Whither E-Commerce?

Edition: June 2002 - Vol 10 Number 06
Article#: 1256
Author: Repertoire

What happened to e-commerce? It's still here. It just looks different. It's not as glitzy, not as cool.

Why? The people developing it found out that it's, well, hard to do, said Tyco Vice President of E-Business Development Patrick Virnich, speaking at the recent Spring Conference of the Healthcare Manufacturers Marketing Council. Especially in the healthcare industry. Figure there are thousands, even hundreds of thousands of SKUs, he pointed out. Each has a different number. In fact, each has a bunch of different numbers, depending on whose numbering system you're talking about. What's more, providers discovered that it was very difficult to integrate the glitzy e-commerce systems with their internal purchasing systems.

Talk about raining on a parade! While just about everybody groused about e-commerce, the fact is, many in the supply chain wanted it. Still do. Suppliers want it because it reduces transaction costs and allows for three-way price matching with distributors. Providers want it because it allows for pricing accuracy and reduced transaction costs as well.

And most everyone was (and still is) convinced that e-commerce is superior to EDI – theoretically, at least. It's real time, not delayed. It can handle more complex transactions, and it can accommodate more complex organizational structures among its users, such as hospitals in which many departments do their own purchasing.

For suppliers' marketing professionals, the real value of e-business (a broader term than e-commerce, according to Virnich) lies in the fact that it alleviates much of the madness (that is, repetitive activities) in marketing today, he said. Marketers produce many materials, such as brochures, catalogs, Websites, training tools, customer-specific documents – many of which contain the same information. What's more, half of the brochures that most marketing professionals produce never see the street, and half of those that do, never reach the customer. Rather than produce those materials and repeat the information over and over again, why not digitize it, then paste it into marketing pieces as needed? It's a process called content management.

Who will be the e-commerce winners? One may be GHX, said Virnich, who sits on the exchange's board. GHX, which was founded in March 2000 by several health care manufacturers, such as Johnson & Johnson, Baxter and Tyco, lacks the ''market cap'' mentality of some of the other exchanges. It has no desire to go public. Today, it has the support of 71 integrated delivery networks, and is growing in order volume 20 to 25 percent a month, said Virnich. GHX has no interest in collecting market share information, then selling it back to suppliers, he added. ''So your data is safe.'' GHX's AllSource™ catalog is constantly updated, so that distributors and others are always up to date on product and pricing changes. It also offers customers the ability to view reports on their own purchasing history.