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Internet and small businesses in Los Angeles

Internet and small businesses in Los Angeles

The internet has had enormous effects in businesses, not only in Los Angeles, but the world over. Internet usage has favored small businesses in many ways. Theoretically, all sites on the Internet are equal, and the small businesses can launch complex sales programs and implement effective globalization strategies on the Internet just like the bigger companies. However, certain guidelines must be observed by owners of small businesses in order to enjoy the benefits of the Internet commerce. This study provides some practical implementation strategies to work at each stage of the Web...

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... site life cycle in an effort to help small businesses implement successful Internet commerce programs.

Electronic commerce pertains to a wide variety of business activities, which are conducted electronically. It covers a range of electronic interactions between organizations and their up and downstream trading partners (Steinfield, 1995; Umar, 1997). Many technologies can be used in support of electronic commerce. As described by the Electronic Commerce Association, it may involve streamlining processes, interconnectivity, Internet, electronic data interchange (EDI), electronic funds transfer, e-mail, security, electronic document management, workflow processing, middleware, barcoding, imaging processing, smart cards, voice responses, and networking.

Among those technologies, the one which has recently become the focus of attention from all business management is the Internet. The potential of the Internet and in particular, the World Wide Web (WWW), has gained incredible notoriety as commercial mediums and markets (Alhadeff and Cohen, 1997; Hoffman et al., 1995; Indermaaur, 1997; Seeley, 1997; Senn, 1996). The tremendous growth of the Internet and the WWW has led to an enormous amount of consumers and firms participating in a global online marketplace. The rapid, and somewhat unexpected, adoption of the Internet as a commercial medium has forced firms to experiment with new ways of marketing to and doing business with existing and potential customers.

As more and more businesses start realizing that the Internet can be a very real commercial market, management must be actively involved in trying to keep up with this changing technological environment (Ricciuti, 1995). The Internet, however, may not mean big business for American’s small businesses. As revealed by the results of a recent Gallup poll of 1,000 NFIB members, 77 percent of small businesses do use computers. But only 40 percent of these firms have online access capability (Stein, 1997).

In this study, the potential of the Internet, in particular the WWW for helping small businesses gain competitive advantages will be explored. Some critical issues of creating and maintaining Web sites will then be discussed. Questions that small businesses may have regarding this new marketing medium will then be addressed. A brief summary of some practical implementation strategies coupled with directions for future study will conclude this report.

The potential of the WWW

Among all the services that the Internet can provide for the small businesses, the most exciting commercial development is occurring on the WWW. The WWW is a distributed hypermedia environment within the Internet, which was originally developed by the European Particle Physics Laboratory (Hoffman et al., 1995). The information on the WWW is located on a network of servers around the world which are interconnected, allowing users to travel through the information by clicking their way around hyperlinks. The WWW thus allows the sharing of information and resources on a global basis. It also has the potential to provide an efficient channel for advertising, marketing, and even direct distribution of certain goods and service. Consequently, the WWW has gradually become one of the most popular technologies in business community.

Commerce sites, or the so-called online storefronts are the Web’s version of stores we see in real life. They offer direct sales via an electronic catalog or some other, more innovative format. Consumers can order goods by filling out forms, using 800 numbers, or regular snail mails. This type of Web site represents a combination of direct marketing and in-store shopping. In this environment, there are tremendous opportunities for customizing the shopping experience and enhancing public relationships.

Another type of commerce site is referred to as cybermall, which works like a real life mall. Each storefront may contain many different categories of goods for sale. The provider charges rent in exchange for the “virtual real estate” and may offer a variety of services for the mall itself (Gallant, 1997).

The main problems with the commerce sites are that the online versions pale in comparison to real world experiences of flipping through the glossy pages of a huge hard copy catalogue, or shopping in a real mall. Security is another issue, which hampers the acceptance of this marketing approach by the customers. Another obstacle is the speed of surfing the Net. It can make online shopping frustrating and tedious at times.

Corporation information sites provide a virtual “presence” for a firm and the products/ services that it is offering to sell. They may also serve to signal to current and prospective customers, as well as competitors, that the firm is on the cutting edge (Angell and Heslop, 1995). The corporate information sites can be in the form of single page electronic flyers with no hyperlinks. Some of them may take the forms that provide detailed information about the firm and/or its products. Others may be in the form of image sites, where information about the product is presented in the context in which the product is consumed.

Content sites function like an information broker. They can be fee-based, sponsored, or in the form of a searchable database, where merchants or advertisers pay the site owner for information placement in an organized listing. The promotion or incentive site represents a unique form of advertising that attracts a potential customer to the site. The objective is to pull the user to the commercial site behind it. This, in turn, generates traffic to their respective sites. The content of this type of site is usually transitory.

Search agent sites, commonly referred to as “search engines” identify other Web sites through keyword search of a database that extends throughout the Web. Most search engines today provide linkages to other Web sites through a hierarchical structure of sites of similar characteristics. Many of the search agents are inter-webbed, and can perform multiple-agent search activities.

