INTERNET: Real-world outfits make most of net - A wide range of businesses are taking steps to benefit from the explosion of e-commerce

If the e-commerce evangelists are to be believed, it won’t be long before we all spend much of our day frantically keying orders for everything from courgettes to cars into our PCs, interactive TV sets and web-enabled mobile phones.

If the e-commerce evangelists are to be believed, it won’t be long

before we all spend much of our day frantically keying orders for

everything from courgettes to cars into our PCs, interactive TV sets and

web-enabled mobile phones.



Of course, some of the predictions will turn out to be wide of the mark,

but there seems little doubt that the growth of e-commerce is gaining

momentum. By 2003, Forrester Research expects internet shopping to

account for 6% of US consumer expenditure. Datamonitor anticipates that

one in three households in Europe will be connected to the internet by

2003.



In the UK, 11.5 million adults have already used the internet, according

to Continental Research. Nearly one in four has bought a product or

service online.



What is interesting is that so much attention has been focused on just a

few sectors. ’Pure-play’ internet retailers (those that only sell over

the internet) in book, CD, travel and auction markets have done a great

deal to pioneer internet shopping, but this does not give the full

picture.



All kinds of retailers are finding new ways to market and sell their

products online.



In the UK, for example, the relatively conservative clothing group,

Arcadia - home to Top Shop, Principles and Racing Green - has online

shops for each of its brands. It has also launched Zoom, an online

shopping gateway, at www.zoom.co.uk.



While internet grocery shopping is likely to remain restrained by the

costs involved in the home delivery of a full range of grocery products,

specialist food and drink retailers are discovering that internet shops

are suitable outlets for products. Heinz, for example, has set up

anonline shop (www.heinz-direct.co.uk) to cater for the tastes of

homesick expatriates.



The impact of internet commerce on business-to-business trade has been

widely overlooked. E-commerce is expected to change profoundly the way

that businesses buy and sell products and services to each other.



IDC forecasts that internet commerce as a whole will be worth more than

dollars 1trillion by 2003, as more consumers shop online, the size of

the average transaction grows and the web is adopted as a viable vehicle

for generating business.



As the four examples (see boxes) illustrate, the range of companies

forming successful online links with consumers is growing - without a

CD, holiday or book in sight.



TOTALBET



Totalbet (www.totalbet.com) is the Tote’s online betting site. It was

set up as a joint venture with the sports news site PA Sporting Life,

itself a joint venture between the Mirror Group and the Press

Association.



Totalbet went live on April 10, to coincide with the Grand National.



’We realised a long time ago that the internet was a medium that had a

fairly major future and we wanted to have a major presence,’ says Rob

Hartnett, public relations director. ’We wanted to do it in partnership

with someone who had internet capability, and the site set up by PA

Sporting Life was by far the most popular in Europe.’



When it was launched, the site was only able to take bets for the Grand

National, but the range has since been extended. ’In the interim we’ve

added other events and sports - soccer, rugby league and union, motor

racing, golf and cricket,’ says Hartnett.



Totalbet also carries editorial content from the Sporting Life site.



’The site has built up 5000 registrations in its first three months,’

Hartnett adds. ’To put that in context, our telephone betting operation

has 50,000 accounts and it’s one of the biggest in Europe.’ The level of

online business per bet is higher than for the Tote’s telephone betting

service, which is in turn higher than it is in shops. Hartnett says this

reflects the fact that internet users still tend to be relatively

affluent.



To promote the site, the Tote initially relied heavily on its link with

Sporting Life. An online and print advertising campaign was launched at

the end of July, targeting sports sites and newspaper sports

sections.



Totalbet also sponsored three horse races.



The introduction of pool betting to the site is also scheduled for the

autumn.



The Tote has the exclusive UK licence for pool betting on horse

racing.



Because this form of betting requires less human intervention than

bookmaking, which involves complex risk assessment, it is expected to be

well suited to the internet.



DIGITALVISION



DigitaVision, a provider of digital images to media businesses, was

established in 1996. It set up a web site (www.digitalvisiononline.com)

in summer 1998 to sell its images over the internet. The current refined

version of the site went live in January 1999. The company anticipates

that its entire business will move to the internet within five

years.



