good article on e-commerce mentions omkt and their technology several times. i really like the fact that forrestor has increased estimates
for e-commerce from 1.3 trillion to 3.2 trillion.if that's the case
this could now be a 16 billion dollar industry for the e-commerce
enabler companies (omkt bvsn ibm nscp msft ect.)out of the 3.2 trillion i have used .5% as their share of pie.(this is my own est.
if someone else has something different please post i could be wrong.)
if omkt can keep their market share currently 30% that would be
4.8 billion yearly revenue. you can see why msft wants in and in the worst way. hopefully they are late for the game but their still a
800 lb. gorrilla.
The Buck Stops Here
Teri Robinson
It doesn't take a retailing genius to understand that the flurry of Internet
buying-$9 billion worth in 1998, according to the U.S. Commerce
Department-signals a momentous turn for e-commerce.
And the numbers are only on the way up. Forrester Research Inc. predicts
that Internet buying will top $3.2 trillion by 2003. Now, Web merchants need
to know that the buck stops with them to get their online payment processing
systems in place.
The stakes are high. A company's future e-commerce success may rest on just
how efficiently and seamlessly payment processing systems handle online
sales.
Properly executed, payment processing systems can free company employees
to focus on business objectives and boost the one element that's really
important for any business: customer service.
At 1-800-Flowers, "the online experience has to be as good as or better than
the 800 [telephone] service or at brick-and-mortar stores," says Donna
Iucalano, vice president of interactive services at the privately held
flower-buying service.
For novice online providers like the U.S. Postal Service, which is running a
pilot test of Post Office Online, customer service also is key. "We have to
make sure that once the customer has sought a service, the service is available
and fulfilled," says Pete Myokhin, payment technology officer at the Postal
Service.
The Post Office system is driven by a payment processing system from First
Data Merchant Services Corp. and Tellan Software Inc.'s credit card
authorization solution. Post Office Online is designed to compete with the likes
of Federal Express.
Faster Transactions
In addition to customer service, an online company can benefit in other ways
as well. Doubletake Gallery, which brokers artworks by Leroy Nieman and
Norman Rockwell as well as other lesser-known artists online, reports some
dramatic productivity gains from the new payment system used in its online
gallery, www.doubletakeart.com. Instead of spending 25 minutes processing a
customer's payment information, the whole process now takes about two
minutes, says gallery president Robert Varner.
Without the system, an employee had to manually process paperwork such as
filling out an advertisement form for an artist or, for customers, taking a credit
card number, running the card, printing the information and sending out the bill.
Now, the gallery outsources its operations to Eliance Corp., whose eSourcing
suite offers customers real-time product information and automated
purchasing. When an order gets typed in by a customer online, it is
automatically sent to a Doubletake database and the customer's credit card is
authorized instantly in a secure environment.
"It will really free up staff to work on the marketing side of the business," says
Varner, who adds that he'd much rather see the staff promoting the site's
quality artwork and authenticity than processing orders.
Although a number of payment processing systems have hit the market, for the
most part they haven't kept pace with the needs of the thriving Internet
community.
Experts say one of the main reasons payment processing systems such as
ORMS from Ariba Technologies Inc. and LiveCommerce from Open Market
Inc. have fallen short of expectations is that they're works in progress-kinks
had to be discovered and worked out.
"It's not [good enough] to simply offer payment processing anymore," says
Geoffrey Bock, an analyst with the Patricia Seybold Group. E-commerce sites
require relationship management, he says. That means that payment systems
must offer companies a way to manage relationships with customers as well as
between buyers and sellers.
For these systems to succeed they need to integrate enterprise resource
planning (ERP) applications, provide the means for real-time credit card
authorization, offer customer tracking, safeguard both buyer and seller against
fraud, meld various payment types and boost scalability to handle the growing
number of buyers.
It's a tall order, but Bock believes payment processing is moving "toward the
evolution of a digital marketplace. Vendors are implementing a variety of
enhancements to payment processing systems, depending on which
e-commerce model-buy side or sell side-the system accommodates.
