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Packaging buyers are becoming increasing comfortable with using the Internet as a tool to find information prior to making a purchasing decision. Companies who provide effective content and interactivity on their site will grab the most eyeballs and, hence, maximize profits.

What’s missing?
The Web is essentially the easiest way for a company to connect with the world and turn visitors into customers by creating a pleasant experience. But the packaging industry has yet to take full advantage of all that the Web has to offer. For example:

1. In an effort to create an online presence, yet with an unavailability of internal web design professionals, companies have essentially taken their brochures and put them on the Web. It is disappointing to see sites that are not updated regularly, sometimes for months.
2. Another powerful feature of the Internet is its interactive capability. While a company might need to spend enormous resources to speak over the telephone to 100 customers to find out their experience with a new feature on the company’s latest equipment, a poll on the ‘customers-only’ section of the company’s website will provide such feedback at almost no cost.
3. The Internet also allows companies to inexpensively answer questions from visitors by providing links to appropriate individuals or, in the case of a large organization, have a customer service rep available either to answer questions through a chat session or by calling back the visitor.

I have yet to see all of these features in a single website in the packaging industry. (I would like to know if there are such sites since I have not visited every single one.)

Providing effective content
As the comfort level with the Internet increases, customers are increasingly using it as a tool to find information prior to making a purchasing decision. The analogy that comes to my mind is that of a trade show. I see trade shows as having a three-dimensional role in business: inform, interact and market. Companies go to a trade show to demonstrate their products (inform), have discussions with potential customers (interact) and differentiate themselves from their competitors (market).

This is exactly what needs to be duplicated on the Internet. You should think about providing such powerful content that visitors feel that they can find out practically anything about the product. This will result in a higher comfort level and, as a result, higher sales. An informed customer is more likely to buy. Customers want to learn about existing applications, benefits to current users and how it compares to competitive products.

I believe you should provide a comparative chart so that customers do not need to go to many different sites to develop one on their own. It would be even better if such comparisons were provided by an independent agency to make sure that they create an impression of being unbiased. This will help users make faster and better decisions and develop a sense of trust in you. Remember that customers in the new economy are armed with information, and you cannot mislead them.

Make it interactive
The second feature that you need to include is interactivity. For example, make interactive product data available so that customers can plug in their specific information and see the product performance. If you have product pictures, make sure it is possible to see them from all possible angles by being able to rotate them.

As purchasing and technical managers use the Internet increasingly as a tool to collect information, packaging companies have to start exploiting it is a powerful marketing tool. A website that looks like a brochure gets treated like one — to be seen only when absolutely necessary and just thrown away otherwise.

Packaging products present a great opportunity to be demonstrated on the Internet, and those who exploit this faster than others are more likely to grab a larger share of the eyeballs and, thus, potential profits.

Labels: content management, information management, internet, marketing

posted by eCreativa Media  # 2:21 PM 0 Comments

I am often asked by packaging industry executives how they can exploit the Internet as a source of revenue generation because, when they present a case for integrating Internet in their business process, this is the first question that is asked of them. There is no simple answer to this question because it depends on such factors as type of business/products/customers that a company has, typical order size, degree of customization required, and nature of relationships with customers.

Since most companies in the packaging industry have not made e-commerce a significant part of their business activities yet, it is difficult to say what the potential savings can be and how much of their business can be moved online. There is still too little information available to us. However, there is some learning to be had from companies in other industries that have taken a more aggressive approach to making the Internet a tool to find new customers, improve customer relationships, and reduce the cost of transactions.

Some of the companies in other industries that have realized huge savings by exploiting the Internet in their core business are Cisco Systems, Oracle, General Electric, and Dana Corporation. Some of these companies actually do a lot more customization than we do in the packaging industry. Most of them also have long-term relationships with their customers and have to regularly worry about proprietary information. Thus, these companies have quite a few similarities with us.

Why not the packaging industry?
The key question that packaging industry executives should ask is, “If other industries like ours can take this approach, then what is stopping us from doing it?” My discussions so far lead me to believe that the delay in implementing these initiatives is being caused by both packaging industry executives and providers of IT solutions. For instance, one of the areas with potential for cost reduction is package design and taking it to manufacturing. With the number of teams and steps involved in the process, some of which may not be in the same physical location, the Internet provides a perfect opportunity to move these functions online so that different participants in the process can work remotely.

