Fast Track to E-Commerce: All Aboard the Electronic-Commerce Train

As we stand on the threshold of a new millennium, we are faced with a business opportunity unprecedented in the history of civilization. The advancement of our communications technology and information systems is bringing the world's disparate economies into one global marketplace. The Internet is underpinning vast online systems of banking and finance, and the World Wide Web is becoming the new market square where businesses and consumers meet to exchange goods and services.

This virtual trading center is being driven by a tech-savvy breed of Web architects and business engineers who are establishing the design and laying the foundation for tomorrow's global economy. As with any new venture of this magnitude, there have been a few false starts, a few second guesses. But astute companies are moving ahead to create a solid foundation upon which other companies can build.

We chronicle the steady rise of electronic commerce, paying particular attention to the technologies that are making it possible and the technical visionaries who are giving it momentum. So grab your E-ticket and climb aboard. What lies ahead is nothing less than a virtual new world--a world within a world, where travelers with quick business reflexes and technical bravado can reap rich rewards.

For centuries, the forces driving the world's economies have remained more or less unchanged. Every society has a marketplace where products and services are exchanged, whether for a handful of cowrie shells or a few bytes of cybercash. The economic structures of these diverse markets have run the gamut from loosely organized to highly structured. And some of these structures have failed, leaving empires in ruins.

Today, the locus of activity centers around electronic structures and the architects are software engineers rather than civil ones. It's a diverse breed of individuals, but they all have one thing in common: an unquenchable enthusiasm for the coming era of electronic-commerce systems.

Judging by the statistics, the vision is contagious. According to a recent study by Cambridge, Massachusetts-based Forrester Research, 90 percent of large companies are already conducting business on the Internet. With 68 million Web users online, electronic commerce is turning into a booming retail channel that could skyrocket from $500 million in 1997 to $7 billion by 2000. Analysts at the Framingham, Massachusetts-based International Data Corporation (IDC) believe that Web-commerce transactions will quadruple during 1998 alone.

The reasons are easy to discern: Out in consumer land, the Internet population is growing steadily. A recent study by the New York-based Nielsen Media Research estimated that 24 percent of all people over 16 years of age in the United States and Canada have accessed the Internet. That's a 50 percent increase in the past year alone (See Don Tapscott's article, "E-Commerce and the Next Generation"). And what's the fastest-growing use of the Internet? Buying and selling over the Web.

Travel Rules

With this rapidly evolving venue come new challenges, many of them technical ones. The processes of creating products, attracting customers, accepting payments, and providing around-the-clock service are all different in the electronic world of the Internet. Businesses must establish a compelling Internet presence that is a natural extension of their physical presence. That means tight integration with existing business systems along with the creation of robust Internet commerce solutions. These solutions must be dynamic and secure to attract and retain consumers, and they must be scalable and extensible to accommodate future growth.

Amazon.com, the world's largest bookstore, is one of the industry's best examples of electronic commerce at work. Amazon allows Internet users to search for any book in print and then use a credit card to order selections. The company's booming business demonstrates how a paper-thin overhead and intensive Web focus make it difficult for traditional retailers to compete.

"Most of Amazon's 2.5 million titles can be delivered to your doorstep in a couple of days," claims Jeff Bezos, founder and CEO of Amazon.com. "Through our distributor network, we can acquire about 400,000 best-selling books overnight."

The Web is a great equalizer for new businesses facing large competitors. In Amazon's case, the immense population of potential customers on the Web has made it possible for a single "store" to house a physical inventory that would otherwise be impossible for a startup operation. Amazon dove into the retail market at a level previously possible only for much larger commercial outfits.

Construction Basics

Electronic-commerce applications have evolved over time. First there were Web sites designed for publishing and disseminating information. These sites were typically stored as flat-file HTML documents and served across the Web by a standard HTTP Web server. This type of simple application contributed greatly to the initial growth of the Web.

Although these first-generation Web sites remain valuable for marketing and information distribution, many companies are now turning their attention to strategic commerce applications that are closely tied to core business processes and existing technology architectures.

Most companies begin with a relatively simple technical infrastructure, taking orders through static HTML pages with forms secured by Secure Socket Layer (SSL), a protocol that runs on top of HTML and encrypts all messages sent between the browser and the Web server. These sites, which are easy to construct and relatively secure, are helpful and informative. But to build a true electronic store, merchants must also deal with other critical issues. How do you handle electronic payment, security, privacy, and fraud prevention? How do you tailor the site for each user? How do you integrate multimedia data types and create dynamic content that can update itself on the fly? (See Steve Bobrowski's article, "Managing Unstructured Data.")

"At best, the Web can offer a highly personalized shopping experience, allowing merchants to form electronic bonds with customers," suggests Larry Shafer, an electronic-commerce consultant based in San Francisco. "Through careful tracking of traffic through a Web site, companies can create the perception of a Ômarket of one' for advertising and promotion. This has never before been possible on such a massive scale."

Seeing the potential in this brave new world is one thing. Getting there is quite another. Carl Lehmann, a program director with META Group, an industry consulting group in Stamford, Connecticut, says that organizations must construct an integrated commerce architecture that can be built on and will evolve within a well-defined electronic-commerce strategy. "Evolving beyond publishing applications to interactive transaction systems requires investments in time, resources, and money," he cautions.

Shafer concurs. "Many companies are attracted to electronic commerce but don't have a good understanding of what it takes to engage consumers and get them ready to make an online purchase," he adds.

In other words, it takes more than eye candy to pull consumers in for the ride.

