E-commerce in Australia: Enter the experts

Summary:When setting up an e-commerce function you might want to get some retail therapy from an expert.E-commerce is both an overused word we're all completely sick of and a business channel that isn't going to go away.

The ghost of dotcom past
Debrincat says there is a far better range of competent providers in the marketplace than existed four years ago. But in terms of organisations deploying e-commerce there was never a dotcom boom, he says. "The so-called dotcom boom was all about perceived vendor company market value and not about the value or availability of solutions. The dotcom boom was more about share price than anything else. One problem was that businesses sprung up overnight offering solutions that did not work. Today we have workable e-commerce solutions but we have to get over the so-called dotcom past," he warns.

E-commerce has moved from the nice-to-have to the must-have basket, says Debrincat. "Australia has been a slow adopter but experience from Europe and USA shows that consumers are becoming e-commerce aware. So if you get a customer to your Web site and they cannot buy easily they will go elsewhere. It is kind of like having a shop on George St in Sydney that is permanently closed. That is a waste of space," he says.

Luke Faccini, managing director of Sydney-based graphic design company The Sponge, says nowadays there is more information available about what can be achieved and models that can work more successfully, so business owners and managers know more about what they should spend. "In our experience over the last several months there has been a steady increase in company spending on Web presence and e-commerce, marketing in general, to expand and secure market share," he says.

Faccini says there are three main reasons a company might outsource its e-commerce function. The first is if it has decided to expand its customer base via the Net and has no experience in the area of e-commerce or marketing via the Internet. The second is if it doesn't have a skilled Web developer or designer on staff. Finally, if previous attempts at setting up an e-commerce Web site in-house, or by low level Web developers, have been unsuccessful and failed, a company might be tempted to outsource it.

Debrincat says this is an area in a state of change. "We are seeing the one person design and development companies slowly go away now that e-commerce is a critical part of the business infrastructure," he says. "In our experience different aspects go to different partners. There are organisations that do it all, but the issue is to find the best provider for the job. There is a significant range in pricing depending on the scope of work, with smaller companies more likely to use the one-stop-shop approach," he adds.

Steve Baty, Red Square
"Web development is a fast moving industry with a rapid growth in technical expertise, so there is a great deal of risk in having internal staff."

--Steve Baty, Red Square

According to Debrincat, at last count there were over 1200 ISPs in Australia, 300 to 400 Web design companies, 100 or more Web developer companies and 10s of e-commerce providers. "The market is messy. The problem with doing bespoke development is that the Web designer or developer may not be there in a year or so and the value of what you have is gone," he warns. "The market is sorting this out as we speak and we are seeing packaged applications replace bespoke development in the e-commerce space and the Web space in general. This was the same phenomenon we saw in the 1980s with the general packaged software market," he adds.

Dion Wiggins, vice president and research director Asia-Pacific at research company Gartner, says the real changes are happening around Web services and collaboration. He uses the example of the Kinko's office and printer centres in the US. "It's a Linux operation and through Web services is offering something quite amazing," says Wiggins. "You download an application for your PC from Kinko's which allows you to select and print, for example, a presentation and order it, via FedEx, to be waiting for you bound, stapled, whatever, at your nearest Kinko's or even sent to your hotel room and charged to your hotel room bill," he says. "It's tying together different businesses and creating a new business model, without changing very much. It's no longer plain old Web sites, we are reinventing new processes," says Wiggins.

All companies great and small
According to Debrincat, all kinds of companies outsource their e-commerce function, and he says it is less usual for an organisation to host a Web site internally than to outsource. "It all comes down to economies of scale. Even hosting companies outsource and there are many that use resources that are obtained from larger IT resource providers," he says.

Debrincat says it is more likely that in-house solutions are run by larger organisations with internal infrastructure and IT experience. "Hosting solutions are available from as little as AU$100 per month and dedicated hosted server solutions from as little as AU$299 per month," he says.

Bowen says SMEs would see a big benefit from outsourcing e-commerce, as they usually can't afford the depth of skill needed. "It is critical to keep the content management of some of these Web sites up to date, and it's a hard job requiring a very different skill set than other areas of e-commerce. It takes some marketing background and knowledge of how people will use a site and what makes people comfortable," says Bowen. "You can build a great Web site which is technically brilliant, but if customers don't like the look or feel of it and it doesn't hit their marketing needs, you're in trouble."

The Sponge's Faccini has worked with businesses ranging from sole traders who have decided to sell their wares online, through to large distribution companies who have switched their ordering through an online gateway.

Some organisations have gone through insourcing and outsourcing cycles in recent years, says Steve Baty, senior analyst at Red Square. Red Square offers services ranging from the strategic and consulting end through to the design and development of Web sites, Web applications and hosting for clients including Panasonic and Youth Hostel Australia.

"For example Telstra has gone through the cycle three or four times over the last seven years, taking on internal programmers and development staff then slowly decreasing that, or cutting out the whole function internally," he says. "Qantas was a very good large customer of ours for five years but went through a major platform upgrade and kept staff in-house to take over the e-commerce function, but then when they launched Jetstar that was outsourced. In some cases outsourcing e-commerce makes sense and some it doesn't," says Baty.

• E-commerce: enter the experts • What's it worth?
• The ghost of dotcom past • Long-term benefits

Topics: E-Commerce

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