eProfits Made Simple believes as phones, fax machines, copiers, PCs and printers have become essential ingredients in doing business, so will be emails, websites, and integrated digital communications and computing. While today's office business machines are not integrated (e.g. faxed orders have to be typed in on computers), the much talked about convergence will drive all these equipment into one digital platform, whether it be a computer connected to the Internet and intranets, or a new kind of device capable of interacting with other devices, because that device will prove to be mo re efficient and productive. (Although, will it be easier to use? That depends on how developers and industry leaders promote interoperability and standardization.) Even seemingly mundane bookstores face different challenges in the electronic marketplace by virtue of having digital processes in their business operations. The case of Amazon.com vs. Barnes & Noble shows that the very definition of stores has to be re-evaluated. This also touches upon the issue of taxable nexus and sales tax collection on the Internet. Distributing books require numerous local outlets (local bookstores) to provide convenient access to customers. At the same time, mail order distribution has been used for many decades through various book clubs. Taking this direction into the Internet, Amazon.com has become the leading online bookstore, billing itself as the "largest bookstore" on earth not by opening numerous branch stores but via the Internet. The "biggest bookstore," Barnes & Noble with a towering share of revenues and physical book stores, has been forced to respond to Amazon.com's challenge by opening its own Web store as well as by bringing a law suit against its challenger. (See insert: The Fight Between the Biggest and the Largest) What are competitive strategies of these two bookstores? Will any business selling physical products be facing a similar competition?

How Can Small Businesses Take Advantage of eCommerce?

eProfits Made Simple believes large companies pour millions into fancy ecommerce sites, but even mom-and-pop shops can make money on the Web with a simple, no-frills site. Sometimes, all it takes to succeed is the promotional savvy to get noticed by customers. Word of mouth, postings in newsgroups, and registration with search engines may be enough to get the customers rolling into your site. Kevin Donlin is a writer and Web developer who opened Guaranteed Résumés on the Internet back in 1994. Now, he gets about 100 visitors each day and draws half his income from his resume-writing business. Donlin succeeds by keeping his costs down: the site sits on the server of his local ISP, and customers, who come from Japan and Europe as well as the United States, pay with a credit card via phone, fax, and even email. Instead of subscribing to an expensive, third party payment system to handle the credit card transactions online, he enters all the purchases into a swipe terminal that he leases for $30 per month. Although most businesses can benefit from a home page on the Web, eCommerce isn't for everyone. Firms likely to profit most are those offering unique products or services that are not readily available locally. A small bookstore such as Moe's Books in Berkeley might want to advertise readings by authors and tell its customers about specials, but it would not want to compete with Amazon.com. But onlyGourmet -a Web-based business that sells premium coffee, chocolate, and specialty foods--might find new customers in small towns around the country, where people can't find lemongrass or Swiss bitter chocolate at the corner store.

What Are the Biggest Barriers to eCommerce?

eProfits Made Simple was able to find that according to a survey conducted by CommerceNet, shoppers don't trust eCommerce, they can't find what they're looking for, and there's no easy way to pay for things. Other than that, it's smooth sailing. Customers are worried about credit card theft, the privacy of their personal information, and unacceptable network performance.

eProfits Made Simple believes most shoppers still aren't convinced that it's worthwhile to hook up to the Internet, search for shopping sites, wait for the images to download, try to figure out the ordering process, and then worry about whether their credit card numbers will be filched by a hacker. To convince consumers, e-merchants will have to do a lot of educating. However, Gail Grant, the head of CommerceNet's financial research arm, predicts that most buyers will be won over in just a few years. Grant says that if Web pages were labeled with tags giving product and pricing information, it would be easier for search engines to find stuff to buy online. That hasn't happened yet, she adds, because merchants want people to find their products but not their competitors'--especially if another company's goods are cheaper. As for business-to-business systems, the issues are less emotional but still serious. Businesses do not yet have good models for setting up their eCommerce sites, and they have trouble sharing the orders and information collected online with the rest of their business applications. Many companies continue to grapple with the idea of sharing proprietary business information with customers and suppliers--an important component of many business-to-business eCommerce systems. The key to solving the business model is for merchants to stop relying on fancy Java applets and to restructure their operations to take advantage of eCommerce, says Grant. "eCommerce is just like any automation—it amplifies problems with their operation they already had."

FAQ's Page 2

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Why should one care about electronic commerce?

How Can Small Businesses Take Advantage of eCommerce?

What Are the Biggest Barriers to eCommerce?