InformationWeek

July 27, 1998

E-Commerce Impact

Companies are finding new ways for Web technology to expand their businesses

By Richard Adhikari

rump Casino Services plans to teach visitors to its Web site how to play casino games. But it's not doing this for fun. The games are part of a lead-generation application to help the Atlantic City, N.J., casino increase its customer base.

Lead generation is just one of many ways companies are exploiting the expanding repertoire of E-commerce technology. Companies are using E-commerce tools to globalize operations, offer personalized customer service, manage sales and support, even create new business. Meanwhile, the technology continues to evolve rapidly. New applications using the emerging Extensible Markup Language (XML) standard are providing users with added capabilities such as information retrieval on a scale not possible before.

Trump Casino plans to use its Web application to take hotel reservations, sell tickets, and market merchandise. By year's end, Trump will have in place a Java-based analysis tool from InterWorld Corp., called InterWorld Business Analyzer. It will be customized to collect information as visitors play on the Web site. Trump will find out how long they remain online, the amount of time they spend playing games, which games they prefer, their ability level, and other details. "We're very heavily database-oriented, and this will create a sophisticated marketing machine," executive VP Robert Pickus says.

American Airlines' AAdvantage frequent flier program is the world's largest, with 32 million members, multiple tiers of membership, and many ways of earning frequent flier points, says John Samuel, director of American's interactive marketing group in Fort Worth, Texas. Personalizing customer service on the company's frequent flier Web site has improved the level of service to customers by offering information based on a user's profile. "We'll give you information about offers, travel-related news, information about American Airlines schedules, new flights, and so on," Samuel says. If, for example, there's construction at an airport, members living in nearby cities will be told about it and asked to allow extra time for travel.

American is using BroadVision One-to-One from BroadVision Inc. BroadVision One-To-One supports large user and content databases, high transaction volumes, intelligent agent matching, and easy integration with existing business systems. BroadVision leverages American's Sabre computer reservations system and databases to dynamically create personalized content for users.

Samuel plans to extend the personalized service. "We're moving from the technical challenge of being able to do it to the operational and business challenges," he says.

E-commerce technology can help erase the traditional boundaries of time and space. When General Nutrition Cos., a Pittsburgh maker of nutrition supplements and health products, expanded globally, distance and time-zone differences slowed the order and fulfillment process. The company's 200 overseas franchisees, for example, waited several hours just to get questions answered.

CIO Tom Smith decided to use E-commerce technology to let the company's 2,500 franchisees find out whether products were available, reserve them, or look at alternatives, all in real time. He also wanted to let franchisees customize product listings, so they wouldn't get lists with products they couldn't sell or in a format different from their own. The solution also had to tie into the existing IBM DB2 database on General Nutrition's mainframe.

After evaluating several proposals, Smith selected the Signal SegWay Suite from Signal Internet Technologies Inc. The product suite links the enterprise with its distribution channel through the Internet. It can be tailored to users' business rules and can be integrated into legacy mainframe and client-server applications so disparate systems can use and exchange data in real time. The vendor created a link to GNC's DB2 database and agreed to run the application for a year, until Smith's staff learned to maintain it.

The resulting Worldwide Product Ordering System has paid off for GNC: "Real-time response gave us higher ship rates, a more satisfied customer base, and slightly larger orders," Smith says. "And franchisees in Asia, where there's a 12-hour time differential, can deal with us according to their working hours."

photo of David Perry

A Whole New Business
David Perry, president and CEO of Chemdex Corp., a Palo Alto, Calif., reseller of life-science products such as hormones, enzymes, and antibodies, used E-commerce packages to set up a whole new kind of business. Chemdex, established last September with $2 million in funding, offers 250,000 products online from 2,000 manu- facturers to 300,000 scientists across the country.

In the beginning, Chemdex faced three challenges, Perry says: Get suppliers on board, get customers interested, and get the two to interact. Early success was important since Chemdex wanted to do a second round of financing as quickly as possible.

