E-business success stories (They do exist!)

Are you struggling to come to terms with Internet technology, doubtful that your e-business plans will ever come to fruition?...

B2C e-commerce - JD Williams Distance shopping company JD Williams has made such a success of its Internet sales channel that it has now set up a company so it can market its expertise to other retailers. Zendor is a joint venture between JD Williams' parent company, N Brown, and GE Capital, which is now generating an extra income for the group by marketing JD Williams' expertise in e-business strategy, marketing and fulfilment services. Not bad going for a company that only launched its first website in February 1999! Tom Fothergill is e-business director at Eunite, the e-commerce design and development arm of Zendor, and the man who managed JD Williams' early forays in selling online. "We recognised back then that as a distance shopping player, e-commerce was a logical extension of our business. We recognised the value of being a multi-channel business before it became a trendy term," he says. The company ran a low-cost trial site until September 1999, based on a Windows NT platform. The next six months saw JD Williams completely revamp the infrastructure behind its website as it looked to create a fully-functional site that could provide new services like live online credit checking, stock availability and targeted marketing. Fothergill and his team decided to use Java-based technology and used IBM's WebSphere software to integrate the website with JD Williams' IBM mainframe based back-office systems. The company had no need of external consultants to help develop its online strategies, which were really just an extension of its own multi-channel business - as Fothergill explains. "Like online retailing, distance shopping is a fine art - it is about having good content and managing information across multi-channels JD Williams already deals with its customers via its direct sales force, stores and its telephone and catalogue services], something we had been doing for 20 years. When we went to see consultants, we were lecturing them and they were taking notes," he says. THE FACTS B2B e-commerce - RS Components RS Components is one of Europe's leading distributors of electronic and mechanical parts. It operates in 22 countries and stocks 300,000 different products from 1,200 suppliers. In the UK, the company's main sales channel to its 400,000 customers was its huge 550-page, 5kg catalogue, which cost the company £30 per copy to produce. Because of the technical nature of its products, RS Components was often required to send customers product information sheets, costing anywhere from 50p to £5 depending on their location. The call centre ordering process was very paperwork intensive, which was costing the average customer £60 per order - very expensive, especially considering that the average order was worth £100. RS Components had started sending customers CD-Rom versions of its catalogue in 1994, but the impetus for the company to develop an online sales channel was very apparent. The company started developing its Internet Trading Channel (ITC) in the UK, with the help of e-business software company, Broadvision. The RS Components site now lists 130,000 products together with their specifications, dramatically reducing the cost involved with publishing, updating and distributing catalogues and data sheets. The site has also eliminated the paperwork involved in ordering parts, thus reducing the purchasing costs to suppliers. More recently, it has started using personalisation technology to get a better understanding of its customers, showing them their purchasing history, preferences and buying habits. RS Components has now moved the UK systems over to a European Internet trading platform, which will see the company roll out multi-language, multi-currency sites in 10 other European countries. It is also working with e-business platform suppliers such as Oracle, SAP, Ariba and CommerceOne to enable its customers to link their own e-procurement systems in with the RS Components online sales system, and has more than 30 international customers using this service. "Internet trading is helping our European business to scale and grow more effectively and it has become a very useful customer acquisition tool," says RS Components e-commerce marketing manager, Julian Wright. THE FACTS Online Auctions - Whitbread Group Hotel, restaurant and fitness chain runner, Whitbread Group, had previously used a highly labour-intensive tender process to handle its procurement contracts. In April 2001, the company decided to explore online auctions as a way of improving procurement efficiency. It had recently outsourced its IT functions to Computer Sciences Corporation (CSC), which it asked to evaluate the market before embarking on a trial project. "A trial seemed the obvious way forward for us, as we were going to be running reverse auctions, looking for the best price on desired goods, rather than forward auctions where suppliers try and sell off excess inventory to the highest bidder. By using a trial, potential problems could be gauged in advance of a bigger rollout," says Steve Apted, Whitbread Group's procurement development manager. Whitbread eventually opted for an auction service from Commerce One, which it asked BT Ignite to provide on a hosted ASP (application service provider) basis. This meant that although the site was branded and personalised to Whitbread, it was hosted and managed by BT. BT, CSC and Whitbread then worked to develop a training program for Whitbread staff and suppliers to learn how to use the auction system. Since April, Whitbread Group has run six trial auctions, mostly for one-year dairy produce supply contracts, which it chose because there was a large number of suppliers, the product could be clearly specified and it represented a high volume of spend. Whitbread is now looking at more sophisticated e-sourcing tools that will enable it to conduct more sophisticated auctions for products such as furniture and utilities. THE FACTS E-learning - NETLinc (Lincolnshire County Council) NETLinc was developed in response to the Government's National Grid for Learning initiative, as project manager Geoff Chandler explains: "The vision of the UK Government is to embrace new technology as a means of raising the standards of teaching and learning in schools. The aim was to give every child access to a PC and connect them to the Internet to create a National Grid for Learning." Begun in early 1998 in conjunction with Microsoft and IT services provider Ramesys, the NETLinc project has created a learning community portal for children and adults in schools and libraries across Lincolnshire. As well as providing a private portal for pupils where online education material can be added and distributed county-wide, the system provides email, filtered Internet access, firewall security and remote monitoring and support. Every learner and teacher is profiled according to age, ability and interests. This enables the system to recognise them when they log on and presents them with content and a graphical interface appropriate to their needs. The project is now being enhanced to include a number of mobile learning units that will take computer equipment out to village halls and offices in more remote rural locations in Lincolnshire. In the future, Chandler predicts that the network could provide a valuable link to any wider 'e-government' initiatives, such as online voting. THE FACTS Online Marketing: Pricerunner.com Comparison shopping site Pricerunner.com had just added a new car section to its site earlier this summer, and needed to drive customers to it. It decided to launch a marketing campaign with espotting.com, a pay for placement search engine that places ads for its advertisers online and then only charges them based on the number of customers that then click-through to the advertisers' sites. Pricerunner chose where it appeared in Espotting's search results and controlled what price it paid per click-through, by bidding for a range of search terms such as 'buying a car', 'BMW' or 'Saloon'. The more Pricerunner was prepared to pay for each click through to its site, the higher up the search results its name and site would appear. Espotting claims that its search engine is accessed by 66% of the UK's Internet users because its search findings are included by other search sites that are run by Lycos, Ask Jeeves and ntl. THE FACTS The dotcom: Londonlaunch.com Londonlaunch.com is a one-stop portal for event and party planners. It was launched a year ago by PR executive Will Broome, who saw a gap in the market for a site that could put party and event organisers in touch with a wide selection of venues, caterers, entertainment and other party service providers. The site has been recently updated with a content management solution from web design agency Absolute Internet, and enables event organisers to use a 'virtual consultancy' service where they key in the sort of event they want to host, and receive a list of suggested contacts. The site currently has around 350 firms listed, and Broome aims to increase this figure to a maximum of 1,000 personally vetted suppliers who pay a flat monthly fee for a listing. There are no more prominent listings for suppliers that pay more money. Broome has begun drawing up plans to extend the service to Paris, New York and Los Angeles. THE FACTS Are you struggling to come to terms with Internet technology, doubtful that your e-business plans will ever come to fruition? Don't give up! Six organisations tell Toby Poston how their online projects delivered fantastic results