Buy-side solutions are really procurement systems that link the supply chain
between companies and their suppliers and then handle payment procedures.
Vendors such as Ariba and Netscape are aggressively pursuing
business-to-business customers in this market, as are Connect Inc. with its
MarketStream solution and Trade'ex Electronic Commerce Systems Inc. with
its Procurement for the Marketplace. Purchase Pro Inc., TPN Register LLC
and Commerce One Inc. also have targeted the buy side.
Netscape is playing both sides of the fence, aiming its SellerXpert product at
the sell side. So is Microsoft, which markets its Microsoft Site Server
Commerce Edition as both a buy- and sell-side solution. Sell-side solutions
are geared toward Web-based businesses that sell consumer items like
books, CDs and flowers.
The buy side and sell side offer different features. Buy systems must support a
wide variety of elements such as purchase orders, lines of credit and disparate
pricing schemes for different customers, including credit cards. Sell systems
must accommodate a variety of payment instruments such as credit cards and,
in the future, electronic checks and cybercash.
But for a true digital marketplace to come to fruition, companies on both sides
require end-to-end solutions that integrate popular ERP apps and include
every part of the purchasing process-from order taking and payment
processing to fulfillment confirmation.
Beyond The Storefront
"I realized that setting up an online store was only the first step," says Steve
Matalon, chairman and CEO of BuyItOnline, an online commerce site that
acts much like a shopping mall to unite carefully screened merchants. One key
to a successful endeavor is quick and secure payment processing, he says.
BuyItOnline created an e-commerce site that integrates Internet Commerce
Services Corp.'s technology with Open Market's Transact. Internet
Commerce's software lets customers build online shopping carts and Open
Market's Transact executes payment processing. Customers can shop at any
or all of the shops at the BuyItOnline site, filling a shopping cart with products
and services then ordering them through a single secure order form.
Others agree that integrated payment processing is crucial. "Most of our
business is next-day delivery. If you shop on one day and we have to get back
to you that a credit card was approved and an order fulfilled, we lose the
point of doing business over the Internet," says 1-800-Flowers' Iucalano. "We
need the whole process, soup to nuts."
While Iucalano says that solutions like WalletTech from CyberCash Inc. or
Microsoft Wallet are impressive, 1-800-Flowers uses services from
Paymentech Inc. for payment processing and OrderTrust LLC for real-time
credit card authorization. Part of the reason for her choice is so users don't
have to download and install software then reboot their systems before
shopping. The online flower shop is "taking steps toward integration" of its
systems.
To meet the needs of a growing market, payment processing vendors are
enhancing and upgrading their products, ensuring that they can integrate with
back-office operations and process a larger number of transactions.
With the release of LiveCommerce 2.0, for instance, Open Market has
moved beyond the Windows NT environment to support Solaris, a move
which means the payment processing system can break the 100,000-product
barrier imposed by NT and meld with a variety of commerce products
available on the market today. As a result, the system-which can cost as much
as $300,000 for an enterprise implementation-also can facilitate a large
number of users simultaneously, a must-have for any Internet-based business.
The Postal Service's Myokhin sees a system's ability to handle more users and
more applications as a big issue. "We're looking at scalability as we take Post
Office Online to a national implementation," he says. The organization will ask
Tellan to provide upgrades, but doesn't rule out turning to another vendor in
the future to meet the service's growth.
Without the advantage of live salespeople interacting with customers or
observing how they shop, Internet merchants are increasingly demanding that
their payment processing systems provide some sort of user tracking as well.
Open Market's LiveCommerce 2.0 can gather information on customer
buying habits-from how long they stay at a site to which items they selected or
rejected. Armed with this kind of tracking data, e-commerce companies can
better tailor promotions, discounts and even inventory to customer needs.
Also important to the success of payment processing systems and the
businesses they accommodate is full integration with ERP systems, such as
those from SAP AG, Oracle and PeopleSoft Inc. That way, buyers can obtain
real-time information about constantly changing elements like inventory and
pricing. Nearly every major payment processing vendor is creating APIs to
hook their systems into a company's ERP applications.