The problem is that packaging industry has a process in place for doing this today, and there is resistance to change it, as there is for any change. The problem gets compounded by the fact that there is no simple IT solution available today for us to do it. Until the day such solutions become as simple as entering your user ID and password to access the design system, companies will not be receptive to investing thousands of dollars in developing proprietary systems.

Why do some companies still think it is wise to make huge investments and develop proprietary systems? In my opinion, this has been prompted by three considerations: these companies recognize that inefficiencies in business processes can be minimized by use of new tools; secondly, they believe in using information technology as a competitive weapon; and finally, they want to keep pace with the changes in business environment.

While I have talked about these issues in my previous columns, let me reemphasize why proactively driving inefficiencies out of the business processes should be every executive’s priority. For centuries our economic system was built on making profits simply because somebody else could not find information fast enough – for instance, information on who the suppliers are, what prices are they willing to offer, does someone have excess inventory to unload, and how soon is it possible to get a large enough number of suppliers to compete for a piece of business to receive a lower price? The rate at which information flows today (and this is just the beginning) has made it so much easier to get these tasks done within a matter of hours at practically no cost.

Our goal of using the net should not be limited to revenue generation. It should actually encompass higher sales, lower costs, and better relationships (which eventually translate into higher sales and lower costs).

Labels: ebusiness, ecommerce, information technology, internet, packaging industry

posted by eCreativa Media  # 2:00 PM 0 Comments

Recently I have been talking to a lot of packaging companies that either have no independent web presence at all or are in the process of improving it to better connect with their customers. To my surprise, I have also been speaking to several e-business solutions providers, who are now starting to think about the packaging industry in less generic terms. Some of the questions that they all ask me are:

• How much information should be communicated through the Internet?
• How can we duplicate the personal relationships over the Internet now that we have customers that are no longer within our standard geographic territory?
• What is the most effective strategy to manage the conflict in communicating with customers through personal interaction and the Internet?

Amount of information to be shared
As part of an unscientific survey that I conducted with a few executives, I presented the following two scenarios to them:

Scenario 1: Company A has a website that provides comprehensive information related to the company, its products, customer testimonials and all the other standard information that you typically see.

Scenario 2: Company B has the standard information but has also gone several steps ahead by including details on problems with products encountered in certain cases, limitations on product use and, most interestingly, a detailed comparative evaluation of their products with their competitors.

Among the individuals that I talked to, the overwhelming majority wanted to conduct business with Company B. Some of the reasons cited were:

• A website that appears to be direct and straightforward develops a sense of trust.
• Warning about potential problems and highlighting limitations right away is helpful in making better decisions and preventing problems from happening.
• Comparative assessment with competitive products is time-saving and makes them trust Company B for future purchases.
• Company B is not only selling products but is also imparting knowledge. As one executive put it, “I will do business with Company B indefinitely because I can trust them to always act in my best interest.”

Managing long-distance relationships
As we all know, whichever type, long-distance relationships are difficult. The only comforting factor is that current technology can make these less painful. If we analyze the basis of business relationships, it is not because someone is better than others at memorizing your children’s names; it is because of the sense of trust that develops by someone always doing what is good for your business.

While it would be hard to duplicate the relationships that are developed in person, it is still possible to duplicate a lot of other things. For instance, it doesn’t take long for you to acknowledge and help a customer who walks into your office in person. Why then does it take companies days or weeks to respond to e-mails?

As long as companies can duplicate the fundamental principle of a business relationship — “acting in the best interest of the other party” — it really does not matter if you cannot shake each other’s hands.

Managing channel conflict
It is not surprising that some of your privileged customers will be upset that information that they received, either on an exclusive basis or at least ahead of others in the past, is now available to everyone at the same time. Several companies are quite upset that it is now so easy for even their small competitors to find out about new technologies so easily.

There are two simple ways to handle this. Since some of these developments are still new and people are trying to adjust to the new realities of business, it will take some time before we all get used to the ease of accessing information. If you want to be a risk-taker, just go ahead and do it and some time very soon everyone will have gotten used to it. However, if you do not want to upset your traditional customers, it is not hard to control what information is available to whom by using the various security tools that are now available.

Labels: customer segmentation, internet, packaging industry, web design

posted by eCreativa Media  # 1:55 PM 0 Comments

While talking to industry executives during recent weeks, I have been shocked by the radical change in attitude insofar as the digitization of their business is concerned. Only a couple of months ago, I would hear complaints about how they were experiencing threats to their core business from online competitors and executives wanted to formulate strategies to protect their business. Now what I hear is “I told you so” attitude. While some of the remarks that industry executives make these days are arrogant, there are others who have just settled down in their comfort zone by rationalizing their fears – The Internet is only a fad, it is already starting to show signs of failure, and the threats to my business are over.

