E-BUSINESS SPECIAL REPORT
The Reinvention of E-Commerce

In the past, brick-and-clicks and pure-plays have not had that luxury. But as the ins and outs of e-commerce have become better known, many companies have begun to change their practices. And rather than jumping into Web waters teeming with competitors, a significant percentage of businesses have chosen to focus on differentiating themselves and targeting consumers in smarter ways.

Turning a Corner

"In general, companies have moved away from an online strategy that was in many cases uneconomic and opportunistic to a business model that is economically sustainable," Boston Consulting Group analyst Simon Stephenson told the E-Commerce Times.

Changes can be seen across the Web as companies focus on giving customers more of what they want -- content -- and fewer bells and whistles. For example, many automakers have retooled their sites significantly to reflect customers' needs. If site visitors want to know the available colors for a car, they will likely find those colors very easily on a manufacturer's site.

Sellers in other sectors -- such as financial services firms, booksellers and clothing retailers -- also have beefed up content and improved site navigation. In almost all sectors, the use of new technology to showcase products rather than design capabilities has helped e-commerce move beyond its beginnings.

"Lands' End is very out there with adopting new technology," Forrester analyst Harley Manning told the E-Commerce Times. "They use things like a virtual model to draw people to the site."

Bumps in the Road

Of course, there might still be a long way to go until e-commerce evolves to the point of being truly useful to consumers. Site design, in particular, still seems to be a sticking point for some companies.

"On average, sites aren't improving," Manning noted. "But some of the leaders have really begun to crack the code and have started to open a wide gap between themselves and their followers."

Companies that yearn to follow the leaders do not lack knowledge about usability and customer needs, Manning said. Rather, they often suffer from poor internal coordination. "Very often, design teams and outside experts know what to do," he said. "But they're ordered to do the wrong thing by people who sign the checks."

Businesses that pull ahead almost always have an executive champion who is willing to fight for continuous site improvement and customer-focused design, Manning noted.

Future So Bright

For companies trying to reinvent themselves through e-commerce, there could be a shiny vista ahead. Stephenson said there has been a striking improvement in profitability for online retailers in particular.

"This is driven in large part by massive improvements in marketing efficiency," he said. "They've moved away from broad marketing channels to more targeted efforts."

A good example of this effort is the leading booksellers, Manning said. "Take a retailer like Barnes & Noble (NYSE: BKS) . They know how customers browse for books, how they shop for that particular product. So they've changed their site based on that understanding."

Emulating effective strategies will likely be a popular course of action as companies mine their knowledge of proven online techniques and attempt to apply that wisdom to the Web. And as those who sign the checks begin to understand what must be done, perhaps even e-commerce followers can catch up to the leaders.