While talking to industry executives during recent weeks, I have been shocked by the radical change in attitude insofar as the digitization of their business is concerned. Only a couple of months ago, I would hear complaints about how they were experiencing threats to their core business from online competitors and executives wanted to formulate strategies to protect their business. Now what I hear is “I told you so” attitude. While some of the remarks that industry executives make these days are arrogant, there are others who have just settled down in their comfort zone by rationalizing their fears – The Internet is only a fad, it is already starting to show signs of failure, and the threats to my business are over.
Nothing could be farther from the truth. As Michael Dell puts it, if bad business models are implemented online, they do not become good businesses; they just become bad online businesses. Like all other bad businesses, these too will go out of business, eventually.
For the packaging industry, the fundamental issues are not if some dot-com companies are going out of business these days or if some online companies are struggling to conduct sufficient number of transactions to remain profitable. The foremost considerations are still related to the basics of doing business – whether a new business process is going to enable a company get more business, serve customers better, and reduce the cost of doing business. While there are several classic examples of how companies are successfully exploiting the web, my favorite company is General Electric. It has taken an ambitious, but simple, approach – do everything over the Internet if it can be done more cost effectively. Now is that too complex for anyone to understand?
Advantages of the Web
In a survey by Cyber Dialogue regarding the advantages of being present on the World Wide Web, more than 40% of the companies responded that they were able to improve customer service, expand business territory, and keep up with the competition. More than 30% of the companies increased sales leads and lowered marketing costs at the same time. More than 20% of the companies reported that they increased both online and offline sales. In another survey conducted by Verizon/Super-Pages.com and Gallup has found that 55% of the websites have either broken even or paid for itself in increased business.
That is why I keep emphasizing to my friends in the industry that we have consistently seen pricing pressures only increase over the years and life is not going to get any better than this. In fact my discussions with industry participants lead me to believe that we will only see these pressures become more intense as the global economy slows down and international trade becomes easier.
What can you do now?
So while you can watch some of the excitement in the dot-com world as it unfolds, here are few things to do to in the meantime. By the way, this is also a good time to execute some of these projects as the providers are experiencing slower growth and you can hire some of the best firms at much lower prices:
- Reevaluate your business strategy to figure out what part of the business can be moved to the web.
- Taking your business on the web is not necessarily about e-commerce. In fact, a vast majority of packaging companies will possibly never need to engage in
e-commerce. However, they will definitely need to provide support services and disseminate information. So take small steps now and be prepared to take big steps as the situation warrants. - Hire an outside firm to give you a jumpstart. It may be possible to do the site maintenance work in-house but you should use professional help in the beginning.
- Stay on top of things. We are living in a world that business environment can change within weeks. So tell your management that they need to be flexible about pursuing a net strategy