Nothing could be farther from the truth. As Michael Dell puts it, if bad business models are implemented online, they do not become good businesses; they just become bad online businesses. Like all other bad businesses, these too will go out of business, eventually.

For the packaging industry, the fundamental issues are not if some dot-com companies are going out of business these days or if some online companies are struggling to conduct sufficient number of transactions to remain profitable. The foremost considerations are still related to the basics of doing business – whether a new business process is going to enable a company get more business, serve customers better, and reduce the cost of doing business. While there are several classic examples of how companies are successfully exploiting the web, my favorite company is General Electric. It has taken an ambitious, but simple, approach – do everything over the Internet if it can be done more cost effectively. Now is that too complex for anyone to understand?

Advantages of the Web
In a survey by Cyber Dialogue regarding the advantages of being present on the World Wide Web, more than 40% of the companies responded that they were able to improve customer service, expand business territory, and keep up with the competition. More than 30% of the companies increased sales leads and lowered marketing costs at the same time. More than 20% of the companies reported that they increased both online and offline sales. In another survey conducted by Verizon/Super-Pages.com and Gallup has found that 55% of the websites have either broken even or paid for itself in increased business.

That is why I keep emphasizing to my friends in the industry that we have consistently seen pricing pressures only increase over the years and life is not going to get any better than this. In fact my discussions with industry participants lead me to believe that we will only see these pressures become more intense as the global economy slows down and international trade becomes easier.

What can you do now?
So while you can watch some of the excitement in the dot-com world as it unfolds, here are few things to do to in the meantime. By the way, this is also a good time to execute some of these projects as the providers are experiencing slower growth and you can hire some of the best firms at much lower prices:

• Reevaluate your business strategy to figure out what part of the business can be moved to the web.
  
• Taking your business on the web is not necessarily about e-commerce. In fact, a vast majority of packaging companies will possibly never need to engage in
  e-commerce. However, they will definitely need to provide support services and disseminate information. So take small steps now and be prepared to take big steps as the situation warrants.
  
• Hire an outside firm to give you a jumpstart. It may be possible to do the site maintenance work in-house but you should use professional help in the beginning.
  
• Stay on top of things. We are living in a world that business environment can change within weeks. So tell your management that they need to be flexible about pursuing a net strategy

Labels: business model, ebusiness, ecommerce, internet, strategy, web design

posted by eCreativa Media  # 1:50 PM 0 Comments

A recent study reveals that the packaging industry need not be discouraged by misleading indicators that predict the doom of the “new economy” but instead should continue to focus on being prepared for the long term.

When I speak to packaging industry executives at companies of all sizes these days, I am surprised by the degree of confusion that is widely prevalent. I can appreciate their anxiety — there are signs that the economy may be slowing down (though a recession appears unlikely), the competitive dynamics have completely changed and new business models are emerging (and failing, in some cases).

Since April, the stock market has further complicated the picture by sending several misleading messages to all of us. The media, which needs spicy stories all the time, has been delighted with the bloodbath on Wall Street. The same magazines and journals that were talking about nothing else but “dot com” companies and how they will change everything, are now similarly making a big deal about how it is all over.

No wonder, we just don’t know what road to take and what lies ahead. The risks appear to be so high that many of us in our professional roles are afraid of committing to anything for fear of being proven wrong within weeks.

Focus on long term
As a consultant, I try to be as objective as possible and help my clients take a longer-term and strategic perspective rather than be carried away by hype or discouraged by roadblocks. While everyone seems to be having fun at the expense of failed “dot com” companies or how stock prices of some have crashed, the reality is vastly different insofar as the strategic issues are concerned.

I have been regularly addressing in depth the fundamental issues underlying the new economy in my previous articles, but this time I want to share some eye-opening findings from a recently released study by The University of Texas’ Center for Research in Electronic Commerce. These findings should be able to convince all of us that we, in the packaging industry, need not be discouraged by misleading indicators and instead continue to focus on preparing ourselves for the long term.

Some of the findings from the fourth bi-annual Internet Indicators study that I think are relevant for us in the packaging industry are as follows:

• The productivity gains at Internet Economy companies are significantly higher. During the six-month period studied, an estimated 11.5% increase was observed.
  
• Internet-related revenue is growing three times as fast as corporate revenue as a whole for Internet Economy companies.
  
