E-Business Just Got Smarter

REDMOND, Wash., Nov. 29, 2000 — Whether it’s bidding on antiques at an auction, buying a jacket from an online retailer or purchasing an airline ticket from a travel Web site, many people today have had experience with e-commerce and sales over the Internet. However, consumer oriented shopping is only one part of the e-business revolution. Business-to-Business online commerce, which enables the digital exchange of products, services or information between businesses, is changing how businesses deal with other companies, their customers and industry business partners.

In early November, Microsoft released Commerce Server 2000 to manufacturing. Commerce Server 2000 is the fourth version of Microsoft’s commerce server technology and provides fully integrated core subsystems for sell-side and e-business analytics solutions. Commerce Server provides systems for user profiling and management, targeted campaigns and personalization, product and service management, flexible order processing, and sophisticated decision support.

Commerce Server 2000 brings together all the tools, metrics, analyses and functions needed to quickly build and customize e-commerce solutions. An integral part of Microsoft’s .NET initiative, Commerce Server 2000 fits together seamlessly with other market-standard Windows 2000-based applications.

Many traditional and Internet companies have worked with the beta version of Commerce Server 2000 to deploy e-business solutions targeting online retail, supply-side business-to-business (B2B), e-marketplace applications, and e-business analytics. For developers, Commerce Server serves as the foundation for building customized private e-marketplaces, invitation-only business exchanges that allow companies to make transactions with minimal exposure of confidential or competitive information.

The following companies were beta testers of Commerce Server 2000 and have used the platform to build very different e-business systems to expand their presence in the e-marketplace. These companies also serve as proof of Commerce Server 2000’s breadth and versatility as an e-business platform — and reveal the shape of things to come in the world of e-commerce.

Radio Shack

“When we started talking about RadioShack.com, there were people in the company who asked what possible value the Internet could add to Radio Shack,”
said Henry Chiarelli, president of RadioShack.com. After all, according to company statistics, there is a Radio Shack store within five miles or five minutes of 94 percent of all Americans, and 99 percent of all U.S. households buys some product from Radio Shack every 36 months.
“Some people argued that we already had market saturation in place without the Internet,”
Chiarelli said.

So when Radio Shack deployed its e-commerce site, the company had specific goals in mind: to drive more business to existing stores, while simultaneously building a stand-alone business on the Internet.

When Radio Shack decided to adopt the .NET server platform and implement the beta version of Commerce Server 2000, the company already had a successful e-commerce Web site in place. Perhaps because of the pervasiveness of Radio Shack stores, however, an MSN-sponsored survey found that 89 percent of all customers who visited RadioShack.com and made a subsequent purchase, made it at one of the existing stores.
“Nine out of 10 customers would shop online, print out the product sheet, and take it down to the store to make the purchase,”
Chiarelli said.
“In most retail operations, traditional brick-and-mortar retailers hate their dot com counterparts. However, at Radio Shack, they love us. We help them by sending people into the stores.”

To increase sales at RadioShack.com, the company decided to target business-to-business e-commerce.
“After looking at our sales information from RadioShack.com, we realized that we had a niche opportunity selling to Maintenance, Repair and Operations (MRO) customers,”
Chiarelli said.

RadioShack.com decided to integrate Commerce Server 2000 into its server platform to better address the needs of its business-to-business customers — without having to duplicate the backend catalog management infrastructure already in place.

“We needed a site that spoke more to the needs of a small to mid-sized business enterprise, whose order needs range from one to 100 pieces — orders too small for the big business-to-business players,”
Chiarelli said.
“The original RadioShack.com site was designed for the consumer, with shopping carts, credit cards, everything laid out for the consumer. But that’s not how businesses do business with each other.”

Using Commerce Server 2000, Radio Shack was able to develop what looks and feels like two Web sites — one for consumers, one for business customers — but both based on access to the same 30,000-item catalog database and both linked to the program’s business reporting functions. The sites’ main difference is the methods of payment: in the business customer site, the shopping cart is replaced with a purchase order. The site also offers other services important to a small business, like flexible payment plans, 30-day commercial charge, tax exemptions and volume purchasing agreements.

Commerce Server 2000 allowed Radio Shack to deploy a one-site architecture that adapts from business-to-consumer to business-to-business, based on the customer’s needs. This allows the site to deliver the content that is most relevant to a particular customer.
“Using Commerce Server 2000, we were able to take the retail flavor out of the commercial Web site,”
Chiarelli said,
“and we ended up with two sites: one for retail customers, one for business customers. MRO sales now comprise 60 percent of all sales on RadioShack.com.”

Starbucks Coffee Company

When Starbucks, the world’s leading roaster and retailer of specialty coffees, relaunched its e-commerce site www.starbucks.com in the fall of 2000, one of the company’s top priorities was to improve the site’s e-business intelligence, with the goal of maximizing both customer satisfaction and online revenues. With over 1 million hits per day, the site attracted plenty of visitors. However, the previous Internet platform was unable to successfully identify and target those visitors, or to extract and analyze information from site usage and purchasing patterns.

“Not only did we need to determine what was selling and what wasn’t, but we needed to be able to peel back the layers and see why we were getting the results that we did,”
said Rob Reed, project manager for Starbucks.
“We needed the capability to identify patterns in customer behavior, make assumptions as to the causes of those patterns, and then rapidly test those assumptions to maximize revenues and customer satisfaction.”

Starbucks examined the option of internally developing a new high-functionality Internet platform, but realized that it wouldn’t have an up-and-running system in time for the important holiday season. Starbucks decided to upgrade to Commerce Server 2000 to take advantage of the server’s built-in functionality.