Each of these five types of site can potentially provide small businesses with an efficient way of exposure of the company and the products to a wide range of viewers. There is a lot of evidence which suggests that Web-based commercial efforts are more efficient than traditional marketing channels, especially for small businesses. Research also points to the fact that direct marketing on the Net is about one-quarter less costly (Cronin, 1994; Dickman, 1995).

 However, to management of small businesses this could be a new frontier for expanding the business horizon, and there are several significant benefits of going online immediately.

Advantages of Internet commerce for small businesses in Los Angeles

There are many advantages in doing business on the Internet for small businesses. The major ones are described as follows:

All sites on the Internet are equal, and the small companies have just as much space in the heavily used Web search engines as the large corporations. Big companies do not gain any edge from their Web sites over their smaller counterparts, unless their Web sites are better created and maintained. Small companies have just the same freedom of pursuing multiple strategies and experiment of new approaches on the Internet as the big companies have. In addition, potential customers of the small businesses do not have to go through layers of bureaucracy as in the big companies to get to the targeted information through the Internet.
The Internet is also considered to be the least expensive way for small businesses to market the goods and services globally (Wilder et al., 1997). There are millions of people worldwide surfing the Internet every day. A small business has a unique opportunity through the Internet to reach each and every one of them. And, since the Internet provides perhaps the cheapest form of advertisement relative to the number of people that it can reach, small businesses would have the same potential to reach those millions of people as the bigger companies.
The Internet allows small businesses to implement effective globalization strategies, which would be otherwise impossible or implausible due to the complexity of doing businesses in foreign countries.
Use of the Internet enables the small businesses to maintain full-scale after-sale customer service at relatively cheap cost and to maintain contact with the customers for all aspects of business activities on a seven-day around the clock basis.
It is the most cost-effective way to demonstrate a company’s products/services in multimedia format.
The Internet allows small businesses to establish an effective inter-business collaboration. This is particularly attractive for small businesses that normally lack the technical expertise to maintain online communication with their business partners but are desperately in need of establishing such expertise.
Concluding remarks

As pointed out by an article on the Internet entitled “Big fish – little fish” (www.wmo.com), the Web is fast and corporate bureaucracies are slow. Corporations with big budgets can afford to lose their investment, while small businesses do not look at the Web as an investment. They look at it as survival.

While the Internet represents a great opportunity, there are many obstacles that small businesses must overcome in order to achieve long-term goals. Beside the technical problems of the Internet, such as small bandwidths, phone line congestion, and the threat of hackers, there are other concerns one must consider before diving into this cyberspace.

Another major problem that small companies face is the fact that once the site starts catching on and the e-mail starts rolling in, more and more man hours have to be devoted to keeping up with it all. As indicated in a report from NETMarketing (Strazewski, 1996), 70 percent of companies surveyed who receive e-mails, less than half actually have the capacity to respond adequately. Although outsourcing could be a solution, the specific content in the e-mail often makes it infeasible to be handled by outsiders.

Owners of small companies also need to realize that having a Web site does not automatically mean that you will reach millions of potential customers. It simply means that there is the potential to reach millions of potential customers (Gaffin, 1994). You will have to promote your site through discussion group participation, advertisements, announcements, directory listings, e-mail, links to other sites, and offline publicity before your site can attract a lot of visitors.

For owners of small businesses, it must be kept in mind that Web sites are not like print or broadcast advertisement campaigns that a company can set up and forget about. The Internet commerce system will never allow you to replace your salesforce with “intelligent selling agents” as suggested by some analysts (Selland, 1998). A site has to receive continuous upkeep and close attention from salespersons. Otherwise, when viewers notice that the site has not been changed in months they would begin to wonder whether or not the company went out of business.

Also one needs to remember that “hits” for a Web site do not equal customers. People can stumble onto the site accidentally. Some may look at your site and decide never to visit again. People can also misunderstand listings on search engine pages and come out of curiosity, only to find that the site was not what they expected it was at all.

There is a great deal of thought and effort that should be put into a Web site. However, with carefully developed planning, design, implementation, and maintenance policies, and always keeping customers in mind, the Internet can be one of the very few tools that small businesses can use to effectively compete with the bigger rivals on the same ground.

References

Alhadeff, J., Cohen, R. (1997), “Assembling the right Internet business model”, DB2 Magazine, pp.11-16.

Angell, D., Heslop, B. (1995), The Internet Business Companion, Addison-Wesley Reading, MA., .

Cronin, M. (1994), Doing Business on the Internet, Van Nostrand Reinhold, New York, NY., .

Dickman, S. (1995), “Catching customers on the Web”, Inc. Technology, pp.56-60.

Fairlie, R. (1997), “The way to the Web”, Mobile Computing & Communications, pp.146-54.

Forrester Research, Inc. (1997), “Revenue by site type”, NetReady Advisor, pp.5..

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