Selling products online may sound like an easy strategy. But scores of companies have still managed to completely muck it up.

In Australia and elsewhere, online retailers have been struggling to recover from the post-boom hangover that left many fighting for life or simply unable to continue. In many cases, shareholders' collective demand that online companies turn in viable financial results were too much for companies where fiscal responsibility had been a secondary concept to big spending and big talking.

Now, unless you can justify a rapid return on investment for your company's Web site and online presence, it may suddenly become a lot harder to sell such projects to the board.

Experiment

Getting your online formula right is going to take a lot of experimentation, and if you've already jumped into online selling you can be sure the site will require constant updating and improvements.

You may even need to completely reconsider your online strategy, if your online presence isn't returning the sorts of profits and customer interaction you think it should.

There are certainly ways to make sure your online selling efforts don't go unrewarded, but a surprisingly large percentage of companies have no idea how to best make the move online. And, as in everything, the mistakes of the past can be an extremely valuable lesson for those now making the journey.

Not totally new

When businesses of all kinds first started jumping into e-commerce, many made the fatal mistake of believing the hype about the Internet being a completely new kind of business model.

Sure, it's a different way of customer interaction and it forces companies to become a bit more cutting-edge instead of relying on established business practices. But the absolute worst way to make this happen was to isolate Internet development efforts from the rest of the business.

This sort of segregation was often meant to let companies' online arms develop at their own speed and have equal access to resources back in the main organisation. It may also have been a way of insulating the main company from what used to be perceived as considerable risk; if online efforts hadn't taken off, the offending limb could be lopped off much more easily if it was operating on its own.

But this business structure had the opposite effect. With newly created online arms set onto the task of building an Internet presence, many companies combined content thrown at them from myriad sources within the company--and ended up with simple brochureware sites consisting of loads of static HTML pages drolly describing products, company history, and vapid mission statements. Those sites that did sell product only offered a most basic inventory and often processed everything by hand; weeks-long shipping delays confirmed that this was simply not the right way to go about online selling.

Working together

"A lot of people look at the Internet as if it's a form of marketing, but they forget that it's something that runs way beyond just marketing," says Presence Online director Jossel Ginsburg. "It's a method of creating something completely new for the business that lets you leverage all your current technologies in such a way that you can do something completely fresh for your business."

Getting value for your online dollars means getting everybody with a stake in the online site--all the way from senior board members to warehouse pick-and-pack staff--to work together. Making this happen, of course, requires strong lines of communication across the various layers of the organisation. If those conduits aren't already open, senior executives will have to exert downward pressure to fix the situation.

Ideally, you'll want to map out a workflow structure that incorporates every part of the business--including both obvious areas like warehousing, IT and accounts, and less obvious areas like marketing, R&D, and human resources. Although their direct involvement in online selling may be minimal, those business units may contribute a new perspective that broadens the utility of your online site.

This doesn't mean everybody should just focus on the Web site, however. Given the change that an online presence can provide, managers of individual business units need to revisit their relationships and interdependencies, and work with online architects to make sure those processes are correctly addressed online.

This can drive major business change that has little to do with the more outwardly focused Web presence, but which generates new opportunities and efficiencies in internal processes.

Inventory hassles

This fact has been the simple reason behind the colossal (and expensive, thanks to over-enthusiastic venture capitalists) failures of ventures such as pets.com, which found that not even the most appropriate domain name in the world could convince customers to buy profit-sustaining volumes of dog food.

Your company's products are probably a lot more valuable than dog food, so treat them accordingly. Before rushing onto the Web to start selling, carefully consider the range of products you want to offer online:

• Are there items that are hard to come by?

• Can your suppliers guarantee replenishment times so you can keep the right amount of inventory moving through the site?

• Should you offer a subset of your product range, or go the whole hog?

Although it's easy to go into an online retailing strategy assuming that you will eventually sell everything online, business caution should necessarily limit the scope of your exercise.

Inventory issues will become particularly pointed in the lead up to the Christmas shopping season, whose traditionally heavy volumes have proved too much for many e-tailers in the past.

