«The vast growth potential of Internet-based commerce is tempered by legitimate concerns over the security of such a system. Despite the potential rewards of conducting business on the Internet, major corporations have been slow to embrace this technology–and with good reason. The number one rated concern for both businesses and consumers in establishing and participating in e-commerce is the potential for loss of assets and privacy due to breaches in the security of commercial transactions and corporate computer systems. A single publicized security breach can erode confidence in the business and not only damage the reputation of the firm, but also hurt the e-commerce industry as a whole.

– «Excerpt from Anup K. Ghosh, «E-Commerce Security: Weak Links and Best Defenses», John Wiley and Sons, Inc., 1998, p 9.

The perceived disadvantages of e-commerce and the Internet in general stem from ignorance and the apparent complexity of Internet and computer technology. Lack of understanding causes inertia in embracing new technology and the lack of clear guidelines and standards to follow compounds the matter. Some of the more popular reasons for small businesses not investing in e-commerce to date are as follows:

7.5.1.1 Security and privacy

Businesses fear that access to their networks from outside will endanger data and records vital to the company. Customers fear that credit card information may be duplicated and reused fraudulently. Both fears are reasonable and can be allayed somewhat by the knowledge that there exists items

such as network firewalls and secure server technology. Firewalls provide different levels of intranet security such that access to sensitive information and data can be limited. Secure server technology ensures that credit card information is only sent in encrypted form making Internet transactions far

more secure than either paper based or telephone based transactions.

7.5.1.2 Complexity and technophobia

Perceptions of complexity and instances of technophobia are only reduced by a coherent information and education strategy. The vast majority of people over the age of twenty-five have very little idea of what is involved with setting up and maintaining a computer system and Internet connection.

Fewer still understand the nuances of hardware and software architecture their correct installation and their impact on computer performance. Most computer users understand the use of a limited number of software applications needed to maintain productivity in the workplace. It is true that computer problems are usually solved by consulting specialist technicians with online stores of seemingly arcane knowledge. Education requires guidance and a structured approach so that knowledge is built and reinforced incrementally. There needs to be real-life examples with which to anchor this knowledge or too much of it is not absorbed.

7.5.1.3 Resistance to change

Resistance to change is rooted in a number of areas. The foremost reasons are a perception that adoption of e-commerce is unimportant or of low priority and a lack of appreciation of costs and potential benefits of such change. Smaller organizations may adopt change readily, however the inertia of introducing and implementing new business directions and strategies to several levels of management within a large organization can be ponderously slow. There are often associated problems with money and resources that must be sourced and allocated appropriately before change can take place.

7.5.1.4 Content

Often the most innocent of web searches can turn up links to web sites that contain material of a sexually explicit or otherwise prurient nature. It is understandable that parents may find access to such material objectionable where children are involved. Equally, it is easy to see how a corporate image may be smeared by association with such material using the Internet as an advertising and marketing medium.

7.5.1.5 Bandwidth

The Internet was originally intended as a low traffic medium for the exchange of data between research organizations in the United States. Expansion of the Internet as a medium for electronic commerce and world wide communication has obviated the need for network infrastructure capable of higher data transfer rates. New Internet2 technology and the extensive use of fibre optics and satellite technology is promising to speed up the transfer of information over the Internet to meet the growing need as more people connect and as demands on data throughput get higher..

International telecommunications and government bodies are wrangling over the allocation of radio and other frequency bands to new and existing modes of communication. Commercial satellite and HD television may take up valuable chunks of the available Internet bandwidth. Changes in technology inspired by international legislation of the use of transmission media may also prove costly to accommodate.

7.5.1.6 Standards

At the time of writing, the standards for correct and ethical use to the Internet as a commercial medium are in embryonic form. Australian and US organizations like the Internet Industries Association (IIA) are lobbying governments to regulate use of the Internet. As e-commerce is an emerging use of the Internet it is important to make sure that regulation is not so draconian and inflexible as to stunt its growth and minimize its potential. At the same time there needs to be and internationally acceptable set of rules and standards such that compliance effectively protects all parties using the medium and noncompliance is easily detected and can be effectively deterred.

