It All Rises In The Fall
In this weekend’s Sunday Times the headline in the Business Section was very reminiscent of last autumn’s. Just like the same old articles on bikini diets in March, how to mix the perfect Pimms in June and lawn raking in September, Internet sales for Christmas 2006 are predicted to show a stratospheric increase on last year. Revisit same time next year to see an identical article. The pundits the Sunday Times wheeled out quoted the same staggeringly obvious causes, namely the rapid uptake of broadband and the growing confidence about the security of online payment. Whoosh-wee! The simplistic graph they used to illustrate the continued growth depicted a Viagra fueled upward sales curve, just like a stock shot from Getty Images with smiling, pointing sales executives.
And of course earlier this year, just as they had predicted last autumn, the sales figures for Christmas 2005 blew the zeros off the calculator. £5.6 billion is the figure that sticks in my head.
The sages and cynics try their best to cool any over-excitement on the subject. They tell stories of poor customer service, identify fraud and big returns levels, but let’s face it – there is no stopping this juggernaut. I have just had a leather briefcase arrive from India 12 days after I ordered it online. It was sewn into a cotton sack with my address impeccably hand written on it with a magic marker, the green ink bleeding into the dirty cotton. Of course, I have no idea whether the souls who picked, packed and posted my briefcase were underpaid, child or slave labour. I hope not, but on balance I reckon £45 of my fine English pounds making it to the sub-continent is better than not. And a much cheaper option than buying from Burberry’s on Oxford Street. What did catch my eye in the Sunday Times article however, is that an independent survey commissioned by eBay showed that 68,000 people (small companies, I presume) in Britain use the auction site to generate between a quarter and a half of their income. These are predominantly the items you see with a “buy now” option on eBay, rather than the auction facility, and one of the reasons I lost a much of my interest in eBay, though I hasten to add it has not had the same effect on my wife.
The interesting point of this is that the vast majority of these online “cottage” industries cannot create cut-through online, due to the physical levels of competition and their lack of marketing budget (and nouse). They therefore rely on eBay and good luck to them. But without eBay, the market that is infinite does have its limitations. If we the consumer can’t find what we want, or cope with all the choice, then the power of the gold mine is diminished.
The dichotomy is that demand and supply are both infinite - £10.3 billion Internet Sales forecast in the UK for 2007 is as near to infinity as my head can cope with for the time being. But for the suppliers to continue to be attracted to the Internet and then survive they need their potential consumers to find them – that however, is a different story.
So what if you or your company want to join in and provide some of that online supply? How do you get a website built if your set-up budget is £1000, £10,000 or £100,000 and what are the differences between the software that you will be sold?
Firstly, forget some of the big six and seven figures sums that you may have historically heard being quoted to develop some of the big brand names online offerings. What we are never told is how much of that went to Accenture to do the two year feasibility study, the leasing of warehouse space the size of Milton Keynes just outside Milton Keynes and how much they were overcharged for their software in the first place. You know how when you get a pay rise, you still manage to spend the increase even though you don’t change your lifestyle? A similar theory applies when a company goes into a digital development with a huge budget, they always manage to spend it even if they didn’t need to.
When selecting a software solution the importance is to be able to compare eggs with eggs. How then can you compare Venda’s apparent £5k per month all-in licence, to a very acceptable e-commerce site I have just seen (built in Dubai) for under £5k for the whole thing? Or what about a big one-off lump of bespoke build fee by some agency or other coming in at around £80k, to a download of software from the US that costs less than £2k for the ‘Enterprise’ version. And where and when should you look into the big licensed products such as from Microsoft or IBM? And did you know that Amazon provide an e-commerce development service? And would you believe that three of the best e-commerce software suppliers in the UK are based in Southampton, Nottingham and High Wycombe and have never featured on anything resembling a league table where the London based outfits jostle for top position? And how many sites out there are based on OS (open-source) Commerce, when the client doesn’t realise the platform they are on? Lots, is the answer to that last one. What of costs for design, account management, project management, copywriting, photography, ongoing hosting platforms, site updates, marketing campaigns and fulfilment procedures and costs?
The answer to the eggs and eggs question is that you can’t compare them. You can’t even get close to ducks eggs Vs chickens eggs. The best you can hope for is eggs Vs apples Vs tennis balls. Which makes it all pretty difficult when making a decision. Last week we were involved in an e-commerce start-up that was all going well until the very familiar message was passed back to us that the MD in question had heard that you can “do it much cheaper” from his mate. And now the project has gone cold. Good luck pal.
So what can be done? How about we take a lead from the automotive industry? When a new car comes onto the market it is promoted and showcased by the manufacturer who sing the praises of its benefits and features. Then the reviewers get their hands on it and they uncover what we hadn’t previously spotted that – i.e. the Skoda Bling is exactly the same car under the hood as the Volkswagen Bla. They examine the subtleties behind the facts and the figures. The torque may be greater on car A, but the design and weight of car B make it go faster. And then they get down and dirty and drive cars A & B and tell us that actually one of them handles like a dog while the other corners like its on rails.Now armed with that information we can make an informed choice which might just come down to whether we would be seen dead in a Skoda or would rather pay more for the same car with a different badge. Alternatively, we may cross-reference all the data and make our decision on the balance of statistics.
In the e-commerce industry our problem is that all the information we need is available from most of the suppliers who offer it, but collating and comparing it is a near impossible task. The pitch process, ITT’s, RFP’s are all ways to try and make the most informed choice, but at the end of the day somebody has to make a decision that amounts to somewhere between to a leap of faith and putting their head on a block.
The time has come for suppliers of technology whether they are an agency or software house to be transparent. To be honest about the heritage, features, strengths, weaknesses and future of their products. To put themselves into a particular market and demonstrate to their potential clients the size and shape of that market and why they are in it. To fight fair and square with the direct competition and may the best man win.
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