Get Real Before It's Too Late

Last month, Furniture Brands International stated that it wouldn’t be doing business with Internet entities that didn’t also have a real bricks-and-mortar showroom. Announcing the decision, CEO Mickey Holliman talked about the need for a “demonstrated commitment to customer service.”

There’s more to commerce than you think. The Internet has been sold as this wonderful commerce medium where you can sell to a worldwide audience at greatly reduced costs. Sounds too good to be true? It is.

Many people vastly over-rate the Internet as a commerce medium while at the same time vastly under-rating the costs of carrying out commerce in an online environment. You don’t become e-commerce enabled by slapping up a web site and getting yourself a secure server. Just because you’re on the web doesn’t mean that you are now miraculously a global business, that suddenly — as if magically — all the problems associated with selling into a foreign marketplace (or even your local marketplace) have disappeared. Get real.

An 11 country study by Consumers International (a group of 245 consumer watchdogs) stated that, “Although buying items over the Internet can benefit the consumer by offering convenience and choice, there are still many obstacles that need to be overcome before consumers can shop in cyberspace with complete trust.”

The study found that eight percent of the products that the study team bought never arrived. Only 53 percent of web sites had policies on returning goods, and only 32 percent provided information on how to complain if something went wrong.

According to another June published survey, (this time by Net Effect) 67 percent of potential purchases on the Internet are abandoned because of lack of real-time online customer support. Only 5.75 percent of people who visit e-commerce web sites place an order. The study also found that consumers are particularly worried about product delivery, returns, and product specification information.

Yet, another June published study by the Federal Trade Commission of 200 web sites from 18 countries found that only 26 percent of web sites had information on their return policy, with only 9 percent listing their cancellation terms. “If people do not feel safe and secure with e-commerce, they won’t use the Internet, and all of those rosy predictions on Internet use won’t happen,” secretary of commerce William Daley said in a recent statement.

There’s more to selling than sales, as anyone who has ever successfully built a business knows. Therefore, I find it surprising how normally sensible people lose their senses when it comes to e-commerce. They talk in animated terms about how great and open the opportunity is, and how they’ll reduce costs by a factor of 100.

Yes, the opportunity is great and open. However, every entrepreneur and their dog sees the opportunity and is chasing it with utmost vigor. It’s a dog-eat-dog world online, you know. Please, the Internet is not the new alchemy. Costs are costs. What is happening with the Internet (and during much of the history of IT) is that costs are being displaced, not replaced. In certain areas, IT reduced costs, but due to automation, it resulted in a reduction in brand loyalty. Thus, marketing costs to new consumers increased.

The Internet is doing the same. Companies are now spending millions upon millions to build and maintain their brands in a very crowded online environment. They may require less staff to run their web sites, but these staff are demanding huge salaries and are very difficult to find. Automation is not everything it’s cracked up to be, either. As the Net effect study found, many people still like to communicate with other people before they make a purchase.

Unless e-commerce gets real, customer service will be its Achilles heel.