7.5.1.7 Initial and ongoing costs

For many organizations with no existing Internet or Intranet or indeed computer technology, the setting up of a commercial web presence may incur significant costs. Few companies would step up from the situation where there were no computers to a computer on every employees desk in one jump.

Even incremental adoption of new technology requires costs for equipment and services and a lead time for staff to learn to be productive with the new

technology. Maintaining a web site and may require one or more employees, processing orders originating from the commercial web site may require a level of technology to be employed at commensurate cost. Updating, upgrading and maintaining computer technology introduces a new sink for funds that may be difficult to plan and afford.

7.5.1.8 Lack of education and training

For the Internet to be an effective tool for commerce there needs to be a strategy for community education. Education needs to be such that there is a place for people of all levels of knowledge and needs to expand their understanding of the Internet. Presently the availability of an accessible and graded

sequence of community education courses is nil. Organizations such as the IIA are pushing for education programs along with the standardization issues mentioned above. Whether the responsibility for public education should fall to government, industry or the existing education institutions is unclear. Along with the standardization program it is likely that all three groups will yet play a part.

7.5.1.9 Lack of understanding of e-commerce issues

Quite apart from understanding the issues of computer and network technology is a need to understand the importance of e-commerce as a different and possibly lucrative adjunct to any existing business. The ability of the Internet to span geographic, temporal, legal and cultural boundaries opens doors to a market with a large and growing shopping public, a wide range of possible suppliers, potential business partners and of course competitors. Accordingly, it is important that initiatives for appropriate education or enlightenment are made available to businesses so that as many as possible can take advantage or at least not suffer through ignorance.

7.5.2 Other threats

Choosing a location where the Industry is getting disadvantages compared to competitors
Knowledge of Internet as a marketplace
Delaying factors as speed, availability and secureness.
Competition- As the industry is booming the Industry will probably getting hard competition on Internet.
Supply from different companies – Without suppliers, who are able to deliver what the business need, at the right time and in the right quality the industry will have problems when the sale suddenly is booming.
Wrong marketing channel – Internet could be difficult at the beginning (security reason and other reason), but because the Industry is adapting the Internet very fast and the services and products are within the Internet trends it shouldn’t be a problem.
Customer base
Trends – at the moment the market for this is booming. This can change when the trend is going in the direction of avoiding giving away private data and the legislation is changing to protect customers privacy more than today.
Price – Are the customer willingly to pay what the Industry and others are demanding?
Expenses
Technology
Privacy

7.5.3 Barriers to selling over the Internet

Organizational change
setting up an electronic commerce site requires significant organizational changes such as improving communications and facilitating information to avoid duplication
Infrastructure not being ready
There is little point in opening up OnetoOne Marketing’s on-line storefront offering an extensive range of products to order at the click of a button if OnetoOne Marketing’s delivery channels are not ready
Lack of on-line payment solutions
There are few reliable on-line payment methods available at present. SET standard is coming soon.
Lack of integration with legacy systems
Avoid the situation where OnetoOne Marketing is displaying out-of-stock goods because OnetoOne Marketing’s site is not integrated with OnetoOne Marketing’s stock control databases.
Lack of expertise
According to KPMG Report on Electronic Commerce organizations feel that they lack the expertise to implement and exploit the opportunities for selling on the Internet
Security issues
Security issues are perhaps one of the greatest impediments to selling over the Internet both from the consumer’s and merchant’s point of view. They revolve around fears of data interception – especially that of credit card details transferred over the Internet; fraud – or misrepresentation of identity and unauthorized users gaining access to organizations’ networks. However, it would be accurate to say that currently the perception of risks is greater than actual risks.

Advances in new technology are resolving many of the current security issues and concerns and the evolution of secure on-line payment methods and in changing demographics of Internet users are also speeding up the growth of on-line shopping.

7.5.4 Advice From Don Peppers

If the Industry is not following their own advices it could be a threats for them.

Peppers suggests you start with secret number three (Organize around customer needs — not

products). «You can’t start a relationship without understanding your customer’s needs,» Peppers says.

So what happens if you follow all of these secrets? How do you know the one-to-one efforts on your web site are working? Peppers replied, «The ultimate yardstick to measure your one-to-one efforts is the LTV (lifetime value) of a customer. This is very difficult to measure and requires extremely sophisticated systems.

