Managing Change - Managing Integration And New Customer Relationships

MANAGING INTEGRATION AND NEW CUSTOMER RELATIONSHIPS

An effectively integrated e-business plan has the potential to increase profits, secure a competitive position in a market, and help establish strong relationships with customers. Integrating the e-business plan into existing operations, however, can be a major task. Along with traditional business operations, management is faced with setting financial budgets and allocating resources for e-business initiatives. The enterprise must also manage the increased business generated by entering the world of e-commerce and make sure staffing and systems levels are adequate to ensure quality customer service. Communication across departments is also crucial and management needs to be able to measure success and return on investment (ROI) in its e-business initiatives.

Providing high levels of customer service is also key to successfully integrating an e-business strategy. As the number of shoppers on the Web continues to increase, enterprises need to offer services on their Web sites that parallel a brick-and-mortar experience. Many stores that now have purchasing capabilities on their sites allow shoppers to buy an item online and return in a physical store, if they so choose. Many offer price comparisons. Dell Computer, for example, allows a consumer to build a computer online and track the machine's assembly and shipping status. Amazon.com, recognized as a leader in Web customer service, utilizes software that analyzes customer purchases to make suggestions on music and books in which a consumer might be interested. As Web consumers continue to demand high levels of customer service, enterprises that begin to offer products and services online must have adequate staffing levels in place to manage customer relations and to ensure that these products and services are issued in a timely manner.

Three companies that have successfully managed e-commerce business initiatives are Victoria's Secret, Eddie Bauer, and Cheap Tickets. Victoria's Secret, its online venture operating as a separate business entity, has integrated its catalog, Web site, and retail outlets effectively and has recorded profits from its initiatives. In 1999, the firm used the Internet to promote its fashion show, which was broadcast to over 10 million Web surfers by way of streaming video. By using cutting-edge marketing as well as integrating product data, inventory, and demographics of online shoppers, Victoria's Secret has increased customer transactions on its Web site. Eddie Bauer launched its Web site in 1996, and has also succeeded in recording a profit for its online ventures by integrating customer and inventory information. As a March 2001 E-Commerce Times article stated, "in order for e-tailers to thrive in the new e-commerce environment, companies must integrate their customer and inventory information across all channels and view every customer interaction as an opportunity to learn." Eddie Bauer has been successful with this integration by utilizing software that captures crucial customer information such as size and preference. The software then searches the inventory to come up with purchase suggestions tailored to customer as they shop online. Cheap Tickets, a travel ticket firm, has also managed its e-commerce ventures well. According to the company, its Internet bookings, which grew by 78 percent in 2000, accounted for more gross booking than any of its other distribution methods. Its Internet business was expected to continue to grow faster than any of its other divisions.

While many companies successfully integrate their e-business initiatives, there are enterprises that do falter. Toys 'R' Us Inc., for example, suffered many problems during the 1999 holiday season and was unable to deliver its products in time for Christmas. Many of the toy retailer's online customers were left scrambling to find substitute gifts at the last minute. At the time, the firm was utilizing its traditional distribution channel for its online sales and found itself ill-prepared to handle an unexpected spike online ordering. A class action law suit eventually brought against the firm alleged that Toys 'R' Us deceived its customers by stating it could deliver products on time when it knew this task was impossible. Toysrus.com also came under fire when claims surfaced that it was selling customers' private information to marketing firms.

The company did, however, facilitate a turnaround for the 2000 holiday season. It revamped its distribution methods and partnered with Amazon.com. Under the terms of the ten-year deal, Toys 'R' Us was able to utilize Amazon's experience in e-business by operating its Web site under the Amazon.com platform. Sales increased dramatically. In fact, the company secured holiday revenues of $124 million, a 218 percent increase over the previous year.

Most enterprises realize the importance of not only having a presence on the Web, but also of having an effective business plan that supports its e-business initiatives. Operating a company Web site that enables consumers to find information on products and services, as well as purchase those items, can be beneficial on many levels. A sound e-business strategy has the potential to increase sales, reach markets that traditional brick-and-mortar platforms are unable to access, and reduce operating costs. E-business can also provide an increased level of customer service and a faster exchange of information between the consumer and the enterprise. According to the Gartner Group, "enterprises that have implemented e-commerce as part of a business strategy have been more successful in reducing business cycle times, improving cash flow, reducing inventories, decreasing administrative costs, and opening new markets and distribution channels." While managing the change that goes along with ever-changing e-business initiatives can be difficult, successful management of these initiatives has the potential to pay off in the long run.