No longer thrilled by the novelty of the experience, today's e-commerce customers can't be fobbed off with any old rubbish, according to Keng Lim, president and chief executive officer of e-commerce service provider Escalate.
"Two years ago, you could put [anything] on a Web site and people would buy it," he told a rapt audience at the recent IDC eCommerce Forum 2000. "But that doesn't work anymore."Citing figures from a 1999 study of shopping behaviour by analyst Ernst & Young LLP, Lim said that e-commerce operations were failing on three major issues: cost, focus and speed to market. Among the major casualties he cited was the e-commerce operation of Levi Strauss jeans, but even small-scale e-commerce is costly to run, he added.
One of the reasons for this was the cost of investing in the order fulfilment, stock management and logistics software required. But this is an investment he had come to realise only "bozos" make.
A few years ago, he said, a friend had told him, "only a bozo buys software," a point of view he said he at first had difficulty coming to terms with.
Since then he has come to believe that renting software can be a better choice.
Claiming that companies are tired of taking all the risks he called on the assembled delegates to "go back to your vendors and ask them to take more risks".
In persuading the audience to "not pay an up-front fee" but instead to pay for software per transaction that it makes, Lim was clearly serving his own interests, but he claims there are other advantages to using an ESP including the service provider's ability to aggregate business data.
Yet while ESPs might draw valuable lessons from this customer data in aggregate, it is vital that businesses hang on to the rights to the details, he warned.