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Unit 63

E-commerce, the Small Business Road to Profits

Is it correct to say, "As the big get bigger, the small get smaller?" It could well be so, if it weren't for the Internet and the surge of "electronic commerce". Much has been changed. Think back to a decade ago and imagine you were looking for a specialized product. It's a story which happened to me.

I wanted to purchase 300 quill pens to hand them out to guests at a function being held in Nov. 1991. It wasn't until I had exhausted almost all of the Melbourne Yellow Pages directory that I gained a lead. A Melbourne gift supplier knew of a company in Britain that produced quill pens in the quantities which I required. I commenced by faxing the Sales Manager. Having no response after a week, I sent another fax addressing it to "anyone who can help me". A week later I received a brochure. We chose the quill pens most suitable and placed an order for 300 via the fax. After 3 days I rang the company to see where my order was, only to find out the order had not been received. I proceeded to refax the information. The order then was processed and they asked for a deposit which was sent. They then confirmed the order. Being in the freight forwarding business, I asked our UK agent to pick up the shipment for me in three days. At that point the unexpected occurred. They didn't have the required number of quill pens in stock. The order was incapable of being fulfilled on time! The result? The whole process took 6 weeks to reach the point where the outcome was negative. This was in 1991.

That is not the way o do business in 2000. If today I was looking for quill pens, I would go straight to the Internet. There I would find numerous suppliers of quill pens and be able to see clear pictures, examine prices, know when and how the product could be delivered, and order and pay for it. Today suppliers compete by their web pages and have opened up the whole world to their products.

E-commerce helps small businesses compete in the world market, against multinational organizations. Businesses, no matter how small, become virtual organizations and can give the same information as though all the components of manufacturing, warehousing and freight were available as in-house functions.

Let's assume that my quill pen supplier in Britain is now just that -- the supplier. The customer, however, doesn't know that! The several participants in its supply chain are now the manufacturer, the marketing company (my quill pen company), the freight company, the distributor and the end user. The Supply Chain can be electronically automated with the greatest of ease. It does not matter how many participants are involved, or how far and extended is the supply chain. The Internet does the rest!

E-commerce enables small to medium-sized businesses to usefully interact within the Supply Chain, as if they were all part of the same organizations they now have the tools to compete! All this happened in a market which, until recently, was regarded for the big players only. Overall it brings competitiveness and greater profitability.