Shafer started his career in electronic commerce as a business-development associate and technology leader for General Electric on the GE Trading Process Network (www.tpn .geis.com), currently the largest business-to-business electronic-commerce venture on the Internet. Today, Shafer is a consultant for SparkOnline, a retail promotions network focused on the Internet (www.spark.com). SparkOnline helps companies develop and distribute interactive promotions that engage users via a game or a multimedia presentation. SparkOnline uses Macromedia's Director and Sun Microsystems' Java, along with products from partners Kiva and NetGravity, to create compelling interactive promotions that encourage end users to purchase the promoted product or service. The business is powered by an RDBMS database.

The Hong Kong-based Asian Sources Media Group (ASM) chose rdbms products to drive its ambitious ventures (see "Asian Sources Media Group: E-Commerce Blossoms in Asia"). One of the largest electronic-commerce cooperatives in the world, ASM boasts big-name customers such as Liz Claiborne International Limited and Reebok Trading Limited.

Expanding the Business: Lucent

Putting the right architectural components in place--in constructing electronic-commerce sites--creates a solid foundation that can support ongoing business expansion.

Consider Lucent Technologies, which is using Oracle's universal data server and Web Application Server to power a high-traffic Internet-commerce site for marketing and selling its business communications products (see "The Oracle Ticket). The site, www.lucentdirect.com, allows customers to browse up-to-the-minute text and images representing more than 1,000 Lucent products. Customers can also place orders securely online.

Lucent built the site, using rdbms technology, in only six weeks, launching it in July 1996, and upgrades it continually to keep pace with escalating customer demand. Thanks to a web application server, the content is all self-creating: When customers request information, the pages are built on the fly and presented to the user through a Web browser.

"The best thing about the Web Application Server architecture is its ease of administration," explains Tom Catani, general manager of electronic commerce at Lucent. "Our product managers are able to easily make updates--such as price increases or product description changes--online, by simply entering the system through their browser, using a password, and making changes to Lucent's electronic catalog. This avoids involving an HTML programmer."

This ease of use makes Lucent's customers happy too. "Consumers want to know that the information they are getting is correct, and they don't want to wait for it; otherwise, they will buy somewhere else," stresses Catani. "Because our product managers are able to maintain their own product content, updates are quick and easy. That functionality helps keep our site successful and directly connects us with a whole new market, saving considerable time and money."

Securing Payment: Scotland On Line

Another key ingredient of electronic-commerce systems is a reliable mechanism for making online payments. As Scotland On Line learned, companies can simplify online transactions by using an Internet Commerce Server (ICS). A joint venture between ScottishTelecom and U.K. publishing giant D.C. Thompson & Co. that was established to bring online visitors and consumers to Scotland, Scotland On Line recently beta-tested ICS. The venture plans to use the product to set up storefronts, receive payments, and establish tracking and reporting mechanisms for data mining and customer profiling (see "Scotland On Line: Scotland Invites Worldwide Business").

"Companies can use ICS to capture user transactions and movements within the Web site and perform off-line analysis to identify trends," says Andrew Sinclair, E-Commerce manager of Scotland On Line.

Accommodating Growth: Auto Town

For a merchant just entering the Internet-commerce arena, there are many unknowns in terms of how successful the site will be, the number of hits it will receive per day, the number of transactions it will process, and so forth. As these unknowns become defined, the underlying architecture must be able to scale from a small trial application to a large-scale solution.

Auto Town (www.autotown.com) has grown to support more than 100 auto dealers and thousands of individuals, thanks in part to a well-designed software architecture. A web application server and an rdbms universal data server provide a fast and highly scalable system for managing the rapid growth of Auto Town's online business, while a search engine provides powerful search capabilities. Visitors can quickly direct their Web browsers to a wealth of car-buying information (see "Auto Town: Online Shopping Vehicle").

"Accommodating growth hasn't been a problem," says Alan Heckman, Auto Town's Webmaster. "We're a virtual company, and we have a solid information architecture in place. But because everything's electronic, we can grow at a much faster pace than a traditional company."

Just as in a physical store, customers dislike slow service and waiting in lines--consumers don't want to be kept waiting when browsing, selecting, or paying for products on the Web. These issues give new meaning to the importance of Web site performance and accurate content management.

The META Group's Lehmann says the most difficult thing to achieve in an electronic-commerce project is getting customers comfortable with the idea of doing business online. "The technical and security issues, while certainly not trivial, are ultimately solvable through internal effort and purchased expertise," he adds. "But customer attitudes and preferences will prove to be more difficult challenges in the short term."

That's why, whenever possible, initial electronic-commerce projects should follow the same patterns set in normal customer relationships: Make as many parts of the process as familiar as possible, and take pains to create a comfortable, compelling shopping experience.

"Our No. 1 priority is making the store a fun place," concludes Bezos of Amazon.com. "People come not only to buy books but also to hang out. Community building is the secret to success for an electronic merchant."

Destination: The Bottom Line

Like a modern monorail transportation system, electronic commerce runs on complex technologies. But also like those sleek silver trains, when the system is built correctly, that complexity is invisible not only to the passenger but also to the engineer: The doors slide open; the passengers climb aboard; and at the press of a button, a smooth and effortless journey begins. Where does it take you? In the case of the passenger, to 24-hour access to information, goods, and services around the world. And in the case of those companies providing stations and services along the way, the journey leads to the ability to process more business transactions, forge tighter links with customers and suppliers, and realize a quickly growing bottom line.

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