Success Story 1:

  • Project launched February 1999
  • Websites had turnover of £5m in their first full year of trading (to April 2001), already recouping their entire online investment and operating costs
  • Online revenues of around £20m forecast for this year
  • Average online order is 47% higher than for other sales channels
  • Customer returns are 4% lower than for other sales channels
  • Around 8% of visitors to the site make a purchase
  • Online sales to existing customers have generated 50% incremental business
  • The Internet is now JD Williams lowest cost sales channel

Success Story 2:

  • Project launched 1998
  • Cost of Internet Trading Channel project so far is around £5m
  • RS Components had UK Internet revenues of £30m over the last year (8% of total sales)
  • The site has 250,000 registered users, 97% of them new contacts
  • Site achieves 1200 orders per day
  • The £60 average cost of placing an order has been cut by 80%. Cambridge Consultants, for example, places 7,000 orders, worth £7.5m, per year. It has cut its average order costs from £90 to £10, saving £100,000 per year

Success Story 3:

  • Project launched April 2001
  • Six auctions run so far
  • Online auctions have produced average savings of 15%
  • Four online auctions for food items have saved £850,000
  • Whitbread expects savings of £5m over the next three years

Success Story 4:

  • Project launched early 1998
  • 367 schools, 100,000 users and 6,500 PCs connected to the scheme around Lincolnshire
  • Project completed six months ahead of its four year deadline, and for only £10m
  • Around 98% of educational establishments connect to NETLinc daily

Success Story 5:

  • Pricerunner received 25,000 click-throughs to its site, of which 1,200 people went on to buy a car from a retailer (Pricerunner itself receives a margin on sales leads it forwards to car retailers) - a conversion rate of 18%
  • Price of marketing campaign - £3,000
  • Revenue from marketing campaign - £12,000

Success Story 6:

  • Launched Autumn 2000

  • Initial outlay £200,000

  • Current turnover £200,000

  • Monthly listing fee increased from £62.50 to £192.50

  • 10,000 unique users a week

  • Clients include BAFTA, HSBC, M&C Saatchi, JP Morgan

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