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.

What's it worth?
The return on investment on e-commerce projects can come from really simple things, according to Baty. "We've tried to form long term partnerships with clients rather than the engagement-type approach," says Baty. "A new banner advert on Telstra's Big Pond recently caused an immediate impact on sales rather than just an increase in click-throughs," he says. "We recently changed the booking process on the Harvey World Travel Web site and saw a 1400 percent increase in sales over a two-month period. And the ROI for Youth Hostels Australia has been in excess of 18 times their investment," he adds.

According to Debrincat, you can measure ROI by the typical approach of asking "what can I save by implementing a more automated system and therefore what is the effect on the bottom line?" But unfortunately, he says, e-commerce does not typically lend itself to standard approaches.

"The reality is that the percentage of people doing business over the Web is growing between 20 and 40 percent a year depending on whose statistics you look at. At the same time e-commerce spend per capita is growing 50 percent plus per year," he says. "There is a significant take-up of broadband access that drives the time individuals stay online to increase. So the issue is one of competitive advantage as much as ROI. We have examples of a 100 percent return on investment within five weeks with a new e-commerce site. But the total ROI calculation needs to include the marketing cost to drive activity to the e-commerce site," he adds.

The Sponge's Faccini says ROI depends on the cost of the project and where the ROI value is measured. "If an e-commerce project costs AU$30,000 to produce and it contains a focused online branding and marketing program, if it can return AU$30,000 of value through a combination of online sales and brand recognition it is a worthy exercise," he says.

In recent times Baty says customers have been looking more for a development or Web partner, a company that can do more than develop just a one off project for them. "Clients are looking for a company that will be around for a long time, that will develop e-commerce as a business function within their company, offer advice and direction and assistance based on it's own experience," says Baty. "We've been around for nine and a half years, but it's not just us who are seeing this, other development companies we speak to are also being asked to get involved in a wider range of activities and there is a growing reliance on specialised services," he adds.

Baty says that in the last two years clients have demanded a greater knowledge of information architecture, usability, and user sensitive design when it comes to e-commerce projects. "It's been around for a while but its becoming a much more expected service that we can offer clients," he says. Baty says the biggest expectation from outsourcing e-commerce that customers have, or should have, is to get a better product for around the same cost as if they do the implementation in-house. "There are a few other expectations, such as the fact that the customer will not wear the same risk as having an internal team," says Baty. "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," he adds. "For a company like us working across different industries, we can wear that risk a whole lot better than an internal department."

Karl Bowen, Capgemini
There are very few people in this sector who have done this 10 or 20 times, but there are companies in the market who have"

--Karl Bowen, Capgemini

When looking for an outsourcing partner, Baty recommends you put stability at the top of the list of criteria. "Look for a company that is established and has been around and is going to continue to be around for a long time, as well as one that has been doing work for similar-sized or larger clients and that can offer advice over and above the project specifics," he says. "It shouldn't just be a case of 'we'll do that project because you asked us to' but asking 'what is the best project to start with, what is the best way to phase the project and the correct direction?'".

Stability is key, and not just of the company but the people as well, says Baty. "In a standard partnership of two or three years, customers want to see the same people within that company working on their project so there must be a stable management group, senior developers, and consultants. In advertising agencies, staff turnover tends to be high," says Baty. "When it comes to developing software, continuity of staff leads to an easier maintenance regime, a faster understanding of needs and requirements, and the ability to anticipate and identify potential problems coming into the market. You can't do any of this if your staff keeps leaving," he adds.

In seeking a partner, Bowen recommends looking at a company's track record as a key differentiator. "There is a big element of trust in an outsourcing relationship. People don't outsource to you unless they know you," he says. "And even though the outsourcing market has matured, a lot of relationships have soured. I came back from Europe after eight years to find some really bad contracts in the market here," he adds.

The biggest mistake Bowen says he has seen in the e-commerce sector is people in organisations making decisions and structuring agreements when they don't really have the skills do so in a market that is still relatively new.

"For example, if I've bought a couple of houses in the past I don't bypass the real estate agent and consider myself an expert," says Bowen. "There are very few people in this sector who have done this 10 or 20 times, but there are companies in the market who have, and from whom you can get advice on how to structure things, choose clients, because too many mistakes are often made," he says. "For bigger companies its fine but mid-tier companies and SMEs should always look to the market to get some assistance on this."

If you use an agency like The Sponge, you can have all these services and activities co-ordinated by a single consultant and design team, says Faccini. "This offers you a consistent and focused image at each client touch point, building a clear brand in the consumers mind. Some companies offer individual services, but we feel it can get a little disjointed," he says.

Faccini recommends that you always discuss your requirements with your consultant beforehand. "There are always options for outsourcing distribution, card payment facilities, stock control and legacy system integration, customer support, server types, remote locations, and monitoring," he says. "Customers are aware that there is a plethora of off-the-shelf options available to them now. We like to find out what our clients requirements are, then inform them of a range of e-commerce models that can work for their business and where necessary we can design a custom solution tailored to their needs," he adds.

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

Topics: E-Commerce

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