Strategic E-Business

What Are You Doing Online, Anyway?

It wasn’t that long ago that every business journal and consultant asked, "Why aren’t you online yet?" Early-adopter was the thing to be. Today, savvy analysts might ask, "Why are you still online?" or more likely, "Why are you giving so much away online?"

There are excellent reasons to be online, but judging by the sites I visit, many companies haven’t assessed the value of their online presence – their e-business strategy or e-business model – since they were first bullied into getting online three or four years ago.

Revisiting E-Business Strategy

Why are you online, anyway? What is your e-business strategy? There must be a strategic reason to be online. Let’s begin with the wrong reasons to be online. If you are online for any of the following reasons alone, you need to reconsider the resources you are allocating to your Web site:

• To drive traffic in order to generate advertising revenue

  Even the biggest sites like Yahoo! are negotiating for pay-for-performance (a.k.a. cost-per-action or CPA) deals like the affiliate programs that smaller sites have always had to use. With CPM (cost per thousand impressions) at under $5 – that’s less than $5 per 1000 impressions –, how can you possibly acquire both content and traffic cheaply enough make money on advertising?

• To cultivate community

  Communities are great, but communities are for hobbyists. Unless the Web site is your hobby, or you are selling something related to the hobby that the community discusses, forget it. There was once a company that created a real movement and an enormous community of people who were passionate about its services … as long as they didn’t have to pay anything. That company was called Napster. Any questions?

• To develop content eventually to charge a subscription.

  The subscription model is more myth than reality. Forrester Research’s recently released report, Making Content Pay, highlights the fact that subscriptions account for 8% on average of the revenue of content sites. The problem with the subscription model is that many other excellent sites are publishing content that competes with yours and are giving it away to people who are used to finding everything they need on the Web for free. The proximity of content – never more than a few clicks away – means that your competitors, who also haven’t revisited their e-business strategy, are still giving away content. As many dot-coms found out, you can’t compete with free. If you and your competitors take turns giving content away, then eventually the dot-com news-and-information sites will join the dot-com retailers in bankruptcy protection.

Profits Come from Sales

Unless you’re selling something from your site, providing information to visitors that will motivate them to buy services from you, or providing information that permits consumes to make offline purchases, why are you online at all? For online merchants, it makes sense: sell products. For consultants online, there’s some logic: provide credibility in order to sell services. For BAM (brick and mortar) sites, the argument can be made: provide information along with a promotion encouraging visitors to buy from you offline – see Sears Portrait Studios’ coupons (www.searsportraits.com). Ultimately, everything comes down to sales. Money is going to have to change hands between your customers and you either directly or indirectly because of your Web site. If your site doesn’t do that, close up shop.

First-mover doesn’t just mean first-to-market. It also means first to profitability. There are good strategic reasons to be in E-business. The most important is to provide information related to what you’re selling. Use your Web site to build credibility for your products or services. Your site doesn’t have to read like a Ginsu knife set ad. That kind of gimmicky hard sell makes visitors nervous. Hard sell reads like spam.

Case Studies Sell with Dignity

Instead, add a case study to your site (www.moveproductonline.com). A case study is an excellent way to say, "We’re knowledgeable, we have satisfied clients, and this may apply to you." That’s the kind of content you should have on your site if you’re selling services.

If your business offers something unique such as mounted butterflies, genuine rattlesnake belts, or ostrich eggs (link to the coolcave.com) that most people wouldn’t be able to find in their own towns, then a Web site can get that information in front of people who are looking for it. For a direct merchant, you have to provide enough information for people to close the deal though, and buy the goods.

Think Profitability Now

There is no time like the present to revisit your E-business strategy to bring it inline with what we know today about content, traffic, advertising, and business models. Stop thinking future profitability, think profitability now.

About the Alexis Gutzman Group
The Alexis Gutzman Group provides strategic e-commerce and e-business consulting. It was founded by Alexis D. Gutzman, author of The E-Commerce Arsenal: 12 Technologies You Need to Prevail in the Digital Arena, which was named one of the 30 best business books of this year. Mrs. Gutzman is a columnist for the ECommerce Guide where her newsletters, the EBusiness Illuminator and the EC Tech Advisor, are published weekly. She's also a judge for the 2002 SIIA Codie Awards.