Skills SMEs Should Acquire Before Doing Business Online

E-commerce in the Philippines today is primarily led by the biggest buyers. They have the clout and influence in directing the standards or means of trading to its suppliers.

Suppliers trading with the big buyers are not in an enviable situation. These companies, dealing with multiple power buyers, have to adjust their respective systems and processes as instructed by the multiple power buyers. This results to a complex e-commerce solution and implementation to these companies. They also end up having multiple e-commerce systems just to meet their specific requirements.

A full-blown e-commerce encompasses the entire supply chain. From the supplier delivering the goods to its buyer through its transportation partner, managing logistics, up to collecting payment.

There are three business information flow layers in e-commerce:

1. In the product specifications and purchasing layer, its intent is to communicate required data to request, establish and modify product pricing, packaging specifications, and contract information.
2. In scheduling and delivery layer, its intent is to provide two-way communication between the customer and the supplier. The customer provides the required data to plan, authorize, and schedule the delivery/shipment of material. The supplier communicates shipment information. If discrepancies exist, the customer communicates them at the time of receipt.
3. There’s the payment layer, where one communicates billing and payment information.

There are also big companies with shorter product life cycles where it builds and release new products every six months. Cases like these are printer and cellphone manufacturers, where new products are mass produced regularly, in order to survive fierce competition, and stay in the lead. Its relationship with suppliers is tight. To keep up with production schedule, everything has to be automated. Suppliers whose back-end systems are sophisticated enough to meet the demands of these companies are the ones who will survive.

Companies can no longer say that they don’t need to innovate and pro-create themselves in this industry. E-commerce is now a necessity for competitiveness globally. With the challenges brought to us by retail trade liberalization, the higher the need for power buyers and suppliers to do e-commerce. Those who refuse to do so may find themselves excluded from participating in a powerful purchasing community for not being e-commerce ready.

There are a lot of entrepreneurs in the country who expanded their business presence over the Internet without planning it through. The lack of better understanding can spell failure and ineffectiveness of the site. One often ask, “What are the skills needed for one to expand its business to the Internet?”

There is a combination of skills required to do such. They may not necessarily exist in one person but through a team. Here’s a list of what every SME should know to make an effective decision in doing a business venture over the Internet. They are:

• A good understanding of the Internet, its capabilities and limitations.
• Knowledge of your target market online. How big is it?
• A clear understanding of your business objectives and how it can be achieved by having e-commerce capabilities and returns expected.
• Understanding of the E-Commerce Law and access to a lawyer who is familiar with the legal issues surrounding it.
• The SME has to assess whether this is going to complement or compete with the existing business structure. What will be its impact to the business operation?
• Who among your competitors has a web site or an e-commerce initiative? What are their strengths and weaknesses? How would you like to be different? What will make your clients and prospective ones transact with you rather than to your competitors?
• How to market your products and services?Will you assign a person to pro-actively seek for customers?
• How to accept payments online? Will you explore as many payment facilities possible that is suitable to your business?

An effective e-commerce website or initiative needs to be updated regularly. If you don’t have much to offer and have no plans for expansion or upgrade, it may become stale and deemed useless in the long run.

Execution of the plan is very important. This is where a good project team comes in. Some may consider doing this within the organization but if the expertise does not exist, it is best to outsource the development and let the organization focus on running the business.

Helping SMEs Do Business Online

There are some funding efforts now with the intent of helping SMEs put up their own website. Although this is ok, I’m not really that up to it. I believe that it is best for limited funding to help existing website owners, in taking their business to the next level. This means teaching SMEs Internet marketing skills, use of advertising engines, and build knowledge on online payment integration.

Their initial e-commerce lessons learned is important and can be helpful as they have a clearer perspective as to what their buyers really want.