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Chapter 5 E-business strategy 315

which the marketplace would adopt dot com innovations’. Furthermore, it was assumed that new
innovations would rapidly displace existing product offerings, for example online grocery shop-
ping would rapidly replace conventional grocery shopping. Even Tesco.com, one of the most
successful online retailers achieves a single-digit percentage of its retail sales from the Internet –
and this has taken several years to achieve. Other reasons mentioned by Miller include:
Timing errors: for example, services for download of digital entertainment that were
offered before high-speed broadband Internet access was widely available. The learning is
that insufficient research had been conducted about demand for online products in terms
of the Access:Use:Buy framework introduced in Chapter 4.
Lack of creativity: many services copied existing business models, or other online retail
services. The learning is that insufficient research had been conducted about competitor
differentiators and capabilities and whether these would be sufficient to encourage
consumers to switch providers.
Offering free services: many services were offered free to gain site visitors and registration. If
a good free facility was provided it then became difficult to encourage payment for margin-
ally better services. This is a difficult balance to get right. A straightforward example is
provided by Webshots.com which provides a comprehensive image library and screensaver
for free, but hopes to gain revenue from those who wish to download many images.
Over-ambition. To achieve investor funding amongst many competing companies, some
entrepreneurs exaggerated the demand for their products and the growth.
Beyond these reasons, we can also point to classic mistakes that start-up and existing busi-
nesses have always made and will continue to make from all stages of the strategy process
described in this chapter. These include:
Situation analysis – insufficient rigour in researching demand for new products and
competitive forces.
Objective setting – setting unrealistic objectives or, worse still, not setting clear objectives.
Strategy definition – poor decisions about business and revenue models, target markets,
product differentiation, pricing, distribution, etc.
Implementation – problems with customer service quality, infrastructure and change
management, as described in Chapter 10.

E-business strategy implementation success factors for SMEs

Of course, government statistics show that a high proportion of new businesses fail within 2

to 3 years of start-up regardless of whether they are online or offline and good planning
practice and financial risk management are important in both.
An assessment of success factors for e-business strategy implementation in SMEs has
been produced by Jeffcoate et al. (2002). They suggest these 11 critical success factors, which
can also be usefully applied to larger organizations:
1 Content. The effective presentation of a products or services.
2 Convenience. The usability of the web site.
3 Control. The extent to which organizations have defined processes that they can manage.
4 Interaction. The means of relationship building with individual customers.
5 Community. The means of relationship building with groups of like-minded individuals
or organizations.
6 Price sensitivity. The sensitivity of a product or service to price competition on the
Internet.
7 Brand image. The ability to build up a credible brand name for e-commerce.
8 Commitment. A strong motivation for using the Internet and the will to innovate.
9 Partnership. The extent to which an e-commerce venture uses partnerships (value chain
relationships) to leverage Internet presence and expand its business.