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Getting Savvy With E-Commerce

E-commerce. A lot of people talk about it, but what does it mean to your business?

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While we can’t really call the Internet “new” anymore, that doesn’t mean it isn’t providing a new frontier of business opportunities. Companies are – and will continue to – leapfrog their competition as they implement business strategies made possible and accessible by Internet technology. When it comes to progress, it’s been stated that, “If you always do what you’ve always done, you’ll always get what you’ve always got.” Well, progress doesn’t work like that anymore. These days, if you always do what you’ve always done, you’ll get a lot less than you’ve always got. And maybe you’ll get nothing at all!

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New ways of doing business on the Internet keep popping up. It’s not just for personal e-mail and surfing to find the latest baseball score. It’s an important business tool, as well. Whether you consider yourself a “techy” or not is no excuse for staying in the dark on this. You’ll want to know what’s likely to happen in our industry with this new e-commerce frontier.

Rating Your Web Presence
Who might be concerned with these developing e-commerce capabilities? Maybe the makers of the Yellow Pages. Why? Because when a customer is looking for a product or service, he’s increasingly likely to check the Internet directory to see where he can get what he’s looking for. In other words, the Yellow Pages stay closed. More and more consumers and businesses go to their computers to choose whom they will do business with. And you get so much more information about the company, product or service than you’d get in the Yellow Page ad, no matter how big that ad is. For many potential customers, if they don’t see you on the Internet, then you don’t exist.

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But all that shouldn’t matter to a collision repairer, right? After all, we get our customers through word of mouth or by referral from a solid business relationship like a DRP or fleet account. You might think referrals that come by way of the Internet are of little consequence to your business.

Think again. The information collected on the log (that number at the bottom of home pages that tells how many visitors have visited the site) generated by my Web site tells me that we’re visited by 400 potential customers a week. This number doesn’t include the hits from lost Web surfers or competitors checking up on us. The same way people judge your shop when they pull up to your front door is the same way you’ll be judged by the Web site that represents your company. And if you don’t have a site, you’ll be judged on that.

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E-Commerce – What Does It Mean?
As you’d expect for an article with this topic, I surfed the Web and found these definitions for e-commerce:

The Business Definition – The conduct of a financial transaction by electronic means. Called electronic commerce or Ecom or emmerce or EC, these terms are used interchangeably, and they all mean the same thing – the paperless exchange of routine business information using Electronic Data Interchange (EDI), email, electronic bulletin boards, fax transmissions and Electronic Funds Transfer

The Congressional Definition – Electronic techniques for accomplishing business transactions, including electronic mail or messaging, World Wide Web technology, electronic bulletin boards, purchase cards, electronic funds transfers and electronic data interchange.

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This doesn’t quite tell us where e-commerce will be implemented in the collision industry. But if you look closer at the definitions, you can see that we’ve been using e-commerce for more than a decade in our industry, thanks to the electronic assignment and estimating transactions provided by ADP, CCC and Mitchell. While these transmissions are packaged in a proprietary format (non-standard), they do meet the definition.

In the Dec. 1999 issue of BodyShop Business, I presented a chart on the status of implementation for electronic methods of doing business. Here’s an updated version of that chart, so you can see how far e-commerce has come in the last two years. At this rate, we can expect to see all the following business processes utilizing electronic commerce over the next two years:

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Business Transaction

Under development

In use today

Products available now

Claim assignment

 

X

X

Estimate upload

 

X

X

Image upload

 

X

X

Repair status email

 

X

X

Real time web repair status

 

X

X

Insurance Claim file on-line

 

X

 

Online access to customer Repair Order

 

X

 

Legally accepted electronic signature

X

   

Virtual Stores for online supplies

X

X

 

Electronic Parts Ordering

 

X

X

Online order inventory searching

 

X

X

Bar-coding for inventory control

   

X

Just in time inventory control

X

X

X

Online access to vehicle databases

X

   

Customer Satisfaction Follow-up

X

X

X

Electronic Funds Transfer

X

X

X

Electronic invoicing and statements

X

   

Electronic payroll transfers

X

X

X

Looking at this 2001 list, few would disagree that these business processes will be supported by e-commerce. Innovators will create new, not-yet-imagined opportunities using the technology. I believe that connecting and enabling business-to-business e-commerce will provide strategic advantage for those who use it. The good news is that, eventually, brand new e-commerce solutions will be made available to the masses. However, those out first will gain the early lead because they’ll be the only ones taking advantage of those solutions.

