The Internet and its effect on your business

May 9, 2000
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Referring to Wal-Mart’s upcoming remake of its Web site, one analyst said it will give retailing a “jolt.” Another said it will “change Internet retailing.” The effects will probably resound beyond traditional consumer retailing.

“The power to navigate the world at the click of a mouse is a force that is transforming our lives like none before,” wrote the editors of Business Week (Oct. 4, 1999). A few paragraphs later, they added that “Anyone with a computer is a citizen of the world and a richer world at that.”

The extent of the Internet’s impact on life and business can be measured by Merrill Lynch’s willingness to place at risk its sales force of 14,800 stockbrokers as the company heads straight into e-commerce. When all Merrill Lynch’s explanations and assurances of protecting its brokers are stripped away, it’s clear the company sees that its future is on the Net.

The same goes for big-ticket items. Auto manufacturers are right there. The move to cut costs by cutting out dealers is clear. That’s the goal. And it’s driven by the possibilities created by the Internet.

Beyond the obvious impact of the Internet on business, such as displacing stockbrokers or bookstore clerks, it is disrupting American business. One can surmise that full employment without inflation is only possible in an Internet world, where prices are actually dropping for many products and services.

Effect of e-commerce

No business will escape the disruptions cause by an e-economy. Here are 11 ways the Internet is playing havoc with every business:

1. Lowering prices: Whether it’s for computers or airline tickets, the ability for customers to use the Net to shop is unequalled.

Inflationary pressures are weak even with full employment and high consumer demand, thus challenging a near-sacred economic dictum. Is the Internet playing a role in keeping prices down?

2. Reducing costs: Whether it’s the ability to handle more business with fewer people or being able to do it faster, the costs associated with doing business are coming down.

Even the use of basic e-mail eliminates the need to send materials by mail or using a delivery service.

3. Extending reach: Perhaps as much as any single Internet site, ebay.com has changed the way consumers and businesspersons look at the issue of location.

A successful antique dealer closed his doors and transferred his business to ebay.com. No longer is he limited by the price and taste peculiarities of a particular locale.

4. Giving customers control: Perhaps the most stressful change for many businesses is the fact that customers no longer look to them for product-type information. Today, because of the ability to do extensive research quickly via the Net, customers are informed before they access a dealer.

Automobile sales are a good example. Customers now arrive in the showroom having made their buying decisions in advance, and knowing what they are willing to pay for the vehicle of choice.

No longer the “persuaders,” salespeople are now facilitators. The most successful are those who identify what customers want to accomplish and then help them achieve it.

5. Eliminating middlemen: Why shouldn’t you get your next home improvement loan via the Internet if you can save money and do it quickly? Although a primary goal is to lower costs, an equally important objective is getting closer to the customer.

Being “nearby” doesn’t mean that you’re close to a customer. A business owner reported that he has two mortgages and a car loan at a bank and the bank has never once approached him for more business. More precisely, the bank hasn’t taken the time to recognize opportunities to build a closer relationship with him.

6. Broadening choices: Someone looking for a furnace would never expect to find all available models in one store, let alone evaluation reports on each model. And if it were possible to have them all on display in one place, the selection process would be long, arduous, and probably less than satisfying.

But because of the Internet, we’ve come to expect a broad range of choices. In fact, we demand it and we feel short-changed to shop where we have a narrow range of choices.

7. Demystifying sales: It may not be popular to discuss it, but selling has been based on guiding, directing, and influencing the customer to make a particular decision.

Nowadays, having visited a variety of websites, customers are loaded with information. The mystery is drained from the sales process.

Watch for a backlash. Instead of wanting to deal with “a live human being,” the trend will be to choose technology-rich venues where a person does not intrude in the process.

8. Making information essential: Perhaps one of the most far-reaching changes is that the customer expects to receive worthwhile information, not glitzy ad copy.

Web site visitors are not there to be sold; they are there to be better-informed so they can make the best possible buying decisions.

9. Redefining service: The concept of service has changed. Just saying “We’re here to serve you” doesn’t connect with customers.

If we buy something on the Internet, we expect instant confirmation of the transaction. Anything less is viewed as second-rate or unacceptable. Next-day delivery has become the standard.

10. Altering communication: Several years ago, faxing was faster than e-mail. There were times when it took hours for someone to receive an e-mail. Now the Internet is so fast we can conduct actual “e-mail conversations.”

Communication has been elevated to instant send and receive, a seamless updating that does not provide for “pauses” for action to take place. This may well be the source of the stress that plagues so many workers, and it may also be driving the desire for new ways to be wired in a wireless world.

11. Upending the buying process: Customers are performing their due diligence before they let it be known they are in the market to make a purchase. It might even be called guerilla buying, since the customer doesn’t surface until the moment they are ready to make the purchase.

The goal is to connect with the customer in a manner that fits. In effect, marketing is the most critical element in the process. Its job is to send signals, keywords or images that serve as hooks to attract customers so they can be brought into a company’s orbit willingly.

The primary job is no longer to be “out there” trying to make sales because today’s prospects remain mostly invisible, surfacing only when they are ready to reveal themselves.

Sidebar: Memphis hospital undertakes hvac systems upgrade

MEMPHIS, TN — Methodist Healthcare-Central Hospital here is taking advantage of a new program to enhance its patient care quality by replacing an outdated chilled-water plant and air-handling equipment.

The program, developed by Johnson Controls, Inc. (Milwaukee, WI) and Methodist Healthcare, helps overcome capital constraints that had hindered certain improvements to the 917-bed facility in downtown Memphis.

The project will replace old equipment with current cooling and air-handling technology. In addition to improved building systems reliability, the upgrade will make it easier for the hospital to consistently meet the latest indoor air quality standards.

The hospital also installed new, energy-efficient chiller equipment.

“We look forward to seeing this project become a reality. It will help reduce our operating costs and enhance indoor comfort for our patients and staff,” said Roger Dacus, director of engineering at Methodist Central.

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