Of course, adding these new features has a downside. More features equals
greater cost. And for the small-to-midsize business, it may be inconceivable to
pay more than $100,000 for a system and up to $1 million to get a Web store
up and running. "The Open Market [technology alone] costs about
$125,000," Matalon says. "You could do [the project] on your own for about
$750,000."
In fact, analysts and government officials expect an influx of small-to-midsize
companies on the Web. As buyers become more experienced online
shoppers, smaller companies have the assurance that customers are at their
disposal. They also have the most to gain: With limited staff and resources,
they need the reduced labor and paperwork that automated payment
processing provides. Automating the process "is going to be a huge time saver
and open up the bottleneck we have," Doubletake's Varner says.
And small businesses have the opportunity to excel on the Web where their
larger counterparts don't. Matalon says small businesses often have a product
or service that can't be found elsewhere, but they need a way to get customers
beyond their front door. The Internet gives companies like Doubletake a way
to expand their reach. "It's hard to find buyers in your geographic areas, so
you have to expand beyond it," Varner says. "But how do you consummate a
transaction from 2,000 miles away?"
Outsourcing Alternatives
For Doubletake, the answer was to follow in the footsteps of other businesses
that simply don't have the budgets to bring Web commerce in-house: The
gallery decided to outsource the operation.
"For us to try to tie in credit card machinery in the background would have
cost tens of thousands of dollars, and what sense would it make to do that?"
Varner asks. Instead, he turned to Eliance to automate Doubletake's
back-office functions using Eliance's eSourcing services. An outsourcer, he
says, "has already established everything that needs to be done" to start up
and operate a commercial Web site.
BuyItOnline has turned that philosophy into a roaring business for other online
merchants. For a fee-$79 per month and 15 percent of each
transaction-BuyItOnline will host a Web store and provide all of the secure
payment processing and back-end functions needed to run a site.
"The overarching idea is that we started taking the technology and providing it
as a service," Matalon says. "It enables the small guy without a large database
to do very secure transactions."
And, it promises the buyer that a credit card will not be charged until an order
is shipped. That is more than enough reason for any company to realize that if
it wants an effective e-commerce operation, the buck stops with them to offer
an integrated payment processing system.
Teri Robinson is a freelance technology journalist based in New York. She
can be reached at teri8994@aol.com.
SIDEBAR: XML Seen As Payment System Link
Payment processing systems can't reach their potential until different vendor
systems along the supply chain can communicate. The standardized data
format vendors are turning to is XML.
Just as EDI offered a common data format for suppliers and buyers on
value-added networks, XML is aimed at achieving the same thing-but at
lower costs and with fewer limitations now that the Internet is the venue.
"XML is an enabling technology," says Geoffrey Bock, an analyst with the
Patricia Seybold Group. "It gives you self-describing documents. Unless a
system can interpret a document, it has to guess what is there."
And indeed, XML is the great data equalizer. XML-enabled data, such as
pricing, is available in a standardized format to any user with a Web browser.
Conventional wisdom is that XML's fate in the payment-processing sector will
follow that of Unix: It will emerge in different flavors as vendors try to cut a
bigger slice of the e-commerce pie.
Commerce One Inc. has made XML the cornerstone of its applications
development. The company snapped up XML virtuoso Veo Systems Inc. to
push its XML effort to the e-commerce forefront. Veo's Common Business
Library is being used by Commerce-Net, an e-commerce consortium, to
establish the eCo Framework that defines commerce between businesses.
Ariba Technologies Inc. has embarked on a different path. Ariba gears its
Commerce XML (cXML) document type definitions-from purchase orders to
payments-at smoothing Internet transaction processing. Commerce One's
initiative is considered a broader, updated XML approach that mirrors the
World Wide Web Consortium's efforts. cXML has the attention of vendors,
but it's unclear how open the standard will be.
-Teri Robinson
Copyright ® 1999 CMP Media Inc.
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