Goin' global

by Daintry Duffy

December 28, 2000 —

Q How are most global companies handling the issue of displaying sensitive content to only the appropriate country? Price differences between Asian countries, European countries and the United States are our most sensitive issue, and we don't want to make it easy for customers to compare prices between countries. We are currently using IP address detection to channel customers to the correct country view, but it is sometimes a challenge to manage the database of IP addresses. We're considering changing to a system that shows anonymous visitors only generic content and shows visitors who log in country-specific list pricing, account-specific pricing or other sensitive information.

A You've raised one of the most thorny topics of being on the Internet. Many companies have different price lists by region or nation. These price lists are often governed by distributor agreements forged well before the Internet started to change the rules, so they can't be broken overnight. IP address detection, as you've found, is an uphill battle that is destined to get worse as the number of users explodes worldwide. There's no perfect answer, but it looks like you're on the right track by requesting a log-in to guide users to the appropriate content. The ticking time bomb here is that your customers aren't stupid. If it costs $100 to buy your product in the United States and $500 in Japan, they're going to figure it out. Now's the time to question whether your regional pricing is defensible based on the services that you provide and the real costs.

Q How do you evaluate the viability of an online business model that's based on consumers buying various products from a variety of name-brand retailers? I have read that B2C models are not expected to thrive nearly as well as B2B models in the world of e-commerce. What is your opinion?

A I'm convinced that there's very little new about the businesses that have sprung up on the Internet. Whether they are B2B or B2C, the model is still all about providing a valuable service to a distinct set of customers. Open your local Yellow Pages, and you'll find all the same business models that have driven the Internet Revolution -- retailers that specialize in price, variety or service, and wholesalers, distributors and auctioneers. Forming a successful business on the Internet means learning what makes these brick-and-mortar businesses work. They deliver specific value to a group of customers, they make sure their target customers know that they are providing this value, and they have to do it profitably. In doing so, they compete for market share against other businesses that provide similar goods and services. All of this holds true for Internet-based businesses, too. You have to be able to answer the question, What makes my company different? Recently, B2C dotcoms have been slammed in the financial markets. In my opinion, rightly. There are a lot of these businesses chasing a finite number of customers with a finite amount of money to spend. The keys to success are the fundamentals of marketing: products, promotion, price and place. If these four Ps don't sound familiar, I recommend picking up one of Philip Kotler's texts on marketing (www.nutc.northwestern.edu/public /executive/faculty/kotler.html). The fundamentals haven't changed.

Q I'm studying some models of global B2B e-commerce. I'm trying to set up a new site that enables corporate members to do business on the Internet. What are the best e-commerce models in the B2B market and the best strategies to build membership and participation?

A Some of the euphoria over B2B business models has waned of late as the financial community has started to focus on real value in the marketplaces. My friends at AMR Research (www.amrresearch.com) recently published a report that predicts that of the 600 B2B marketplaces operating today, only 50 to 100 will make it. The winners will be those that provide real value to members. If you're not sure how to determine value, take a look at Michael Porter's book Competitive Advantage: Creating and Sustaining Superior Performance; it's a classic.

Q Do we need to register our e-business in all 50 states and in all countries where orders are initiated?

A I'm not an attorney, but I believe that it's necessary to register your business only in the states in which you have a physical presence, not in all the states where you have customers. Your responsibilities may vary as you do business internationally, and it depends on the type of business. You can get a good grounding on doing business abroad from the U.S. Department of Commerce's International Trade Administration (www.ita.doc.gov) or from specialized publications like Export Today or its Global Business Online site, www.exporttoday.com.

QWhat methods can a dotcom company implement in attracting global distribution and fulfillment companies?

A If you have relatively low international volumes and you're dealing with consumer goods, you should consider working with a global integrated carrier, like DHL Worldwide Express, and distributing directly from your home country. If your dotcom is targeted toward businesses and if you have high volumes or specialized logistics needs, you should consider having an agent represent you in your most important foreign markets. This is a topic where the United States' government is eager to help. Start at the International Trade Administration's website.

Q How do you see the traditional role of banks changing in the emerging B2B business model? What opportunities do banks have to leverage their corporate relationships and trusted third- party status? What are the new revenue streams?

A Many institutions will find their ground rules changed by new business models. The Internet provides unprecedented visibility to competitors' offerings. So what happens to banks in B2B? They will form deeper relationships with their customers -- adding services and knowledge of their customers' businesses -- or they'll strive to become the most efficient players by driving high volume with lower margins. For a third-party view of the new structure of banking, take a look at the "Open Finance" research developed by Forrester Research (www.forrester.com).

CIO