That's why it's probably better to start with a small assortment of products, make sure you have the logistical procedures in place to ensure a continuous supply of product, and then add new lines over time.

Keys to success

"A lot of companies have gone into this space and failed," Cooper says, "and I believe one of the key reasons for this is that, unlike a lot of businesses, you need a really close marriage between the technology and the e-tailing mindset.

"There's a bit of a disconnect between offline retailing and online consumers, and when retailers get online they don't always understand that. There are also a lot of hidden processes that, on the face looking from outside, people don't know exist."

The hidden process most likely to trip you up is logistics, which has emerged as a central differentiator between online winners and losers. This is because no matter what your line of business, product inventory is expensive to source, stock, manage, and distribute.

And while established real-world retailers have well-developed networks for moving product out of their warehouses and through retail outlets, online retailers may find it very difficult to keep product moving as effectively--particularly if the online division is handled separately from the rest of the business.

If your company already has well-established distribution channels, use them and manage the online presence as simply another warehousing point. This will allow you to minimise the effect of largely unpredictable online purchasing patterns, shifting product to the right place as demand dictates.

You may also find third-party logistics providers can make a valuable contribution in overcoming potential logistics nightmares; just make sure they have the systems to let you deal with them completely electronically.

Love thy customer

Particularly in the US, product rebates, steep discounting, and free shipping were among the many incentives used to lure consumers online. Yet these all eat into precious margins, forcing the business into a spiral of losses that would ultimately affect the company's ability to deliver. This, in turn, led to a customer exodus, which helped secure the fate of the hundreds of dot-coms that are no longer around.

Clearly, keeping customers happy is the way to keep them shopping. And, despite early inclinations to the contrary, keeping customers happy doesn't necessarily require a singular focus on low prices.

Customers also welcome good service, a range of delivery options, product variety, and the convenience of a full-service shop available at times that suit their lifestyle; give them all this, and you won't have to sacrifice precious profit margins.

This singular focus on customer satisfaction isn't a skill you can learn overnight. Many online companies quickly realised this lesson after their e-mail handlers literally staggered under the weight of customer enquiries and complaints being sent to them.

Such problems are ironic given that the same companies often have perfectly well-equipped internal or outsourced call centres with more than enough resources to handle the influx. Make sure your online support processes are integrated with existing customer support centres, where a variety of applications let staff juggle phone calls with multiple e-mail responses and chat sessions at the same time.

Customer-centric business philosophies aren't built overnight, and can be a real problem for many real-world companies where selling and product development take priority. But if you want to succeed online, make sure customer service takes on an air of urgency within your company's internal culture.

Selling online "changes the relationship you have with your customers," says Kate Holz, general manager of e-business supplier ACCPAC International. "When somebody used to go visit them and take their orders, there was an interface between you and the customers. That was the true sales function, and you have to understand how going online is going to affect that sales cycle. A lot of this is still so new that people are tossing around ideas and realising how unprepared they are to face an Internet Web store."

Pretty as a picture?

Even issues such as site design can become pitfalls if customers can't easily navigate around and find the information they need. Test your site design extensively within the company before customers even get a chance to see it; actively solicit customer feedback once they do; and don't be afraid to radically update designs. With so many options online, customers won't stick around at a site they can't use well.

Customer service also revolves around performance issues such as bandwidth, as you'll know if you ever spent minutes waiting for a complex site to load. While they may sound great in marketing presentations, complex graphics, Flash presentations and the like can be a big turn-off for the majority of customers, who are still using 56Kbps or slower modems to get online. Bandwidth economy is particularly important if you're aiming to serve rural parts of Australia or overseas customers, where poor line quality can mean even 56Kbps is unachievable.

Getting personal

To avoid customer concern over privacy, you can use aggregate statistics to make intelligent guesses at the things that customers might like. Amazon.com, a leading proponent of this philosophy, offers additional alternatives to a particular purchase by tracking what other customers have bought at the same time as the item in question.

If customers explicitly consent to collection of data about their individual purchasing habits, your site can make even more intelligent recommendations without seeming overbearing, as happens when salespeople hound customers in retail stores.

