US businesses need to get smarter with e-services, business expert says

August 30, 2000

Retail companies already trying to profit from the Internet -- or hoping to eventually -- should smarten up, a University of North Carolina at Chapel Hill business expert says. The key to making money is not so much technology, but rather those three old business standards - service, service and service.

That's the view of Dr. Aleda Roth, professor of business administration at UNC-CH's Kenan-Flager Business School.

For the past three years, Roth has studied the electronic marketplace known as "e-services." She is scheduled to present her findings in Seville, Spain, Thursday (Aug. 31) at an international conference of the Production and Operations Management Association.

"From my research, I've come up with what I call the seven myths of e-services," said Roth, president-elect of the association. "Myth one is that if you build a nifty portal, or Web site, customers will come. The fact is that most dot.coms -- retailers selling through Web sites -- still think of their technology and products first and customers and services second. Savvy e-services take a customer's view of the business from the first click to completion of the entire transaction."

For many customers, she found, convenience and price are not the top priorities. Reliability and consistency of service, however, are critical to e-service success.

Myth two is that companies that mix their stores and electronic businesses -- "brick and click" -- face a competitive disadvantage, Roth said. Traditional companies are not only creating Web sites, but also have begun to integrate them successfully into their physical stores. Clothing retailer Land's End and Norstroms are examples of firms doing the job well.

Myth three is that Net self-services will reduce the need for staff. "Cisco, the leading supplier of high-performance Internet products that link networks, reported that the cost per transaction decreased, but the number of transactions increased along with the need for more staff," she said. "Amazon has 17 million customers, but 20,000 of them need a problem solved every day."

Amazon, which now sells more than books and uses real people to answer e-mail messages one at a time, found that empathy and judgment are what make e-service work, not automation, Roth said.

Myth four is that businesses have little to gain from selling to, or purchasing from, other companies through e-services themselves. Star Alliance, an international airline network, has established an e-commerce operation that allows airlines to buy most of their supplies online. Its members already make up 25 percent of the world purchasing market among airlines.

"Another myth is that those who set up e-services first have a better chance of locking out their competition," Roth said. "The truth is that technology provides only a temporary advantage. Services are constantly evolving, and just because you are first doesn't necessarily mean you'll stay there."

Myth six is that online retailers are winning loyalty from customers, she said.

"Barely a fifth of users say that rewards for frequent use of a Web site actually influence their purchases over the Net," Roth said. "By contrast, one recent study showed that 40 percent of customers said 'easy product returns' and 'good customer product services' are real incentives for repeat purchases."

Myth seven is that there can never be too much personalization of Web sites.

"Delivering personalized services presents a real opportunity for e-businesses, but it can be taken too far," she said. "Reflect.com, a company that sells makeup and skin and hair care products, required me to go through a complete online psychographic examination before I got to see the products. They even asked questions like 'Are you a peacock?' and 'Are you a dove?' That would blow a lot of potential customers away, and the experience was just awful."
-end-
Note: Roth can be reached at 919-962-3181 (w) or 843-0125 (h) before Aug. 24 and after Sept.3. She will check her e-mail, aleda_roth@unc.edu, while she is at the meeting.

Kenan-Flager Contact: Kim Spurr, 919-962-8951
News Services Contact: David Williamson, 919-962-8596.

University of North Carolina at Chapel Hill

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