Challenges in ECommerce Strategy


1
Challenges in (E-Commerce) Strategy

• Ajit Kambil
• Global Director
• Technology and Innovation
• Deloitte Research.

2
Outline

• The context.. (US viewpoint)
• What went wrong
• The underlying transformations
• What we need to address

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The times they were a changing
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to be followed by..
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And even more..
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But there is silver lining

• The lowest interest rates in decades
• Unemployment rate has flattened
• Corporate cash flows and profitability are going
  up
• Oil prices are more stable
• Household spending is holding steady
• New life in the venture capital environment

7
It should be no surprise eCommerce is not top of
mind for CXOs

• Generate demand and cut cost
• Reduce over capacity
• Restore pricing power in their industry
• Compete in deflationary and inflationary
  environments
• New regulations

8
Many eCommerce initiatives were oversold and
under-delivered

• Not enough real value in exchange processes
• Did not create a win-win-win between buyers
  sellers and market makers
• Governance and business model failure
• Process redesign integration costs were very high
• Others drowned in liquidity

9
Despite the failures there are genuine successes

• Auction based market place founded in 1995
• 45 million subscribers in March 2002
• 61 million subscribers by January 2003
• Rapid international expansions and
  diversification
• 2002 gross merchandise sales on eBay exceeded
  US13 billion
• eBay motors (4.3 billion)
• Computers (1.9 billion)
• Consumer Electronics (1.8 billion)
• Books/Movies/Music (1.4 billion)
• Sports (1.2 billion)

10
EBay is lot more than a consumer auction

• Clearance Time is money and many high
  technology products are perishable. Liquidation
  on eBay is cheaper and often generates higher
  prices
• Resale - Accelerate upgrades while reaching new
  customers and driving new growth
• Customer Insights - Product demand pricing and
  customer preferences
• Fashions and Nostalgia Nissan 350z the mini
  are hot products
• B2b New channels to small businesses
• Resale markets like eBay should not be ignored
  as even large companies look to to them for
  value.
• Resale markets must be factored into supply
  chain strategies especially in a down turn.

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There are other promising market applications
12
Nevertheless there is technology and innovation
fatigue and skepticism

• Technology often outruns the user
• User expectations for convenience have gone up
  but we all carry multiple gadgets

13
But there are fundamental and disruptive changes

• Socio-Economic and Demographic Changes
• Aging of developed world populations seeking
  economic and health security
• New security concerns national and corporate
• Major workforce disruption at the level of
  knowledge workers
• China and India plugged into the world economy
• New customer cultures

14
Businesses are rapidly outsourcing

• Business Models
• Outsourcing
• Business networks are becoming more complex
• Decoupling returns from physical informational
  relationships and other intangible assets
• Competing through IP

15
Technological Changes on the horizon include

• Information Technologies
• Auto-Identification
• Grid computing
• Utility computing
• New Interfaces
• New sensors and MEMs
• Nanotechnology
• Power technologies
• Bio-technology

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From a business perspective the questions remain
the same..

• How will a new idea impact my business
• What is the business case for a new technology or
  initiative
• What are effective models for moving from
  innovation to deployment of a new idea or
  technology What works
• How should I organize to capture the value
  (collaboration co-opetition internal
  development etc)
• What are the broader social impacts of the
  technology
• How will individuals unions and society respond
  to these changes

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Beyond the obvious there are broader challenges

• What are we really managing and measuring
• Many intangibles are invisible in much of
  traditional accounting
• Thankfully cash flow and earnings can be
  measured.
• How should we conceptualize strategy in networks
• Does IT matter (not so according to the recent
  HBR)
• What technology capabilities and architectures
  are required to compete in the future (IBM wants
  to sell it to you on demand)
• How do we increase individual and knowledge
  worker productivity
• How do individuals really collect and interact
  with information to make critical decisions
• How should governments respond to technological
  change and create environments suitable for
  attracting the best labor capital and other
  value creating assets to meet the promises and
  obligations to their citizens
• How can information technology support the growth
  and economic aspirations of a society

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Conclusions

• eCommerce is not novel any more
• Today we want to know how to make it work better
  to satisfy individual corporate and societal
  needs.
• Within this context each of us has to decide how
  we create distinctive value in a competitive
  market place for ideas for different audiences.
• The latest CAIS issue suggests some directions
  for this in a summary of an ICIS panel