Second-Generation E-Commerce

If the hallmarks of the dot-com boom were glitz and venture capital, the postcrash world of e-commerce is much less glamorous.

Today, the hallmarks of e-commerce are better relationships with customers and cost-efficient transactions with business partners, says John Plansky. He's a senior vice president at NerveWire Inc., a consultancy and systems integrator in Newton, Mass.

Here are two examples of the kind of second-generation e-commerce Plansky is talking about.

Organization: Sprint Corp.

Mission: Provides wireline and wireless communications services to 23 million customers in more than 70 countries.

Challenge: To find a paperless, efficient way to manage 7.2 million invoices and 2.5 million payments per year. The process is quite complex, involving 7,000 suppliers, many of whom have multiple locations and want line-item detail about the payments, says Tammie Calys, director of supplier disbursement at Sprint.

Technology: Sprint tried implementing electronic data interchange (EDI) from August 2000 to April 2001, but only 29 of the largest customers were willing to make the investment required. Thousands of smaller suppliers weren't willing or able to handle EDI transactions, Calys says.

In June 2001, Sprint started a pilot project with the Xign Payment Services Network (XPSN) from Xign Corp. in Pleasanton, Calif. XPSN links a buyer's accounts-payable system with a supplier's accounts-receivable system across a secure settlement network. It's essentially an outsourced payment network with a Web interface. Xign already had a prebuilt adapter to hook into Sprint's PeopleSoft Financial system.

Payoff: Sprint has now signed up about 1,000 suppliers for the Xign network, Calys says, and the network handles 40% of disbursements. Her goal is to reach 60% of disbursements by year's end and add electronic invoicing to the mix.

The Web interface gives both sides "end-to-end visibility" into each transaction, which then reduces phone calls checking on the status of a payment. Those inquiries used to account for 25% of calls to Sprint's call center, but now the figure is down to 15%, Calys says.

Other savings come from reducing the issuance of paper checks, which cost 54 cents each to process compared with the electronic transaction fee of 6 cents per payment. The electronic network also reduces the number of lost checks and rework. The net benefit in the first year is expected to be $150,000 in savings.

The invoice and payment network has another, broader benefit, too. "It's the building block for an e-business relationship with our suppliers," Calys says.

Organization: Shop At Home Inc.; Nashville

Mission: The 24-hour television network reaches 68 million cable and satellite households. It sells collectibles, jewelry and other products on the TV network and on the Web.

Challenge: "When we relaunched our Web site last year, the goal was to make the Web channel enhance the customer's experience with the television broadcast, rather than treating it as a separate business," says Bob Miller, vice president of IT. "We want customers to be able to shop with us on their terms. If they want to call into the call center they can, or if they want to order by touch-tone on the phone they can, or if they want to order on the Web they can."

Telephone orders are limited by the number of available telephone lines, so the Web has greater capacity, Miller says. "You've probably heard TV shows where the host says, 'The phone lines are jammed, bear with us, please call back.' We wanted to give the show producer a way to drive that extra traffic over to the Web site."

Technology: Shop At Home uses the e-commerce platform from BroadVision Inc. in Redwood City, Calif. In May 2001, the IT department built an online tool "that creates a BroadVision [Web] sale on the fly, with a time-to-live duration," Miller says. "If we have a particular item for sale on the air that's causing the phone lines to fill up -- and we don't want to lose those sales -- the producer can give a [Web] discount on shipping or create a 10%-off sale," Miller says. The producer launches an online sale, such as 10% off the purchase of a camcorder for the next 10 minutes, with a single mouse click, he adds.

Payoff: "It's been very successful ... we see a definite spike in Web traffic when we offer" an online sale, Miller says.

But it's a double-edged sword. You don't want to train customers to hold off on buying at the regular price in hopes of a Web discount, he says. "You don't want to give away margin points when you don't have to," he explains, but the Web technology pays off when those phone lines are jammed.

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E-Commerce Grows Up

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Copyright © 2002 IDG Communications, Inc.

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