E-commerce: the next generation

The way in which businesses and consumers exchange value is changing fundamentally, and the new landscape created by that will appear sooner rather than later, says one industry analyst.

How we define e-markets and how they will interrelate with each other will be a crucial element when doing business in the near future, said Walid Mougayar, president of Toronto-based CyberManagement consulting firm and author of Opening Digital Markets – Battle Plans and Business Strategies for Internet Commerce, during a recent presentation in Toronto.

“The simple concept of buying and selling has been one of the most boring definitions of e-commerce we have heard about so far,” he said. “Yes, e-commerce is about buying and selling. But you have to think about it – the buying and selling — [as] a series of steps. And the e-commerce process includes covering all the steps.”

These can include the early sales cycle, product discovery, comparison shopping, increasing product knowledge, ordering merchandise and customer service.

“What’s most important is to remember that what is changing in this market is not the process with the Internet. What is changing is the way that value is exchanged between buyers and sellers. The question now is about who is going to deliver that digital value. Is it going to be you, or somebody else?”

It will be somebody else unless your business can move quickly to offer different levels of choice in the digital marketplace, Mougayar said.

“Because if you don’t, there will be companies out there immediately who will come between you and your customers, will hijack these customers, and therefore claim the customer relationship. From banks, to travel, to retail and the list goes on.”

Ottawa-based JetForm Corp. is one company that is extending e-commerce to many business roles including security, marketing, sales, distribution and supply chain management, according to John Kelly, president and CEO of JetForm. He said the use of these technologies actually serve to increase customer service and human interaction within his company.

“Internet commerce helps to reduce transaction time, automate the processes and allows people to add more value in other roles,” he said.

But many other companies still have no clear understanding of how to use electronic commerce to their advantage. According to Mougayar, the marketplace is currently in a state of “digital anarchy” – a critical mass with no set standards and much confusion about definitions and terms.

“So far, everyone has gone on thinking that e-commerce has two parts: business to consumer and business to business. But that’s only the start of it. As we have more and more of these electronic businesses, they will start to interrelate to each other and will start to form electronic markets,” he said.

Mougayar pointed to six models of e-commerce prevalent today: aggregated information and services, which includes virtual malls, on-line auctions and financial services; business to business transactions; digital cooperatives, in which companies share elements of their businesses for a common interest; private marketplaces between buyers and sellers; trading exchanges, which includes bidding on companies’ used and excess inventory; and software agent-based marketing, which will become more common as Web sites move from HTML to XML.

According to Mougayar, in order to make the most of these virtual markets companies need to place more significance on setting standards within the industry.

“The problem of this whole IT supply chain that this industry has is that they are so focused on the next generation – faster computers, greater memory and so on – that they have almost forgotten the importance of being able to interoperate their e-businesses,” he said.

“Today, they each have different product families and many don’t even have a handle on the actual inventory of their products throughout the supply chain. This creates a lot of inefficiency.”