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The Role of Business-to-Business in Holiday E-commerce

Read What Others Are Saying. Add Your Comments Too!

You've heard the warnings about this holiday shopping season.

"Scalability" is no longer just a concept for you because, if you've taken care marketing and promoting your products and services, you're experiencing the scalability challenge right now.

And that challenge is the point at which the business-to-business e-commerce meets online retailing.

One great example of a successful business-to-business company is Cisco Systems, who did 80 percent of their $12.15 billion sales of routers and networking gear online this year.

Another one is Grainger.com, the world's largest business-to-business distributor of maintenance, repair and operating (MRO) supplies.

Grainger recorded online revenues of $69 million, thanks to their understanding of how the Web increases the efficiency of their distribution process.

And delivery services like FedEx and UPS round out the scalability formula with their their $5.6 billion and $5.3 billion in online revenues so far this year.


There are numerous points along the value chain where your online success depends on business-to-business services like these.

Earlier this season, Web Developer's Journal's Bruce Morris described ISP and server-level stress points at which an eretailer's holiday sales activity could be interrupted.

Although many peopleare talking bandwidth nowadays, Morris points out that "you need to determine where the bottlenecks in your system are" first.

"To be ready for Christmas you need to be sure you understand how your bandwidth provider allows you to burst and/or quickly increase the size of your pipe," adds Morris, "and make sure the rest of your systems are ready for any possible flood of new traffic."

Tim Musgrove, Chief Technology Officer for SmartShop.com, agrees.

SmartShop is a shopping destination--not portal--that allows consumers to research, shop and buy products from a number of online merchants without leaving the SmartShop site.

"Since we serve ten times more information about a product than most other shopping sites," Musgrove explained in an email communication to iBizMagazine.com, "we face a huge challenge in getting all the data out of the server before the user gets tired of waiting."

He recommends using dual Pentium Xeon processors "with at least a gigabyte of RAM [that] lets our SQL database fly like the wind."

SmartShop.com runs this on FreeBSD Unix, said Musgrove, "which we love because it's inexpensive, easy to maintain and so scalable that even Yahoo! can run on it."

Web Developer's Journal's Morris echoed Musgrove's advice. "If you're lucky your server farm is easy to upgrade," he wrote this autumn.

"Remember you can always hire servers on short notice," he said. "There are several services in the U.K. that hire SUN and Intel equipment on a couple of hours notice."

As far as RAM (random access memory), Morris suggested, "one can never be too, thin, too rich or have too much RAM."


After the online transaction, however, come the real challenges.

Distribution channels, effective fulfillment and customer service are the final bricks required to erect a scalable e-commerce architecture to maximize your holiday profits.

Just as ISPs are becoming much more than simply access points to the Internet, package-delivery services are stretching their business model to include more of the transaction chain extending from the factory to the end-consumer.

UPS, for example, has set up warehouses across America to store and pack products for delivery.

At the other end of the spectrum is Amazon, with its recent multimillion-dollar investment in brick and mortar fulfillment houses across America.

Fulfillment is the ultimate juncture between online--or traditional--retailers and business-to-business applications.

As InternetWeek editor-in-chief Robert Preston pointed out in a November column, some brick and mortars will benefit much more by leveraging the Web to optimize fulfillment--moving inventory to where it is in demand--than by establishing an online-retailing presence.

One example is Levi Strauss & Co., who recently announced they would soon stop selling clothes online because of channel-conflict with traditional Levi's and Dockers retailers.

Preston suggests that, for some businesses, the most immediate way to increase sales is by focusing on customer-satisfaction and brand-building before establishing an online shopping site. "Fix and improve what you know before tackling what you really don't," advised Preston.

The bottom line is that this holiday season will be best for two kinds of retailers--those whose solid relationships with their business-to-business partners allow them to scale up fast to meet demand, and those whose brand is associated with trust and reliability among customers.

The Internet is a tool that can help companies acquire both of these essential characteristics.

Robb Scott
Copyright, iBizMagazine.com, 1999


Originally Published in 1999 before we changed our name to iBizResources.com as part of the journalism internship teaching process. We used this piece, written by Robb Scott, our editor and principal writer, as an example of how to write for the web - something very different for most of us back then. For more information about our internship program visit http://www.iBizResources.com/interns/index.html.


Reader's Comments:


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