The ongoing emergence of digital technologies is providing “New Age” entrepreneurs with a wide range of fascinating opportunities for tailoring design, promotion and delivery of their products and services to customers’ needs.
Furthermore, distance is no longer a severe obstacle for “going shopping” and this is very good news for the Australian sellers who used to find direct penetration into international (and at times even interstate) markets “mission impossible” due to the obvious geographic boundaries.
Yet, now, online success stories are beginning to emerge from a diverse range of industries.
For example, consider these four the leading Aussie online ventures – Flowers, Open Universities Australia, QuickSales and Domain.
They appear to have very little in common. Flowers is an online flower retailer and Open Universities is in business of online training delivery. QuickSales runs an auction website, while Domain is one of the most popular real estate websites.
The differences do not end there – Domain and QuickSales are both portals that act as “middlemen” between the buyers and the sellers, Open Universities is in business of online delivery of services while Flowers sells physical goods.
Similarly, the target customers also come from different walks of life. Few of those who are planning to undertake educational courses are searching for houses to buy, and low-impact purchases such as flowers, books and CDs have little to do with high-impact real estate or education-related purchases.
If you build it, will they come?
So what is the secret (if any) behind their successes? Have they just got “lucky” or should entrepreneurs assume that as long as they can get their business ventures up-and-running online, success is guaranteed?
Unfortunately, getting online alone is not going to be sufficient for ensuring business success. While we do hear about a lot of e-business success stories, sadly enough, a majority of online start-ups fail miserably. As no business has ever been launched with the objective of “failing” or with a goal of “having fun rather than making money” something must’ve gone horribly wrong.
In recent years, I have been involved in assisting entrepreneurs with establishing strong online presence. Both our research and the projects that we have carried out for our clients strongly suggest that the very critical factor for online success is usually (though not always)… a strong offline presence!
Nearly all of the successful Internet start-ups I have worked with have been built on the basis of a solid offline foundation incorporating established supply and distribution channels, technical and business support networks and in some cases even well-established brands.
Out of the four success stories discussed above, only QuickSales was started from “scratch” and can be regarded as “100%” digital. With the other three, offline presence and/or experience have been instrumental to their success.
Remembering the supply chain
Flowers entered the online market with a pre-arranged network of flower delivery services. It can deliver flowers (a perishable product) anywhere in Australia as well as overseas. This would never be possible without an outstanding network of product delivery channels.
Open Universities had seemingly lesser troubles with its service delivery arrangements, as education is one of the most suitable services for the online delivery. However, at the other pole of the supply chain – a training provider needs a solid list of courses to offer. Open Universities has resolved this problem by getting some of the major Australian Universities on board as providers and training partners.
Similarly, Domain was established by the Fairfax Media Network so it was able to take advantage of Fairfax’s established offline relationships with the advertisers within the Real Estate industry.
To sum up, emergence of the digital technologies has led entrepreneurs towards discovery of many new business opportunities, but the new business ideas and concepts can rarely be fulfilled successfully without addressing centuries-old supply chain management requirements.
So, if it’s online success you’re after – it’s time to get off-line!
Dr. Michael Baron is the founder and Managing Director of Baron Consulting, a boutique Melbourne-based consulting firm. He also lectures MBA and MIS students in some of the leading Australian universities.