While the promises of a golden age of online commerce via the Internet have often seemed far off, a number of developments are now occurring which could see deliverable systems available within weeks rather than months.
For resellers, the opportunity to broaden markets and reach customers should be more than enough incentive to investigate the possibilities.
Sun Microsystems' chief networking officer Geoff Baehr was in Australia recently to promote the idea of online commerce. His message that the rate of technological change in telecommunications is altering the way people do business is one that shouldn't be ignored. "This is a new advocate for competition," said Baehr, "particularly for people who are resellers and are searching for a new vehicle to broaden their market, or to broaden their ability to deal more dynamically with a changing market and a changing mechanism for channel distribution."
Baehr says for resellers the notion of a presence on the World Wide Web is one of an automatic sales person available 24 hours a day in an area not bounded by geography. "What you're doing is appealing to a larger audience, but you're also doing it in a way that you can maintain it over an infinite period of time. Previously you had to connect the customer to a sales person to find the right types of information. Now you can connect the customer to a Web site and allow them to construct their own search for the types of information that's appropriate to them.
"So this has opened up a new channel, particularly for people who are selling peripherals or some of the lower-cost items. It's a sales mechanism that allows the customer to essentially buy on demand."
While there have been a number of well publicised bugs in previous attempts to initiate Internet-based transactions, Baehr said new systems now provide adequate protection. "You can be pretty safe now. But the next evolution of this is not using the Visa card number, it's being able to use a purchase order number. Because how many companies allow employees to purchase a $5,000 item on their personal credit card?"
He adds, though, that it is naive to expect total security in transactions, due to the predilection of hackers to crack any new encryption. "There should be 100 per cent acceptance of risk. Be cognisant of the risk, and then you can make an informed decision as to whether you should take it, as opposed to assuming you can buy 100 per cent security."
Baehr says he also sees potential in the realm of the intranet - internal Internet-style systems developed using Internet principles and protocols. The potential benefits for any business may be great. "If purely for executing their own business, it means the ability to have the most current information available in a format that doesn't require any training." Baehr says intranets are useful for putting much of the information contained in organisations within reach of its employees, such as data and pricing sheets, product descriptions and technical manuals. "And the most current copy is the one that is available."
While many of the technologies Baehr talks about are still in their infancy, it is interesting to see how his own company is utilising the World Wide Web. He says that Sun now takes in a large percentage of orders from distributors over the Internet, a figure he numbers in the tens of millions of dollars. "We take those transactions in from our resellers because they prefer to give them to us like that - they have them in real time and the charges are relatively low.
"And as for the percentage of people who are actually prepared to do these electronic transactions, I don't know. But I have a strange feeling that the ones who are doing it now are the ones who are ahead of the power curve."
Most other vendors are developing online commerce solutions. IBM is tackling the problem from both ends, by educating its business partners in how to resell these new technologies and how to use them themselves.
IBM's Elizabeth Carr says business partners are being trained in how to profit from the looming information revolution. She says the greatest opportunities will be in the area of services. "If you look at a cost model for a reseller, they'll make 70 per cent from services, maybe 20 per cent from hardware and about 10 per cent from software.
"So what we're needing to skill them up in is programming and services and the strategy work." According to Carr this will move many resellers in the direction of systems integration. "Because we see that's probably the only way that we're going to be able to do this next phase."
IBM is also marketing a number of its own applications designed to provide a vehicle for online trading. Of most value to resellers will be Net.Commerce, which Carr describes as being something akin to an Internet-based shopping mall. IBM intends to utilise a number of its technologies to facilitate such commerce, including Cryptolope secure encrypted containers for copyright protection in online publishing, and secure and instant credit card transactions based on the SET security protocol. The LL Bean catalogue is already available through Net.Commerce, as well as ticketing for the 1996 Atlanta Olympics.
Here and now: Sydney company provides online solutionsSydney-based Techway is one company that has already established an online trading presence. Through its wholly owned subsidiary Web Australia, Techway has created a solution that brings traders, buyers and banks together.
Web Australia executive officer Dr Elwyn Jenkins says Virtual Merchant Network is already being used to provide an effective means of both promoting product and taking orders. It is already being used by Office Products Promotions in Melbourne, a marketing cooperative of 78 stationers that have joined together to create a single image and approach to selling into their markets. "When we first started talking to them they didn't recognise the capabilities of the Internet or the capabilities of what could be done. But now they recognise that their whole organisation and their whole business could actually be re-engineered through using the Internet."
When customers log on to the OPP site the location they are dialling in from determines what that site will appear as. For instance, if they are logging in from Cairns, they see a front end that actually belongs to the Cairns distributor or retailer, with the complete OPP catalogue behind. "And you can order products from that catalogue and so forth. You can also put in your credit card or eventually your debit card and have the merchant or the reseller obtain his funds. You can see your order forwarded directly from that retailer to you, having done it all on a machine that's actually physically sitting in Melbourne."
Jenkins said the savings made by the OPP members is enormous. "Instead of spending $2.5 million a year to put out a nice colour glossy catalogue, that catalogue is essentially on this very large database. You don't have to reprint catalogues to place different retailers on to the front of the catalogue - that's done automatically on the Internet. And they can change their catalogue at will - add products, change products, change prices and so forth, because it's updated online.
"What they're now looking at doing is just simply providing a disk and a modem to those people who don't have modems and putting their customers online - no more catalogues. The cost of doing this is well under the $2.5 million for the glossy catalogues they used to do."
Jenkins said as part of the merchant virtual network customers can pay online and have the bank satisfy the amount immediately, or hook it up on a seven-day account. Techway is already working with Advance Bank on the billing system, and Jenkins said he has agreements pending with five others.
The potential benefits of such a system for the computer reseller channel are many. Jenkins said Techway is already working on a system for one company reselling computers.
This system allows the customer to receive a quotation and order the computer online, and have the computer directly delivered to the customer. "When the customer puts the computer online it logs them on to the system, and registers their computer for the warranty. It also gives them five hours free on the Internet, and provides a support mechanism.
"And because they've registered that computer they can download programs and so forth as freebees, and each month they can get new freebies."
Jenkins said Techway has the product at a stage where resellers can badge it for themselves, and are provided with everything necessary to get up and running. He estimates the cost at anywhere from $20,000 upwards, depending on the complexity of the system required. "It is a truly distributed model where there could be lots of servers involved. It depends on how simple or complex they want it. It is a full business system that provides accounting services as well, so that when sales are made and orders are produced it's not just an ad hoc file. It's all part of a system, so they can see how much business is occurring across the Internet."