• While “dot com” companies have often been the face of the Internet economy, they make up only approximately 10% of the revenue generated. The remaining 90% of the revenue comes from companies that are exploiting the power of the Internet.

What does it mean for us?
These findings clearly show that real and significant business improvements are possible if we can adapt the tools to meet our specific needs. For instance, those packaging companies that have embraced online tools for collaborating on package designs with their customers and colleagues are already seeing major improvements in productivity. Several executives have confirmed to me that merely having a website has helped their company increase the number of good leads, reduce the cost of marketing communications, and, above all, their potential customers can evaluate and consider their products right away without having to wait for catalogs to arrive in the mail.

We all know that companies with bad business models eventually die whether they have a “dot com” in their name or not. On the other hand, we should learn from the mistakes that these failed companies made and then develop a business model that is better suited to our business, fits our corporate philosophy and can be implemented at a speed that meets the needs of our customers.

What drives growth within an enterprise is innovation, that is, coming up with breakthrough ideas and implementing them before anyone else does. General Electric, which believes in reinventing itself every couple of years and completely changing its business models (to the point of destroying its own business models, developed and perfected by it over the years), should be our role model. While the future is as unpredictable as always, it still makes sense to learn from industry leaders.

Labels: ebusiness, ecommerce, internet, packaging industry

posted by eCreativa Media  # 1:48 PM 0 Comments

The advantages of connectivity, e-commerce and exploiting other tools for more effectively purchasing products or reducing supply chain inefficiencies are clearer to small businesses than to larger ones. The reason is simple: small packaging suppliers, in many cases, compete with some of the largest companies but do not have the same bargaining power when it comes to purchasing raw materials or being able to force suppliers to expedite a delivery when absolutely necessary. If they can do anything to get that extra penny out of their costs, they are in a more competitive position.

The major problem facing small suppliers in our industry, however, is the lack of availability of suitable products that enable them to do that. As e-marketplaces are trying to build their businesses, their focus is on increasing the number of transactions. Since large companies typically conduct more business transactions, there is a greater tendency to design products for them and to pursue their participation more aggressively. To many in the packaging industry, this means that the game has not changed a whole lot. Wasn’t the Internet supposed to be the greatest equalizer?

Issues before small- and medium-sized suppliers
While discussing the unmet buy-side needs of this highly diverse and fragmented group of packaging companies, I came up with the following themes that were consistent across the industry:

• Need for relatively simple system requirements for e-commerce. They simply do not have the resources to build a new IT department and then be forced to update their systems every quarter because of revisions and upgrades.
  
• Flexibility with regards to minimum requirements to participation — for instance, the number of transactions or the value of business conducted in a given period.
  
• Less stringent requirements for approval to be included. Small suppliers generally need more cash-flow and credit help.

An equally important, but not as critical in the industry yet, is enabling these suppliers to sell online and to streamline their back-end processes. Most estimates put the number of small businesses at this stage at just 10%. This does not appear to be a serious problem right away since customers in our industry continue to buy through traditional channels and the point at which they will no longer do business with a company that is not integrated into their system is about 12 to 18 months away. (This period can shrink somewhat as the slowdown in the economy puts increasingly higher pressure to cut costs.)

Recommended roadmap
The turmoil in the business world is not likely to subside any time soon as we see slower growth in the economy, higher competition from global suppliers and, consequently, pressure to reduce costs. Some of the tools available today already enable small businesses to take advantage of purchasing over the Internet (though I am told that only about a quarter of the companies use the Internet to procure even office supplies, airline tickets and other similar products that every company should be doing today). While it may be difficult to procure specialized raw materials for small-volume buyers right now, they can definitely start with other products. This will not only reduce cost but also make the company’s executives more web-savvy and hopefully speed up the implementation in other areas.

The second solution that I am proposing may appear to be less practical right away but I would like to generate an industry debate on this issue. The larger packaging companies are already making or are planning to make significant investments into their IT infrastructure to address the realities of business today. Since the new economy thrives on partnerships and alliances, the larger companies should allow smaller companies to take advantage of their bargaining power, IT infrastructure and memberships of e-marketplaces. This will be a win-win situation for everyone because once the IT infrastructure has been set up, the marginal cost of an additional transaction approaches zero.

I am convinced that we can still compete in a healthy environment while enabling everyone to grow.

Labels: corporations, ebusiness, ecommerce, information technology, internet, packaging industry

posted by eCreativa Media  # 1:46 PM 0 Comments