DigitalVision started using the net ’because it was a good fit’, says

Tracey Tannenbaum, marketing manager.



The company’s images were already available in digital format. Internet

technology makes the process of selecting, buying and using images

faster, more flexible and convenient.



Typically, customers browse through catalogues, place an order and wait

for the delivery of prints or slides, which are easily lost or damaged

and must also be stored or returned.



At DigitalVision’s web site, which holds more than 10,000 images,

customers can search for and preview images, download selected images

from the site for immediate use and pay online. ’We focused on making it

easy to navigate,’ adds Tannenbaum. As in other consumer areas, users

become frustrated if web sites are slow.



More than half of the company’s customers already use the site to

preview images before they buy, even if they don’t order over the

internet.



Activity at the site, which recorded 1.5 million hits in June, is

growing at a rate of 500% a month.The internet gives DigitalVision an

international reach via distributor web sites - many of which are based

on the DigitalVision web site model - in 50 countries.



There are a number of strands to the site’s promotion.



’To keep people coming back to the site and to promote a new catalogue,

Contexture, one of the things we’ve done lately is run a competition to

win an iMac,’ says Tannenbaum.



The competition runs on a micro-site - www.imac.digitalvisiononline.com

- until September.



An e-mail newsletter goes out to everyone on the database, to back up

sales letters and postcards promoting the site. ’We also do promotions

on the web, rather than a loyalty programme,’ Tannenbaum adds.



Until the end of September, clients who spend pounds 500 online receive

Virgin vouchers worth pounds 100, while those who spend pounds 1500

qualify for a Sony Minidisc player.



About 200 people a week download a screensaver from the site.



MOLTON BROWN



Molton Brown, the premium UK niche cosmetics brand, opened its online

shop, at www.moltonbrown.com in July.



’The philosophy is quite logical,’ says Charles Denton, the company’s

sales and marketing director.



’We’re a lifestyle brand and the products evolve to match our customers’

changing lifestyles, so it’s natural to match the changing way that they

shop.



’We wanted a fast, hassle-free e-commerce solution that enabled

customers to buy Molton Brown products within a couple of clicks.’



The site’s performance has exceeded expectations. ’The number of

visitors is much greater than we expected and the customer profile is

very exciting,’ says Denton. Originally it was thought that the site

would not show a profit for six to 12 months. It is now expected to do

so within three months. The average value of sales from the site is

higher than that of in-store sales. ’It’s not cannibalising sales,’ adds

Denton. ’If anything, it’s driving people to stores.’



Denton says that Molton Brown plans significant investment to develop

the site in three stages over the next 18 months. ’The third stage will

be a fully interactive site which allows us to communicate with our

customers on a one-to-one basis.’ The internet offers a critical reach

into global markets. ’Molton Brown is a small company in a very

competitive world, but this enables us to compete on a level playing

field,’ says Denton.



A section on male grooming is prominently placed, recognising men are

still the most eager internet shoppers.



The biggest problem faced by the company was how to accurately represent

product colours on the web. Another limitation is that consumers who

enjoy testing products in-store aren’t able to sample products online -

yet.



BERRY BROS & RUDD



Berry Bros & Rudd is a privately-owned specialist wine retailer that can

trace its origins back to 1698. In 1995, it became the first UK wine

merchant to have a web site, says John-Paul Cockain, Berry’s internet

shop manager.



Initially the site, at www.bbr.co.uk, acted as a shop-window. In

November 1998, it became a shop in its own right. ’With internet

shopping expected to explode, it just seemed to us that the time was

right,’ explains Cockain.



The site is regularly reworked to improve navigation. It focuses on

Berry’s 300-year history to build trust in online shopping, and features

special offers and J-P’s Wine Surgery, which explains wine

mysteries.



The internet shop now accounts for 5% of Berry’s London-based sales,

with 60% of internet purchases made by new customers. About 40% of sales

are to customers outside the UK. ’The internet has certainly opened us

up to a much broader audience in the UK and overseas,’ says Cockain.

Berry also supplies international shoppers through its duty free shop at

Heathrow Terminal 3, which opened in 1994.



The company used print advertising and internet banner ads to promote

its online operations. The bulk of its online advertising is focused on

sites where visitors are likely to be comfortable with online shopping.



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