own industry of technology and software development.

Doing business using electronic means and developing new ways to exchange data between businesses, and between businesses and consumers, is neither earth shattering nor a black art.

Sure, there are lots of start-up companies which are failing as you read this, but let's ask the question: What was their business model like in the first place?

Many of the newer technology companies are quietly getting on with their work, with well thought out strategies and business plans.

You cannot change the habits of society overnight and turn them all into online consumers. Change as significant as this often requires a slow approach, and both companies and investors have to recognise this.

Of course, many have!

What many seem to have lost sight of in the last 12 months is that a smart idea is not enough for a successful business. Experienced and savvy management, good software design and development expertise are just some of the essentials you need, but be warned that only some of the people claiming to have the necessary experience actually do.

There are not that many experienced people in the marketplace as yet.

Some of the people who found the opportunity to make a quick dollar in the Y2K space have suddenly reinvented themselves as e-commerce experts.

Doing business electronically involves rethinking existing business processes, which can mean doing the same business in a different manner, or adding an extra dimension to the business.

However, the traditional imperatives of having a strategy, business plan, appropriate resources and skills haven't gone away - they are now more essential than ever.

Those electronic businesses which have succeeded all either had these key elements and skills in place or brought them in to complete the equation.

Many of the well-publicised failures raised money and created a business application, but then squandered their resources in expensive advertising, expecting to change people's buying habits overnight. Of course, it didn't happen.

One of the key aspects fuelling the success of some online companies has been their ability to think through the design issues relating to their e-business application.

Not only is it important that an e-commerce application be fully integrated with back-end processing systems, but the user interface must be intuitive and carefully aimed at the level of expertise of the consumer being targeted. Using the latest and smartest technology is not always best.

There are many issues that companies must come to grips with if they want to succeed in the online environment, but the business essentials remain the same.

IT start-ups must have or obtain the necessary management and design skills to complement their smart ideas and new technology, to enable them to develop an appropriate business solution.

Before throwing their money behind what might seem to be a golden opportunity, financial advisers and investors should be asking for proof of these skills or strategies for bringing these skills into the new business.

They should be looking for well-thought-out strategies that clearly identify potential risks and explain how those risks will be managed, as well as practical marketing plans which apply proven principles rather than relying on enormous advertising budgets.

If nothing else, the stock market corrections we saw in April have taught us one major lesson.

Regardless of whether you're talking old or new business, it's still business.

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