If you've got retail outlets as well as an online shop, it's important not to treat online customers in isolation. Many of those customers will likely be regular visitors to both your Web site and retail store, which is where cross-media promotions can become a highly effective way of combining online and offline networks. Online portal ninemsn has been doing this quite effectively, working with broadcast partner the Nine Network to arrange online chat sessions that are referenced within television shows such as 60 Minutes.

There is a lot at stake when you're dealing with customers that can just as easily go to your competitors. If you've already got an established brand name, you've also got to consider the effect that a poorly executed online presence can have on the overall brand. This can also work in reverse, helping the Web site gain legitimacy by leveraging the real-world brand. But in every case, putting the needs of your customers first should ensure you a strong market presence. Back it with a solid e-business infrastructure and your chances are better than most.

"We find that the organisations that are successful online are the ones that are successful offline as well," says Rohit Bhargava, senior producer with Web integration company Dimension Data. "One of the big mistakes people perceptually make when selling online is thinking it's a completely different environment and sales strategy than what they've done in the past. We advise clients to look at what's made them successful in reaching their target markets in the past, and looking at how you can translate that without reinventing the wheel."

Mind your housekeeping

"Many organisations have learned that brochureware is wholly inadequate," says Presence Online's Ginsburg, who believes content management in particular is a lot more complex than most people have made it out to be. "They have not yet learned their lessons because a lot of organisations have tried to come up with in-house built solutions for managing their online content. They think they can get away with paying less because they don't understand the implications of change."

"But it's very difficult for an in-house solution to keep up with changing technologies. An organisation that will try to evaluate where they should spend money might not do a change because it's too costly, and they won't realise what they're losing until the crunch comes and they're falling behind."

Integration between business applications is, of course, the key to making this happen, and it can be a harrowing process for companies new to the game. While many companies have built their own bridges for channelling data between inventory, order management, accounts and other systems, those systems typically fall apart when the business changes even a little bit. That's why it's important to work with a service provider that knows the game and can implement integration tools to match your business needs.

"At the moment, we have an industry that isn't learning," says Ross Liston, regional vice president of infrastructure provider interBiz. "There is still an eagerness to use emerging technology at the front of the business that doesn't have to do with business-things like really clever ways of presenting products, taking orders, and personalisation."

"They look at the total front end of the system and forget everything needs to be fulfilled. But if you're still running a pen and paper back-end e-business, you will fail. You may have short-term success, but not in the long term. Most companies that were in the industry for a while and got in trouble, got into that trouble because they couldn't manage their growth."

Measure yourself often

Just how you measure these benefits is up to you, and there are no hard and fast measures of e-commerce success. One good indicator, of course, is whether the online operations are profitable. This was a major problem for many early dot-coms, who found they were losing so much money on shipping and support costs that their losses were increasing as their revenues increased. If you get into this situation, consider taking drastic action to save your skin before the online business descends into irreparability.

Ultimately, the site's effect on your bottom line will determine its value to the business. Yet there are also many intangible benefits that can do good for the operation as a whole. A particularly informative site, for example, can help educate consumers and indirectly generate additional business down the road. You may also consider using customer surveys to assess the penetration of your advertising and cross-selling efforts, since many anonymous Web visitors may well be directed to your retail stores as a result of something they saw online.

Whatever your business goals, go online with an open mind and assume that things will change dramatically-and quite regularly-over time. Instead of expecting the Web to change your business overnight, focus on short-term deliverables and set regular milestones to make sure you're on the right track. And never, ever, stand still-your competitors certainly aren't.

"The dot-com world thought you could take a pure online enterprise and use it to satisfy all the needs of customers, bypass everything we've learned in the business world for the past five decades, and replace all traditional businesses," says Stuart Woodring, vice president of research for emerging Internet economies with analyst firm Forrester Research.

"What we've found is that the opportunity provided to us by the Internet and e-commerce gives us wholly new capabilities. We need to flow these together with all the traditional business rules and processes to create a better, more compelling experience for all the businesses we interact with. By 2004, nobody will be talking about e-business anymore-the 'e' will become invisible and simply part of the business fabric, and all of this will simply become a component of every successful business strategy."

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