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The Web has proved to be an excellent transaction medium for business-to-business dealings. Some companies selling memory chips for computers, for example, have registered sales of several hundred million dollars per year. For a few, these transactions represent more than 85 percent of their total revenue. Their sales are to companies that buy computer components to install in units for sale or to upgrade their own equipment. This type of Web transaction will continue to grow in the years ahead. How do customers nd out about these transaction sites About a third of them comes from advertisements placed in print magazines, a third comes from Web ads on technical sites, and the remainder comes from search engines. Many have established premier pages for their best customers. On these pages, their best customers have established accounts,
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so that their employees can order the units charged directly to their company accounts. Business-to-business Web transactions continue to register success in a wide variety of elds. Why are they more successful than consumer Web sales There are several reasons: The average order size of business transactions is much greater than the average consumer order size. The universe of business customers is much smaller. It is less expensive to reach them through direct mail or print or Web advertising than to reach average consumers. Premier pages work well here. They don t work at all with consumers. Business customers have a continuing and predictable need for most of the business products sold through the Web. Consumer purchases cannot be predicted as easily. Business-to-business transactions on the Web are conducted during the day, when buyers and sellers are in their of ces working at their company PCs. Consumers, on the other hand, if they are employed, have to do their Web shopping after they get home at night. There are competing demands on their time. It is more fun to go to the mall with their families or to watch television. That is why about 80 percent of all sales on the Web are business to business.
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Business-to-business e-commerce transactions can be highly successful. Pure-play Web e-commerce seldom works. Success comes to established businesses that add a Web presence. To make the Web work, you have to build a very expensive distribution system. Once you have built such a system, you are not a pure-play operation anymore. Barriers to entry on the Web are very low. It is very easy and inexpensive to start a new Web site in any category. It is very hard and expensive to build a chain of stores and warehouses. That
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means that if you are successful on the Web, you will very soon have many Web competitors. People like to hold something in their hands before they buy it. What about catalogs A catalog is something you can hold in your hands, pass around, and scribble on; you can tear out pages and stick them on your refrigerator. You can t do any of this easily on the Web. There is precious little loyalty on the Web. To keep people coming back, you have to personalize your Web site and communicate often. Mass advertising is too expensive for most Web sites. Loyalty is very dif cult to generate and maintain on the Web. So if you have an established land-based business and want to bene t from the Web, what should you do Look on the Web as more of an ordering medium than a selling medium. Put your Web URL on all your catalogs, brochures, and direct mail pieces. Provide one-click ordering to make it super fast. Provide a dealer locator. Create a pro le of every customer. Give all your customers, whether business-to-business or business-to-consumer, a personal PIN, and invite them to come to your Web site to update their pro le. Give them a gift for doing so. What is a pro le It contains not just the customer s name and address, but the customer s email address (with permission to use it), demographics, family composition, preferences, and purchasing history. Get the customer s permission for you to remember his or her ID and password that is, permission to put a cookie on his or her PC. If the customer is a business, use the pro le to nd out what it does, how it uses your products, and how often it buys. Use the pro le to populate your database that is used for regular of ine sales. Use the pro le to personalize your site. As Amazon or Staples does, say, Welcome back, Susan (using a cookie). Then vary the site content based on the pro le. If Susan has children under the age of 4, your site will look different from the way it will look if she has children in college. This is not expensive to do. Most sites that have customer pro les developed can become fully personalized for a hundred thousand dollars not millions.
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