 
12/06/1998
Journal of Internet Banking and Commerce
The Experience of the
NUOVA BANCA DI CREDITO DI TRIESTE
with Electronic Commerce
(part 2/3)
By Contributing Editor Pecenik Miran
translation by Michele Clara
Pecenik
Miran was born in Trieste (Italy), in 1956. From 1978 he worked
in the Banca di Credito di Trieste - Trzaska Kreditna Banka, in
sectors like Edp and organization. Now he is the chief of Information
and Communication Technology (and also Webmaster) in the Nuova
Banca di Credito di Trieste - Nova trzaska kreditna banka.
In the last two years he published many articles about the Web
on italian and canadian newspapers and his work was mentioned
in dozens of articles on financial and Internet magazines, on
television and on an italian national teletext. Overall he increased
the popularity of the bank with over 700 links all around the
world.
He spoke in various meetings, organised by the principal italian
banking corporates, such Abi, Ipacri and Istinform. In 1996 worked
on a questionnaire of the use of Internet in Italy (nowadays the
biggest in Italy, with 1700 answers) and had organised the first
italian elections on the Web. In 1997 he tested the push technology
with a group of 700 people.
After this exhaustive discussion of the steps that can take an enterprise
into electronic commerce, I find it necessary to reflect on what
an enterprise might be offering on the Net or, in other words, of
the commodities that might be sold on line. Let me try to put forward
a list of the enterprises that are currently selling their own products
worldwide.
Let me categorize these commodities on the basis of their price
and their potential customers. For a start it might be useful to
differentiate between 'visible' and 'invisible' commodities. Invisible
goods (such as services, software, news, etc.) can be further
divided into goods that can be sold by units and those that can
be sold with a fixed charge.
In the next two tables we can have a look to a whole range of invisible
goods that can be exchanged via electronic transactions.
|
Unitary
cost
|
Invisible
good sold by unit
|
|
<
5 cents
|
Constantly
updated pages (e.g. top links, sectoral lists, exchange
rates or quotes on line, etc.)
|
|
|
Simple
advertisement banners
|
|
<
50 cents
|
Downloadable
pictures, screen-saver, etc.
|
|
|
"Intelligent"
advertisement banners which are tuned to the page where
they are located
|
|
|
Reference
are made available to links to the telephone, fax, pager,
or mobile phones network- the Internet can be used even
without holding an own account because all the data can
be exchanged through other channels
|
|
<
2 USD
|
Downloadable
simple software applications
|
|
|
Simple
economic activities such as financial intermediary or professional
activities
|
|
|
Commercial
information of general interest but not advertisement
|
|
|
On
line programs with temporary license - most probably the
source of most office automation software for network PCs
|
|
<
10 USD
|
Complex
software applications
|
|
|
Professional
commercial information such transactions based on forecasts
|
|
<
50 USD
|
Branded
software (at reduced prices)
|
|
|
Complex
software services
|
|
>
50 USD
|
Strategic
commercial information strategic and/or sectoral studies
|
|
|
High-fidelity
satellite links
|
|
Annual
subscription
|
Invisible
good sold with a fixed charge
|
|
<
25 USD
|
Simple
news on specific topics
|
|
|
Special
offers on mass-consumption goods
|
|
<
100 USD
|
Subscription
to newspapers and magazines - the cost should be the same
as for the 'on-paper' versions
|
|
|
Specific
news on pre-defined topics
|
|
|
Shareware
or try&buy applications distributed via e-mail
|
|
<
200 USD
|
Professional
bulletins with a large audience
|
|
|
Subscriptions
to audio-on-line record companies
|
|
<
500 USD
|
Strategic
newsletters and bulletins with customized market analysis
|
|
|
Professional
video clips
|
It should be noted that the transactions involving many of these
invisible goods might very well lack any form of control (by the
state, the regulators or the consumers associations). It is therefore
possible to gain access to the 'deal of the century' or just one
of many 'lemons'. The best advice is to try the service for a while
to see if it is worth one's money before paying for a subscription.
As it can be easily seen, the list (which is by no means exhaustive
and should be read as only suggestive of the countless opportunities
available) includes, beside the by now common pages of 'useful links',
also the opportunity to download files such as audio or video files
and images of all types.
The method of payment for these transactions should also be discussed
in details. Many suppliers are not yet connected to secure servers
supporting encryption. A recent development is the creation of 'Internet
billing companies' that provide secure pages and then divert the
payments from the final consumers. Clearly these providers have
identified the scope for a profitable business much in advance of
the banks, which have in general been very skeptical about new forms
of payment such as Digicash e Cybercash, to mention but a few.
Let us now discuss the opportunity for electronic commerce of visible
goods. For a start it must be acknowledged that not all such goods
can be adequately commercialized on the Net. Here are some examples
of goods that have been sold successfully through this new medium
of communication.
Books can be sold most easily on line. The classic example is that
of the virtual megastore Amazon.com which caters for something like
one million clients without a single (physical) bookshelf. Numerous
attacks have however been waged against this experience, supporting
the purchase of books from the (physical) bookstores on the street.
In collaboration with a bookstore in Trieste (Italy), we have tried
to study, back in 1996, the opportunity to sell books on line. The
cost of shipping the books elsewhere in Italy was found to be about
2.5 USD. It seemed a price that customers should be willing to pay
to receive, at home and in a couple of days, a book otherwise impossible
to find. In this case, the payment was to be made upon receipt of
the book.
