E-Biz Party Is Still On

Click-and-mortar synergies provide staying power for Web enterprises.

When Body Shop Digital started planning its leap into e-business last year, CEO Patti Purcell, like most business-to-consumer e-commerce managers, thought the most important thing was attracting eyeballs to her new site. Revenues and profits, Purcell thought, could wait.

But as 2000 wore on and the dot-com obituaries started piling up—particularly among other B2C health and beauty sites such as Eve.com and beautyjungle.com—Purcells eyes were opened. Now, as she plans Body Shop Digitals full-blown online launch slated for the spring, shes adjusted her sights, keeping a lid on costs in the hope of delivering a profit sooner.

"Were back to basics now. Well have to orient the company to profitability much faster than we originally thought," said Purcell, in Seattle. "There are very few dot-com entities out there currently that are even close to posting a profit. Some are looking at or have built business models that are forecasting a five-year time frame until they reach profitability. I would say that we aspire to cut that time in half." Body Shop Digital is a spinoff of The Body Shop International plc., of Littlehampton, England.

Purcell isnt the only e-business executive to have noticed the dot-com meltdown in the second half of this year. But for many like her, the dot-com carnage is no reason to back away from e-business. Officials at click-and-mortar enterprises in particular say they are pushing ahead, although with a closer eye on costs and profitability. Others are proceeding with a focus on business-to-business e-commerce.

"The dot-com bubble may have burst, but we still see tremendous opportunities in universal e-commerce and mobile commerce," said Sarah Perry, senior vice president of strategic investments and business development at Visa International, in Foster City, Calif. "Even though the dot-coms have been suffering from funding problems, we believe that investments in underlying technology infrastructure will remain profitable for us."

Improving the Odds

To increase its chances of online success, Body Shop Digital has been running an extended test of its e-commerce site. Since last month, the company has been offering a limited selection of products to a select group of customers. Purcell said the plan is to have key market intelligence in place on day one.

"We will be able to garner introductory feedback about our customers and begin to aggressively collect opt-in information so that we have a robust customer list to market to when the e-commerce site launches next spring," she said.

Meanwhile, Purcell is keeping a lid on costs. The e-commerce spinoff, which has 47 employees so far, is deliberately hiring workers with broad sets of skills to avoid having to overextend itself financially by growing too fast, she said. In addition, the company has made some conservative buying decisions regarding the technology its using to run the upcoming Web site.

"For example, in terms of personalization tools, were going with the ones that are more or less out-of-the-box—just add water, and it works," Purcell said. "We need to watch our cash and show [investors] the money."

Officials at other established click-and-mortar companies say the bloodbath among B2C dot-coms will have no impact on their focus on what they see as the high-growth core of e-business: B2B. Package shipping giant FedEx Corp., for example, plans major enhancements to its e-logistics offerings as well as its B2B Web site development services businesses next year, said David Roussain, FedEx vice president for e-commerce marketing and supply chain management, in Memphis, Tenn. Although some ill-conceived dot-coms may be going away, Roussain said, FedExs enterprise customers are only accelerating their focus on B2B e-commerce.

"The core of e-commerce will be business-to-business because companies see it as the most efficient mechanism to do business," Roussain said. "The only thing thats changed is that companies that use the Internet as their only business model are going to put themselves at risk. But others who see it as an auxiliary channel wont. For them, the key is putting CRM [customer relationship management] and other information into the hands of the people who need it."

Give Them Some Credit

Like FedEx, Visa isnt backing away from e-business just because a few dot-coms have gone dark. In fact, Visa officials said they see next year as the time to expand the companys activity in the B2B marketplace.

This year, Visa rolled out its e-Visa mobile commerce platform, enabling consumers to check and pay their Visa bills from mobile devices such as personal digital assistants and cell phones. In July, it announced Visa DirectExchange, a network capable of processing all credit and debit cards in the United States as well as handling other forms of electronic payment, including smart cards and electronic check conversions.

Next year, Visa will be just as busy delivering on its e-business strategy, officials said. The company continues to work on the Visa XML (Extensible Markup Language) Invoice specification, which it hopes will be accepted as the standard for invoicing. It is also looking at applications such as consumer-to-consumer payment, which can be rolled out to desktop and mobile users alike.

So, while some dot-coms are turning out the lights and locking the door behind them, established enterprises such as Visa, FedEx and Body Shop Digital are calling for another round of e-business.