«You should determine a proxy variable to serve as your metric. For example, a bank could measure the average number of products a customer uses. This is not as difficult to measure. If you know what your goal is for one-to-one efforts on your web site, then you will be able to determine a reasonable metric.»

So what should you make sure you do right when implementing your one-to-one web efforts?

«The biggest mistake companies make when implementing one to one,» Peppers told me, «is

underestimating the degree to which a web site needs to be integrated with other systems and

data. Although it is hard work, it is not impossible. Customers will want to check inventory, order status, configure products and perform other activities online. These activities require integration with other systems and processes.»

7.5.5 Once we determine that one to one marketing has a sound theoretical foundation, we need to pay attention to the practical issues:

http://www.WebCMO.com/forum/onetoone/whatis.htm

is one to one marketing strategy easy to implement?
How costly is the one to one marketing strategy?
How effective is such a strategy?
What limitations does this strategy have?

Perhaps, it is hard for most of us to answer the first question. So, let’s focus on the rest issues: cost, effectiveness and limitations.

Let’s use the above one to one marketing case to explore more about one to one marketing:

What is the cost to collect each customer’s every piece of information?
How much information do we need to predict a customer’s behavior?
What portion of Ritz Carlton’s customers can provide enough information for the accurate behavior prediction? (in terms of frequency and stability)
How stable is each customer’s interests and behavior?
How important is such one to one marketing service to a customer’s overall satisfaction?
How important is such one to one marketing service to a customer’s choice of a hotel?
What portion of travelers (all travelers) are willing to pay for such one to one marketing service?
What portion of travelers (all travelers) can afford to such one to one marketing service?

You will get your own answer when you carefully go through these questions. And finally you have to make up your marketing decision: Shall I adopt one to one marketing strategy in my hotel?

Tom LeeDirector of Research http://www.WebCMO.com

7.5.6 Who is most threatened by the World Wide Web opportunity?

Generally the businesses/industries who is sleeping and not monitoring the competitors, customers changing buying habits and the trends within their Industry or the generally trends within the global business world.

Missing or too late engagement
Mistakes done by the accomplishing of the take on to Internet
(Unknown) changes in the market situation
Cost pressure from competitors who is on Internet

The businesses/industries who don’t monitor the new competitors online.
If your competitors are using the possibilities which Internet offer faster and better than yourself you will probably have a problem. This is especially dangerous for industries that customers today can reach directly by Internet. Here a lot of businesses can loose valuable market shares. That means e.g. Media, entertainment, and information Technology companies.

Businesses and organization who cover certain joint in the value chain and see competitors who extend their activities to other joint in the value chain (vertical integration)

Local dealers, local businesses. Internet is a global media and barriers are falling or the admission to the markets will be easier.

Companies who are handling mail orders. It will come an extra competition through different demands for competence by e-commerce. A lot of Internet catalogue companies will be established and the prices will be forced reduced.

Because of the information transparency the companies who is not using Internet or databases to do Business Intelligence, Market Intelligence. Personal Intelligence etc. will have problems.

Companies with high prices or poor quality or long delivery time. The reason is that the customers within a short time can compare a lot of offers. Use of intelligent agents. Competitors could use Internet to reduce their prices.

Companies who are not willingly to think in a new way or have manager in the age of 45 and older who is afraid because they have to little knowledge about the computer world compare with the next generation or does not understand the rapid grow of Internet.

Companies who don’t understand that to do business over Internet demands a Strategic Internet marketing plan /-approach, which are supporting their goals and business ideas.

7.5.7 Threats when not handle in the right way

Electronic commerce – general – Marketers will experience

That increased accessibility will help the user (customer) to find exactly the information they seek for, exactly when they want where in the world the information will be at the moment.
The customers will get direct accesses to the person or company who has a product or service to offer.
The customers expect a personal gain because much of the job will move from the person or company who is offering this product/service to the customer.

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Kunnskapskilden – Internet Marketing Intelligence Internet Situational Analysis of 1to1 Marketing/CRM

Research Project: Internet Situational Analysis of 1to1 Marketing/CRM from Jan Vig at Griffith University , Australia 1999/2000

Content

Chapter 7

SWOT

7.5

Threats