“Deciding to go with Commerce Server 2000 was a fairly simple decision,”
Reed said.
“It was clear that Commerce Server 2000 delivered, out-of-the-box, a majority of the business and technical functionality that we were looking to develop. And the program could be easily adapted to meet the rest of our needs.”

Commerce Server 2000 allowed Starbucks to meet one of its strategic goals: to reach out to customers via the Internet and extend the Starbucks experience into the user’s home or office. To do this, the company needed the ability to better communicate with customers to learn their preferences. It also needed to know how to use this knowledge to deliver a better customer experience.

In designing and implementing its new Web site, Starbucks used many of the new business and marketing tools provided in Commerce Server 2000. The Business Analytics System consists of a sophisticated set of reports and analysis tools plus a fully integrated data warehouse with built-in data-mining capabilities, which enable business managers to identify business trends and better understand the effectiveness of their content and campaigns. The Business Desk is an interface that allows Starbucks managers to create marketing campaigns, update product data or modify profiles according to the knowledge gathered by multiple information tracking systems. The Profile System stores and manages information on users and purchases, while the Targeting System facilitates the selection and delivery of specific commercial information to Web site users according to criteria determined by business analytics.

“The purpose of these Commerce Server 2000 reports is to better understand the motivations and behavior of our customers,”
Reed said.

The data we have now is much deeper than just traffic volume. We can track sales of featured items based on where on the site each item is located. We can also see the browse-to-buy ratio for a product, view the top-selling and least-selling items by geographical area, and even get a report on the number of times a person visits the site before making a purchase.

“As we better understand our customers, we can make improvements to better deliver customer satisfaction. We can refine campaigns and promotions based on aspects of user behavior. It all comes back to the same theme: learning what our customers want, and using this knowledge to drive real-time improvements to the customer experience across the company.”

Henry Schein

Henry Schein, Inc., is one of the world’s largest distributors of medical, dental, and veterinary healthcare products, with a catalog of more than 200,000 items. The company currently serves over 400,000 customers in 125 countries. The company has a complex, multi-pronged approach to marketing its products: there is a field sales staff, a direct marketing telephone sales staff, a paper catalog, a Windows-based PC off-line order site, and an Internet-based e-commerce site.

“Basically, our philosophy is that we don’t care how you connect,”
said Diane Forrest, chief e-commerce technical officer at Henry Schein.
“We want to make sure that the level of service is the same no matter how you reach us. We are trying to offer the Web site as another sales channel, not replace our traditional business-to-business channels. We want to let customers choose whatever channel they want on any given day.”

To centralize and improve Web ordering, the company has just relaunched HenrySchein.com using the Commerce Server 2000 platform to enhance the online experience and reach new customers. The previous Web site was a closed site — that is, users needed a login to enter the site.

“We had to know who you were, had to make sure we checked your license to make sure you were a real practitioner before you could shop our products,”
Forrest said.
“We had a lot of business but we didn’t get any new business, since no one could browse and see what we sold. The old site also didn’t have a one-to-one marketing tool.”

Using the Commerce Server 2000 platform, customers are able to browse the entire Web site, see products and compare prices. Practitioner authentication — login — is now taken care of at check out. The Profile System function allows Henry Schein managers to present advertisements based on profession, geography, specialty and where practitioners are in their careers.

“From an internal point of view, one of the greatest benefits is the Business Desk function,”
Forrest said.
“It allows marketing people to set up campaigns and change them as they see customers interacting with the site, as they see what people are clicking on and what they are doing.”
In addition, the new site offers sophisticated searching, streamlined ordering and enhanced online customer self-service, all to offer buyers the fastest and easiest path to single and repeat purchasing through the Henry Schein network.

Henry Schein also makes use of Commerce Server 2000’s ability to design custom catalogs.
“With over 200,000 items in our catalog and a client base of dentists, veterinarians and medical doctors, we’re excited to be able to tailor an on-line catalog for different market segments,”
Forrest said.
“We can design presentations and catalog formats based on what we’re trying to sell to the specific customer we’re trying to reach.”

Clarus Corp.

When Clarus Corp. — a leader in providing business-to-business, e-commerce procurement and trading services — began its development of Clarus eMarket, the product’s designers realized that in the business-to-business space, software solutions needed to be flexible, integrated, and scalable. With Clarus eMarket — e-commerce software that allows multiple buying communities and suppliers to collaborate purchasing over the Internet — Clarus saw a market opportunity to target mid-enterprise companies, with sales between $250 million to $5 billion. However, to serve the needs of this large but very diverse market, the software platform had to be easily customizable, and it had to be ready quickly.

“When we put together the specs for designing Clarus eMarket, we had the choice of building, buying or outsourcing the technical infrastructure,”
said Steve Hornyak, executive vice president and chief strategy officer.
“Microsoft’s .NET platform made it easy to decide. Commerce Server 2000 provided an integrated system that gave us a lot of the capabilities we need right out –of –the box. That handed us the speed to market that we had to have to get Clarus eMarket out into the marketplace.”

Hornyak cites several key benefits for using Commerce Server 2000 to develop e-commerce platforms.
“The whole transactional layer of the server is impressive: the shopping cart function, the catalog capabilities, the packing and transmission of orders, plus order security and documentation. These capabilities came out –of –the box fully functional and customizable. Add in the openness and flexibility of the .NET infrastructure, and we were able to produce a Internet-ready product that’s easily customized to specific business needs in a minimum of time.”

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