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Globalization: Does it make sense to be on the
Web?
By
Michael Drapkin
Since the
dot-com start-up orgy turned into a starvation diet of
lost balance sheets and revenue, many people have been
watching to see how other firms were going to pick up
the slack. Corporations that watched the dot-com boom
from the sidelines have been gobbling up the leftovers,
and the used Web hosting equipment market is
booming.
The real
players emerging from this morass come as no surprise to
anyone over 30 years old. Anticlimactically, many of
today's movers and shakers have turned out to be members
of the Fortune 500 who have expertise in very uncool
(and low calorie) things such as customer relationship
management, shop floor management and supply chain
management. The active term here seems to be
"management."
Yet most
agree that the Web is not going away any time soon, and
substantial opportunities exist for those with the
skills and wherewithal to capitalize on what the Web
does best: Reach a global audience. Managers need to
consider whether the Web will generate more revenue
globally, or merely create a huge cost center. Here are
a number of points to consider when looking at
e-commerce as an avenue to globalization.
- Geographical
reach. The Web
gives businesses unprecedented access to audiences and
markets in a way that was previously difficult or
expensive. Firms such as eBay would not exist if its
community of users didn't have access to a Web
browser. The question to consider is whether your
offering can take advantage of that access. If your
company decides to manufacture a product that is well
suited for an overseas market, using the Web becomes a
very cost-effective way to reach those customers. The
alternative would be to start advertising and opening
sales offices, which can be infinitely more expensive.
On the other hand, if you run a string of gas stations
in a local metropolitan area, customers are highly
unlikely to drive in from surrounding states to get
your product, website or not. Make sure you are a good
candidate for geographical reach.
- Personalization
and localization. The concepts behind
personalization and localization are simple, but
implementation is very difficult and
resource-intensive. Most people think of
personalization as what they see when they visit a
site such as Amazon.com ("Welcome back, we have
recommendations for you."). However, personalization
and localization methods often involve far more
subtlety. In order to sell in a foreign market, your
website will need to wear multiple skins - multiple
language versions, multi-currency capability and the
ability to accept foreign-issue credit cards, for
beginners. You may have contracts with your suppliers
that only allow product sales in certain geographies.
Software such as BroadVision helps personalize these
factors to the local customer, but careful planning
and management is still required. Be prepared to buy
lots of servers to handle the many permutations of Web
pages you will need. Offshore hosting may also be
required to allow reasonable response time for foreign
clients.
- Fulfillment.
Once you receive that product order from overseas, the
order will need to be fulfilled. You cannot simply
deliver from home, as shipping and handling charges
will boost the price to non-competitive levels and
slow delivery. This problem may be overcome by setting
up fulfillment centers in the foreign countries or
continents where your product is selling. This can be
expensive, and the alternative, using third-party
fulfillment houses, has its own inherent problems,
risks and costs.
Clear
sailing in the e-globalization process is by no means
guaranteed. Look at your core competencies and how your
product line will be sold, fulfilled, shipped and
supported. Otherwise, without proper planning, going
worldwide may inadvertently become the cause of your
firm's undoing.
Michael Drapkin is
founder and CEO of business and technology consulting
firm Drapkin Technology. He is chairing the session "E-Globalizing Your Business for the
Second of Third Time", part of the comdex.biz
Conference, on Tuesday, November 13, 1:15 p.m. at COMDEX Fall 2001. 
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