TORONTO – The Internet is as much a corporate graveyard as an e-commerce gateway and the key to avoiding becoming another bankrupt dot-com is a careful mix of aggression and focus, said several Canadian firms that operate online.
After the dot-com bust half a dozen years ago, Internet commerce is still no panacea but has shown consistent growth, said Butch Langlois, president and CEO of Truition Inc. His company provides customizable and hosted e-commerce engines for clients such as Major League Baseball, Dell, Disney and Toshiba. Langlois was one of six panelists at the RBC Growth Technology Conference 2.0 held in downtown Toronto on Tuesday.
“By the end of this decade (the Internet) will comprise 15 per cent of the overall retail channel,” said Langlois. That’s nowhere near initial estimates of the reach of e-commerce when the Internet was just getting rolling 10 years ago, but is cause for optimism, he said. However, taking advantage of selling opportunities is no easy proposition.
Langlois pointed out that Sharper Image and Circuit City have both experienced a decline in online sales. “Why? Because competition has been very fierce. It’s not about putting up a storefont today. You have to be ubiquitous on the Web,” said Langlois, referring to the dominance of companies like Google, eBay and Amazon. “You have to have an IT infrastructure” that allows you to reach new markets and manage expenditure.
Hannes Blum, president and CEO of Abe Books, said his company is constantly fighting the perception that Amazon is the last word on Internet-based book sales. “Our key challenge is to become better known in the broad public,” he said. “Below the radar of the Amazons and eBays of the world, there are a lot of small companies that are very attractive.”
Abe Books’ strategy isn’t to compete with Amazon on volume, said Blum, but to sell books that the online giant may not be able to offer, like out-of-print books, rarities and first editions. The company is partnered with 13,000 booksellers and provides them with a software package called Homebase to enable transactions. The software is a “lock-in opportunity” to solidify those partner relationships, he said.
Google and eBay “are not unbeatable if you maintain your focus,” said Denis Gadbois, CEO of Mediagrif Interactive Technologies. The company operates 12 industry-specific B2B exchanges, as well as the Merx e-tendering service, which handles contract tenders for the federal government.
The ability to focus solutions on a given market is a way to overcome seemingly overwhelming competition, said Francois Cote, president and CEO of Emergis. Cote named IBM, Accenture and Cap Gemini as main rivals. “What makes the difference between us and them is, our success has been business process versus technology. We’re not there to sell technology.”
In the last few years the firm, which was sold off by former parent company BCE in 2004, has focused its e-business efforts on health care and finance.
One provider that has found its niche is Points.com. The site acts as a central management tool for people who subscribe to multiple loyalty programs from Air Canada to American Eagle. Airlines in particular have been a boon to the company, said its CEO Robert MacLean, since they welcome any opportunity that helps lift the travel industry out of its post-9/11 slump.
But again, said MacLean, the key ingredient to dot-com success is focus. Points.com doesn’t do much R&D and relies on the technology of its partners. “They can send you in very different directions,” he said. “I think that’s one of our biggest challenges. It can turn into a black hole of money and energy and resources very quickly.”
“If you’re in a situation where you’ve got investors, there’s a lot less patience than there was five years ago,” said Internet author and expert Rick Broadhead in a separate interview. “I think the standards are a lot higher, the bar is a lot higher and there’s a lot less patience for experimentation. . . . Most of the companies that have not turned a profit by now are out of the picture.”
“There were some wacky ideas in the late 90s,” said Langlois. The companies that lived through the dot-com bust – and those that were established after it – have gained focus by necessity, he said. Corporations that “got burned the first time” are starting to re-emerge as dot-com players, he said, naming some of his own customers. “They know the time has come again for them to rise.”