Speed to market was the key for Chemdex. "Internet businesses are about market share and first-move advantage," Perry says. Anybody with a computer and access to the Web can do business on the Web, he explains, so "If you can get out there first and do it very very well, you can build traffic before they do."

Chemdex tested various software packages to see which would let it get to market fastest. Also, because the company deals in sophisticated technical products, any software it purchased would need customization. "It's not like selling boots online," Perry says.

Chemdex chose Connect Inc.'s PurchaseStream, a Web-based distributed requisitioning system that automates routine transactions and lets customers serve themselves.

"PurchaseStream had a lot of the functionality we needed-a database, a transaction engine, and a front end-all built together," Perry says. "It let us get up and running in a real hurry." It took six weeks from the time Chemdex bought PurchaseStream to have a prototype to show to prospective customers. "There's a tremendous difference between talking about a plan and having a system that's running even though it's not perfect," Perry says.

Connect has since leveraged much of the customization it did for Chemdex to create its latest product, MarketStream, a multiseller-multibuyer marketplace application for companies selling on the Internet. Features include the ability to search multiple suppliers' product lists and provide users with customized product lists and pricing. The product also provides administrators with reporting tools.

Managing sales over the Web is a popular E-commerce application. But doing it in a way that customers are comfortable with isn't always easy.

John Landwehr, director of product marketing at smart-card manufacturer Gemplus Corp. in Redwood City, Calif., found that his personal experience ordering flowers over the Web colored his view of the technology. Landwehr had waited six hours to find out what happened to his order because the front-end and back-end systems were synchronized only four times a day.

Landwehr swore he wouldn't put his company's customers through a similar experience when Gemplus set up its Web-based store. "I wanted more than just a simple Web front end," he says. "I wanted to combine an internal call center with a Web interface so the front and back ends were always synchronized, whether orders were placed over the Web or the telephone."

After a long search, Landwehr selected Orders of Magnitude, an order-management package from Dover Pacific Computing Inc. Orders of Magnitude lets companies control and integrate every aspect of taking, processing, fulfilling, and shipping orders. The software also works with existing back-end systems. Landwehr rolled out the Web site in March during a product launch.

Gemplus customers get product support and updates on order status in real time. Orders of Magnitude also sends orders electronically from Gemplus' Web site to its fulfillment company, which ships orders and sends back confirmation information using the shipment-tracking number.

"We couldn't have gotten the storefront up and running as quickly with another product, and I don't believe we could find another product that would let us do exactly what we're doing," Landwehr says. Orders of Magnitude also can create customized reports on all incoming orders. "It's nice to be able to track leads as they come in," Landwehr says. Eventually, he'd like to develop a system for repeat customers that will let sales reps have information about the customers on their screens before they even pick up the phone.

Easier Research
Research is one of the mainstays of marketing, and business users who want or need to access multiple sites for research or other data-gathering functions will find their work made easier by XML-based E-commerce tools. One such product is the Web Automation Toolkit from webMethods Inc. The toolkit wraps XML technology around HTML. Using the toolkit, webMethods created Agent Discovery, an automated procurement and purchasing application that can search multiple Web sites simultaneously and bring back photographs or other information such as data for Excel spreadsheets.

The photo services group of Discovery Communications Inc., an advertising agency in Bethesda, Md., uses Agent Discovery to query Web sites and retrieve photographs for use in ads. The company has preprogrammed Agent Discovery to query the top 10 stock photography vendors it uses. If the vendors' sites are suitably equipped, they can bill Discovery over the Web as their photos are retrieved.

"We used to have to search individual Web sites and identify the results and bring back the photographs individually," says Pam Huling, senior manager of photo services at Discovery. Now the company's offices around the world use Agent Discovery to find photos they previously wouldn't have been able to access.

E-commerce technology is being used to overcome the traditional boundaries of time and space, even to create new types of businesses. As E-commerce technology evolves through new products and standards, companies will find ways to reach out further to their customers and suppliers.

Read sidebar, "Ensure E-Commerce Quality."

Photo by Robert Houser