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Things should get exciting the next couple of years because the Internet breeds a different culture with software developers. Previously, our industry had to pay the added costs for using proprietary software over the last decade. Before moving to open standards, software suppliers were able to limit their customers’ use of their software to conducting e-commerce with those using only their software. Imagine a scenario where only those with AT&T phone services could only talk to those with AT&T service. What happens if a client had MCI? You wouldn’t be able to talk to them, unless you purchased an MCI system, as well. This situation with the providers required users to buy multiple versions of the same software solution. To do e-commerce with all insurers, shop owners had to buy all three of the main estimating solutions: ADP, CCC and Mitchell. And this wasn’t cheap. The annual expense was approximately $21,000 to use all three systems. So, if the business pre-tax net profit was 6 percent, the shop had to bring in $350,000 a year just to pay for the estimating systems.

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But developers of Internet-enabled software have created an alternative. Instead of pulling in the reins, they know that value comes from solutions that can be used by customers with different brands of software and systems. When the barrier to entry is lower, the more people you’ll have at the party. And value for all of us increases as more come to the “party.” This is what the Internet brings to the table. Those who don’t support this culture won’t make it in the software business. The competition will be fierce, but it will drive prices down and value up.

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Getting Connected
The technology isn’t slowing down either. Start-up and log-on times are getting shorter, making it more efficient to do lots of work over the Internet. Connectivity and band width (the speed and volume of the data that moves over the phone lines or conduit) is getting better each day. Digital subscriber lines (DSL) are widely available in most metropolitan areas. These DSLs provide up to 10 times the speed of your average dial-up account at 33,600 baud. But keep in mind with the extra speed comes a higher price. Internet estimating is available now. But with Internet estimating, expect to “pay by the drink.” In other words, you’ll likely pay for each use of the online database to generate these estimates.

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With this technology also comes more opportunities for dealmaking. For example, online suppliers of parts and materials may even subsidize the cost of the online estimates mentioned above if you use their online vendors. And when it comes to personnel support, there will be a shift in staffing from heavy in field marketing to heavy in research and development regarding those providing software solutions to our industry. Software companies that supply the specialty applications to our industry will have to reinvent themselves and their products to survive and adapt to the tastes and expectations of their customers.

Existing distribution channels of parts and materials will be broken down, bringing about alternative distribution and payers for parts, materials and supplies. Thus, it will be tempting for some insurers to purchase parts directly. In fact, the word “direct” will be in the lexicon of many businesses. Insurance-direct, parts-direct, paint material-direct, software-direct, direct repair, etc. Why so much direct-tion? The word “direct” speaks to consumers as providing new value. E-commerce will force everyone to analyze existing distribution channels within and across the value chain of the collision repair and claims processes as they look for opportunities to squeeze out inefficiencies.

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The E-Commerce Ride
Most businesses in the collision industry (shops, insurers, material suppliers) will need to just strap on the figurative seatbelt and prepare for a wild ride. People ask me all the time what they should do to be ready. How does one prepare for the changes that are coming? Become computer and e-commerce-literate.

Use the Internet to source products and services. Use email to communicate and for personal correspondence. And do it yourself. Having your secretary or your kids send and receive your email doesn’t count.

You must become comfortable and proficient with the computer and all its tools to conduct business. Why? Because others are doing it, too. People who are technology competent now will manage successful businesses in the future. And if you fail to use the technology, you won’t understand the potential value it can create for your organization. To keep from being thrown off this wild ride, you’ll need more than a seatbelt and a roll bar. You’ll need to have your eyes peeled and looking dead ahead to predict the next turn. Stay informed.

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Writer Erick Bickett founded the collision Industry Electronic Commerce Association (CIECA) in 1992.

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