The very same kind of payment was envisaged for a (physical) megastore
of computers in Florence (Italy). On their Web site it is possible
to select the preferred PC configuration in details and to pick
up the computer the day after at any of the affiliated shops, paying
what had been indicated on the web page, without any extra charge.
Again in Florence, a provider has succeeded in putting on line some
twenty among the most famous local artisans, offering to its customers
(worldwide) the very same products that can be found on the city
streets and delivering them directly at home. The sale of these
products is optimized with respect to the status of the artisans'
inventories. In this case the cost is not a key variable, what is
vital is that the product should arrive on time even in Japan. And
it does ... !!
Along the very same principles and relying upon an existing network
of delivery points (such as the Pizza Hut outlets or Hard Discount
chains), it may be possible to facilitate the distribution on line
of standardized commodities (such as pizza) or even of pre-defined
baskets of goods.
For sake of completeness a reference should also be made to other
successful experiences such as the sale of CD-ROM disks (Cdnow)
which also offers a valuable service in terms of discography search,
of software (Buydirect offered by Cnet) with the opportunity
of a pre-purchase trial, of flowers (1-800-flowers) a virtual
Interflora, of travel packages (Travelocity) and tickets
(Ticketmaster).
If an enterprise intends to sell its products on the Net but lacks
the necessary technical capabilities, it can easily join a sale
point such a cybermall or a netmarket. These virtual commercial
outlets can also be organized on a smaller scale or for the needs
of a medium-size town, if a sufficiently large number of customers
is present. A so-called "local" bank can evidently play
a key role to establish such an arrangement, to centralize and therefore
facilitate payments, or to provide guarantees for the commodities
sold.
New markets would therefore be disclosed to the enterprises participating
to this experiment (by now "clients" of the local bank)
and the bank would have the opportunity to strengthen the ties with
its customers and to increase their profitability.
In the last year, we have been experimenting with electronic commerce
both of visible and of invisible goods.
For nine months we moderated a news service (delivered by e-mail)
to over 700 people on some forty different topics. The service complemented
a questionnaire on the use of the Web in Italy and it was entirely
free. From this experience we drew the impression that the best
way to deliver news is most often also the simplest one. Nowadays
some enterprises are willing to deliver information using always
more elaborate techniques (both in terms of graphic and contents),
on the assumption that their potential clients possess computers
of the latest generation. The so-called 'push technology' channels
seem to be still within the reach of a very limited minority of
customers; I would suggest the need
to rethink this strategy, making use of a more traditional medium
like the e-mail, which I believe to be the most valid element of
the Internet.
In the summer of 97 we also tried to sell the tickets for a rock
concert that took place in Trieste. Through a simple form, the potential
buyer had the opportunity to fill in a request which would be then
sent and processed as an e-mail. At most within two days, he or
she would be then contacted by a freelance delivery-boy, who would
take the tickets directly at his or her home and without any extra
charge. Given that the service was only open to the inhabitants
of the area, the results have been significant.
Numerous contacts have been established with the clients of our
bank including bookstores, computer shops, car retailers, tour operators,
estate agencies and supermarkets; in general all displayed some
sympathy towards electronic commerce, even though there has been
no evidence of the keen interest which normally surrounds those
projects with a clear business implications and which would have
been needed to start a serious program.
What is holding up the take-off of the Net or, in other words, why
is electronic commerce standing still? In the USA, 17% of the users
(out of an estimated 50 million users of the Net) admit to buy commodities
on line with an average monthly expenditure of around 50 USD. In
Italy, it was optimistically estimated that 2.5 million people navigated
the Net in September 1997. Nevertheless, it has been almost impossible
to find out how many of these users are 'professionals' ones and
how many rely on temporary, educational or corporate accounts. It
is also estimated that, out of eight people who browse the Net,
only one pays a subscription fee for this purpose: this is the case
of corporate local networks, cyber-cafes or other types of spot
accounts such as, for example, mailboxes with temporary passwords.
From these elements it is clear that the expansion of electronic
commerce will be a problem. What could stimulate or hinder such
an expansion? Let me dwell on this topic from the point of view
of the buyer and of the seller.
The enterprise that decides to have its products bought on the Web
opens itself to the global market (if and when it gains a sufficient
visibility), with all the pros and cons that are involved. It gets
contacted by customers that would have never been reached but for
the Net. At the same time, however, it can also encounter new types
of problems because it becomes accountable for wrong-doings in the
purchase of components, because it discloses information to its
competitors, or because it can breach the legislation of some foreign
country. All in all, the experience should be positive in most of
the cases.
For the buyer, there are clear advantages from shopping on the Net
but also disadvantages. Discounts might be available to net-buyers.
The real advantage of shopping on the Net coincides however with
the opportunity to access information on the products required from
a variety of competing sources. Here is the other face of electronic
trade. Many US firms admit to be present on the Web not so much
to sell, but rather to be competitive, to strengthen their communication
with customers, to increase the visibility of their brand and to
improve the after-sale services they offer to their customers. Why
should these firms be in any way interested in exploring new means
of communication, when the existing ones are more than enough?
Copyright Miran Pecenik, 20-Feb-1998
|
