The Requirements for Success

Most Internet "commerce" start-ups are online ventures, and most have no idea that their needs go far beyond simply building the site. To be successful and effective, online ventures require building and operating a business. Often, online business stakeholders are deeply focused on the development of their website and miss the need to address the development of the business itself. Some never make this realization until they've already launched their service, only to find that they are ill-prepared to deal with business functions such as shipping, billing, and fulfillment.

Following are the primary strategies for developing a successful online venture:

Carefully study your market.
It is always important to know your product or service well, but it is even more critical to monitor current trends and anticipate future ones especially in this rapidly changing online industry. Your competitors online may be very different than those offline. Because the Internet, for example, connects so many disparate people, companies, and nations, it heightens the likelihood that your competition may be from companies only tangentially related to your core business. Your marketing and positioning will not only need to be prepared for real-time change to address threats from previously unlikely sources, but also have the capacity to identify opportunities that never could have existed in a different medium.

Likewise, it is important to understand how your online customers differ from your offline ones (if you have them). The online medium offers an unprecedented opportunity to track, understand, and respond to customers -- particularly their shopping behaviors. Online businesses must respond to customers skill levels, their varied interests, their needs at any given time, and their goals, while also addressing their time, location, and experience in order to serve them best.

Lastly, plan and build the alliances and partnerships with other businesses that will drive customers to your site, support your messages and initiatives, offer the experience and content your customers desire, and establish reliable flows of products, services, and capital. More than any other medium, online businesses require relationships with other companies in order to remain a contender in the rapidly developed, highly competitive market. Going through these exercises will enable you to set your own strategy and build an effective operating plan.

Structure your company to meet the demands of the online marketplace.
Because operating in the online medium is so different from the offline world, merchandising, order processing, fulfillment, and customer service all must be customized to meet the demands of customers in this medium. Existing companies need to identify opposition to their online venture within their organizations due to structure, attitudes, or lack of experience, and be wary of any blocks developing during the life of their venture. New companies must build organizations that are streamlined from the beginning. Too often, companies only think through or develop their Internet site, spending the bulk of their time and budget developing the service without properly considering the operating structure they need to execute this service. This is one of the biggest failing points for businesses -- new or reengineered -- and one of the least recognized. Traditional ways of doing business are not necessarily going to be successful online. Likewise, too many new businesses start by focusing only on their products and services and skimp on the back office pieces (processes, systems, tools, relationships, authorities, etc.) until they're already "up and running." By the time they're ready to address these needs, their businesses are usually already failing or experiencing organizational trauma.

Focus on the customer experience.
Online ventures, more than standard companies must recognize that the experience their customers have with their website (or other online solution) is the key to a successful customer relationship. The online medium offers a rich opportunity to develop strong relationships not paralleled in any medium other than physical, face-to-face interactions. Through this medium, companies are finding ways of treating their customers differently, often with personalized service. Customer loyalty is difficult to win, and is built only on the experience customers have with a company. Likewise, a company's brand is built through these very same experiences. For online ventures, lack of an effective website with valuable online experiences (for example, if the navigation is confusing, the content inappropriate, the process too arduous, or the interaction too impersonal), is the quickest route to failure. Part of the process is to develop a solution that encompasses all of the necessary aspects of an exceptional experience: information architecture and navigation and -- especially -- interaction design. Too many companies pay attention merely to what their sites look like (visual appearance or technological tricks) and not to how its organization communicates values or how its interactions enable experiences.

Build realistic financial projections and growth expectations.
Online ventures do not turn profitable overnight and expecting them to do so is a mistake. More important than profits at the outset are the establishment of a presence, gaining market share, and growing traffic/customer relationships. This requires significant investments and expenditures in marketing, site development, customer service, and often advertising. In general, you can not count on a return on investment (ROI) in under three years. In fact, the most high profile online venture to date, Amazon.com, has yet to turn a profit, and yet the company has a market capitalization of over $19 billion. Granted, online ventures (or any other type of company, for that matter) can not continue to operate at a loss indefinitely. But, having a realistic approach to profit expectations is necessary from both an operational planning and an investor perspective.

Create and support an entrepreneurial spirit.
In a medium with little clarity and few models, inspiration, and insights might come from anywhere and anyone and online ventures need to create and foster an environment that rewards commitment, energy, risk-taking, and resourcefulness. The culture of an online venture is critical to its success and is more than merely "nice working conditions." A company is its people and a company's culture will determine how that business responds to stress, problems, opportunities, and change more than any process, tool, or command structure.

Partner with an experienced developer focused on your business.
Lots of companies can help you build a website. Very few can actually help you build a business. Understanding how to use the medium well and working with an experienced partner are some of the most strategic requirements an online venture must address in its earliest development. The ideal relationship for any online venture is to build partnerships that reflect a shared understanding of skills and experiences: each partner trusting the insight, experience, and knowledge of the other and, together, building a customer experience that emphasizes these shared strengths.

For an online venture, the company's website is its connection to the world. It is what defines its brand, establishes its customer relationships, and generates revenue. Because of this, cutting corners in the development of the website costs much more in terms of lost business, poorly communicated messages, poor service, frustrated customers, and the cost of redeveloping the site soon after launch to correct these problems. In the long run, the few dollars saved by hiring inexperienced or cut-rate design firms, or firms that cannot provide a well-rounded business-focused methodology and skillset can cause irrevocable damage to a company's competitiveness and usually nullifies any lead it may have held in the market.

The issue is not even really one of money, but of time and complexity. If you hire a partner who can only help you develop a website, than you are ignoring the need for help in developing your business. This medium's effects reach widely into all aspects of a company's activities, and these must be addressed, resolved, and prepared for a website (or other online solution) to have a successful impact on the company's growth.

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