Reality bites for the dotcoms

After all the praise, reality bites for the Internet start-ups, who are now finding that infrastructure, procedure and a solid...

After all the praise, reality bites for the Internet start-ups, who are now finding that infrastructure, procedure and a solid customer base all have a part to play in success.

David Bicknell

It didn't take very long for those who said 2000 would see the post-eXmas shake-out arrive in the dotcom world to be proved right.

This week, Beyond.com axed 75 full-time positions - about 20% of its workforce - and promised a reorganisation to focus on the business-to-business market. It cost the chief executive his job too. Mark Breier goes in a move which will see restructuring charges of between $2m and $3m in the first quarter.

For a bricks and mortar world that has seen and heard plaudit after plaudit about dotcoms and how "old" companies need to become dotcoms, such woes must be almost music to their ears. Especially in a month that has seen one of the most famous names in entertainment, founded in 1922, taken over by an overvalued ISP. Is it too early to say "welcome back to the real world"?

So, in a week where Tesco's massive investment in people to support an increase in Web shopping from its stores shows the other side of the tale, let us take stock and try to assess what has been learnt over the past year.

To start with, it is clear that companies turning themselves into e-businesses still have to make better use of Web intermediaries to help outsource and broker the buying of "low and high tickets".

Low ticket items include office suppliers and stationery, high ticket goods include capital equipment, software, and professional services. According to the Delphi Group, such use of intermediaries is "minimally deployed", with the majority of respondents in a recent survey saying that only 20% are making purchases through an intermediary.

Other impediments to the wider deployment of e-business include a lack of corporate infrastructure, a lack of standardised procedures and a lack of interest among potential customers.

However, for really e-active firms, IT issues are paramount, especially the integration of legacy applications into an e-business system. Achieving this remains a formidable task for pioneering organisations.

A similar split applies to partnering and outsourcing. Forward-looking companies take an aggressive attitude, defining it as a strategic part of their business plan. Others are less enthusiastic, perhaps embracing it only out of dire necessity.

Understanding key e-business issues will continue to sort out the e-aware from the e-ignorant.

The failure of many e-commerce sites to respond to queries from anxious customers over Christmas has proved that many dotcoms have a great deal to learn about customer service. Leaving the e-mail mounting up in the corner, or not answering the phone - or worse, not giving a number - is hardly likely to engender customer loyalty.

Now, according to the Wall Street Journal last week, the shake-out in telecoms companies is not making life any easier.

Last year, the phones failed at the US reservations centre of Polish airline Lot's New York offices. Bell Atlantic had taken over the service area after merging with Nynex, which is now merging with GTE. Eventually a repairman arrived, but overall the service centre was without phones for about 33 hours.

Then, to make things worse, a few weeks later, Lot lost its Internet service. Its provider was supposed to be MCI WorldCom, which, as part of the merger mania, had agreed to sell you get the picture.

Ultimately, the airline was told, "Buy a service contract from one of the companies that MCI WorldCom has done a deal with." But as the manager at Lot's New York office admitted, "These mergers are killing us. One domino falls down and everything else falls apart."

Over the last three years, the total merger and acquisition activity in telecoms in the US has totalled some $500bn. The good news is that all this is coming to Europe too.

So, if you are overseeing the customer service operations for a dotcom company or a bricks and mortar company trying to get its e-operations off the ground, you might want to check out who is providing the communications links in your customer centre. And, more importantly, are they planning to merge with someone, sell their operations on and, ultimately, leave you wondering who to call?

Part of the solution is to move customer services to the Web, with lots of frequently asked questions. But you still have to offer the customer somewhere to go regarding their specific order, as many e-Xmas customers found to their cost. This is an area the e-world has so far failed to get to grips with - and it probably isn't going to change soon.

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