HTML 4.0 Sourcebook
(Publisher: John Wiley & Sons, Inc.)
Author(s): Ian S. Graham
ISBN: 0471257249
Publication Date: 04/01/98

The Federal Express (www.fedex.com) Web site is an ideal example of this approach. Federal Express was an early adopter of the Web when they launched their Web site in the fall of 1994. Although their site initially had very little content, it supported package tracking. By entering a Federal Express package waybill number into a Web form, anyone could see the status and location of the package without having to telephone FedEx and wait for an available agent to search the database on their behalf. This was an extremely useful tool for users, and brought Federal Express much publicity—and many site visitors.

Indeed, at present, over half a million packages are tracked each month via the Web. Not only is this good for the customers, it has also led to substantial cost reductions for Federal Express. In practice, each 1-800 call costs the company approximately 50 cents, when the cost of staffing and infrastructure are taken into account, so that costs can be significantly reduced by simply reducing the number of calls. Thus, even if only half of the packages tracked via the Web are done in place of a phone call, the cost reductions are substantial. Indeed, recent estimates indicate savings to Federal Express on the order of $125,000 per month.

Creating a large-scale application such as the Federal Express package tracking mechanism is beyond the budget of many Web sites. But then, not every company is the size of Federal Express! The key to providing a customer service site is simple: Provide Web-based accessibility to support resources and staff, and give customers the opportunity to receive timely answers to their questions.

E-commerce Web Sites

On the Web, even a small company can use electronic commerce technology, or e-commerce, to deliver an effective international presence. Indeed, e-commerce has become a “fourth channel” of sales, after phone, mail, and sales agents, significantly extending the sales capabilities of the traditional three. For example, phone access is limited by time of day—either a customer can’t be reached, or a customer can’t get a question answered when no one is available after office hours. On the other hand, a Web site is open 24 hours a day, seven days a week. Print sales material can be hindered by time lines—the material is useless if prices and availability change and is expensive to produce and distribute. Web content can be instantly updated, at minimal cost. Finally, much of the content relayed by a sales agent can also be handled or facilitated by an interactive, on-line exchange—indeed, some sales agents can effectively “move on-line,” and use the on-line medium to supplement their other tools for contacting customers.

Although relatively small at present, the size of the on-line market is expected grow rapidly over the next few years. Indeed, by the year 2000, estimates for the amount of public commerce that will take place via the Web range from a conservative $6.6 billion (Forrester Research Inc.), to a middle-of-the road $7.3 billion (Jupiter Communications, www.jupiter.com), or to a maximum of $12 billion (Price Waterhouse, 1997 Technology Forecast).

Using the Web, on-line companies can often move quickly into new markets, even outflanking larger competitors. The on-line bookstore Amazon.com (www.amazon.com) exemplifies such e-commerce possibilities. By offering over 2.5 million book titles and a simple, secure on-line ordering system, Amazon.com generated more than $16 million US dollars in sales in 1996, with steady increases each quarter. Although other booksellers have now moved to on-line ventures, Amazon.com has continued to innovate to maintain a leading position. To build interactivity and a sense of community, Amazon.com offers unique features, such as forums whereby authors and readers contribute profiles and reviews for books sold through the site—this becomes value-added content for the Web site.

The Amazon.com “Associates” program is another interesting and uniquely Web-based approach to building a client base. This program encourages other Web sites, particularly those that list or describe books, to create “Associate” links from their documents to the pages at Amazon.com associated with the described books. This makes it easy for a site visitor to purchase the book—by following the link to Amazon.

Many small Web sites are unable to afford on-line transaction mechanisms, so that “associating” to Amazon.com is an easy way for a site to provide an on-line purchasing venue. Of course, a site needs a good reason to offer such a link, and to provide this incentive, Amazon.com offers to remit, to registered Associate partners, up to 8 percent of the revenue of each sale arising from the Associate’s site link. Needless to say, this is a significant incentive! Indeed, a quick check, using the AltaVista search engine (www.altavista.com), shows that over 100,000 Web pages now contain links to Amazon.com. An analysis of some of these sites indicates that most are small sites wanting to provide readers with a convenient way to purchase books they recommend or have reviewed. Such cross-marketing arrangements are likely to become more common amongst e-commerce sites.

Of course, customer sales is only one aspect of Web-based commerce. Indeed, according to CommerceNet, an international industry consortium dedicated to e-commerce issues, business-to-business transactions will be one of the largest e-commerce growth areas. In an analysis of business-related e-commerce, Paul Regan, Director of the Networking Solutions Group at Tandem Canada, states that while 15 percent of retail electronic commerce will have moved to the Internet by the end of the century, he expects that up to 30 percent of business-to-business transactions will occur on-line.³ At the same time, Forrester Research estimated that business-to-business trade will have reached $8 billion in 1997, a figure that will increase to $327 billion by the year 2002.

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³Reality Check: Commerce on the Internet, General Content Corporation, in association with CommerceNet Canada, 1997.

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Fruit of the Loom (www.fruitactivewear.com) has already made the shift to business-to-business e-commerce. To encourage the use of the Web for their business-to-business relationships, Fruit of the Loom builds customized Web sites for all of their Activewear distributors. These sites include an ordering system integrated with the Fruit of the Loom back-end accounting and inventory databases. Then, if a distributor’s client needs to order 10,000 shirts, the distributor can check the Web site for special price options such as deals on overruns, place the order, and produce and print a proper record on the transaction.