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Many businesses want to get into online marketing, and, certainly, some companies are scoring big sales on the World Wide Web. But many more are failing. What are the businesses that are succeeding doing right?

They have a clear objective.

Don't create a website just because it's the thing to do. Decide why you're building your site, and design it with this in mind. But don't limit yourself. websites can serve a number of goals. You can advertise, sell, build prospect lists, or pursue other creative marketing ideas.

They start by experimenting.

This is a new medium; learn through experience. It's far more important to get a site going than to spend months planning it.

They look for cost savings.

A toll-free number for order-taking or customer service can be very costly. If customers communicate with you through the Web, these costs are eliminated entirely, and the savings go directly to the bottom line. Before committing to this strategy, however, make certain your operation is ready to service customers in this new way.

Electronic commerce is growing rapidly as our technologies for processing, analyzing, andtransmitting vast quantities of data continue their extraordinary development. Consumer and businesspractices across a number of markets are changing, in some cases dramatically. In the end, there maybe far-reaching and positive implications for the structure and efficiency of many of our markets.Three key sets of variables that are shaping electronic transactions and electronic commerce can besummarized under the headings of convenience, confidence, and complexity. Convenience refers tothe capital, labor, time, and other real resources needed to conduct a transaction. Obviously,consumers and businesses wish to optimize the resources expended in conducting a transaction.Confidence refers to the trust that parties have in the elements of a transaction that generate risk tothem. Financial, operational, security, and legal risks are relevant here as in many other contexts.Particular attention is currently being paid to the complex of “trust variables” relating to theauthentication of transactions and parties, as well as to issues of privacy. Complexity is a shorthandreference to the ease with which the key features of a transaction can be standardized and automatedand, ultimately, understood by the parties to the transaction. As we have now learned, however, it isnot the good or service itself, sometimes called content, that necessarily has to be standardized in orderto participate in electronic commerce.

Ken Jeanos, director of inside sales and operations with Panasonic Industrial, once believed the Internet would make his company more efficient. The company, a multibillion-dollar division of Matsushita Electric Industrial, distributes electronic components, storage devices and semiconductors, among other products, to original equipment manufacturers and electromechanical subcontractors. Panasonic Industrial had used electronic data interchange—a standard means of exchanging purchasing information—for more than 15 years, and it worked well for the company. Nevertheless, the Internet promised to streamline some business processes that weren’t EDI-enabled and to generally help the company meet customer needs more quickly, at a lower cost.

However, just as Jeanos’ expectations for the Internet were rising, a handful of Panasonic’s customers asked him to stop using EDI altogether and to use their extranets exclusively to exchange purchase orders, invoices and forecasts. Jeanos understood why. According to industry analysts and CIOs, shifting to extranets can allow a company to shut off its EDI networks, and save as much as several hundred thousand dollars a year on fees for value-added networks (VANs), the private network providers that lease communication lines for EDI, map data between trading partners and test systems.

Since my article “Atomicity in Electronic Commerce” appeared last year, new developments in electronic commerce have been coming thick and fast. Here are some of the more salient changes as they relate to my original paper. As the reprinted article mentions, even in 1994 total electronic commerce (including business-to-business, financial and consumer) exceeded $245 billion. We’ve all noticed the tremendous expansion of financial services available lectronically, but especially dramatic has been the growth in consumer-level electronic commerce. Estimates vary on the dollar volume of consumer-based electronic commerce sales in 1997, from Forrester Research’s $2.4 billion to American Express’s estimate of $4 billion to $6 billion. IDC predicts that consumer sales will reach $20 billion by the end of 1998.

And indications point to widespread acceptance of electronic commerce by the public. Here are just a few examples:

A study by Ernst & Young of a shopping cart of consumer goods indicated that in 90% of all cases, the best prices were found on the World Wide Web. Dell now sells $3 million worth of computers each day from its Web site. Egghead Software has decided to abandon its retail stores and switch to a Web-only presence.

In particular it focuses on the way goods and services are delivered to customers and considers the implications for UK international trade statistics, both in terms of how such transactions might be presented in the statistics, but also how the data might be collected. It draws on a paper by the United Nations Conference on Trade and Development (UNCTAD)1 and a draft discussion paper by the Interagency Task Force on Statistics of Trade in Services,2 both presented at the Organisation for Economic Co-operation and Development (OECD) Trade Statistics.

The issue of classification namely whether electronic transmissions or products shipped electronically (instead of physically) should be classified as goods, services, intellectual property or something else (perhaps intangible goods) is more than a statistical issue and has been the subject of discussion amongst taxation and trade policy experts. For example, if they are regarded as goods, they would be subject to General Agreement on Tariffs and Trade (GATT) rules, which would make electronically shipped products dutiable. If, on the other hand, they were classified as services they would be subject to General Agreement on Trade in Services (GATS) rules and probably not dutiable. Thus the issue of classification has implications for government revenues from Customs tariffs.