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A bigger piece of a bigger pie - the impact of E-commerce

Howard Hallman
Guest Columnist
Summit County, CO Colorado
December 19, 2006

It was a large conversation before a small group, but those who came got more than their money's worth. The "Changing Face of Retail in Summit County" was discussed by retail professionals at last Thursday's Our Future Summit Forum in Frisco. E-commerce and its impact for good or bad on local business, was on everybody's mind. The conversation was thoughtful and enthusiastic.

Attendees heard from a top-notch panel that included J.D. Burns, a district manager for Polo/Ralph Lauren Factory Stores; Scott Miles, group sales and marketing nanager for Keystone Sports; Michael Pixton, manager of Silverthorne's Target store; and Don Sather, owner of BigHorn ACE Hardware. Jennifer Kermode and I from Our Future Summit served as moderators.

There was general agreement among both panelists and audience members that internet commerce is expanding rapidly and is increasingly an important part of a successful strategy for almost every business. According to Don Sather, internet sales increased 25 percent last year, with a 17 percent upswing in the number of internet customers. The internet offers a large advantage to those businesses, local and national, that are able to utilize it properly. However, this may mean making changes and adapting different approaches.

E-commerce can provide new markets for local goods and services, literally around the globe. Scott Miles said that a large percentage of his company's business is conducted through the internet. He cited an example of a company in eastern Colorado that became successful as a result of its internet presence. Jennifer Kermode said that in large part because of the internet, she and her husband can operate their mortgage business out of Summit County, servicing clients throughout the country.

Popular websites can help prospective customers find a local business. According to Constance Jones, executive director of the Summit Chamber, the Chamber's website has more than a million hits a year.

This translates into visitors and locals being better able to find the product or service they need, which can only be good for business. Katie Roberts wondered whether websites promoting small local businesses could be effective tools to help "ma and pa" businesses compete?

Others talked about finding unique and reasonably priced products over the internet, and the convenience of having the internet "open 24 hours a day". There were also questions raised as to whether there is a difference in the internet shopping experience for men and women, or along generational lines. Are there gender specific on-line shopping behaviors? Some audience members had reservations about internet shopping because of their desire to "touch and feel" products such as clothing.

J.D. Burns stressed the importance of a well designed website to enhance product branding and recognition. One key to his company's extraordinary success is its highly positive brand recognition. Burns contends that in most cases the internet generates new business and new online customers, therefore making "the pie bigger," rather than reducing local or in-store purchases.

He also saw the internet as a way to bring new customers into local stores. Michael Pixton agreed. Mr. Pixton added that through the internet an expanded assortment of products becomes available to the customers. Target has an agreement with Amazon.com which brings potential customers to Target's website. Target also views its website as a way to connect to local communities, communicating information on the numerous community benefit activities in which Target is involved.

A new generation of "lifestyle" websites provides connectivity to the prospective buyer beyond simply listing products and prices. More and more the customer becomes interactive with the website and in a sense a part of the "family".

Don Sather expressed concern that increasing internet sales could reduce local sales and sales tax revenue on items that are sold directly over the internet by companies with no physical presence in the community, if these items are also available in local stores. Sather said it is likely the federal government will lift its moratorium on tax for most internet items, which will create an opportunity for local governments to collect tax on internet items, for those choosing to do so. J.D. Burns said that businesses selling commodity items may be hurt by the availability of less expensive products over the internet.

However, there may also be an opening for local retailers to service customers for products bought over the internet. This might require agreements between national and international suppliers to compensate local businesses for their "value added". Don Parsons was concerned about the increased use in energy (particularly jet fuel) resulting from a dramatic expansion of e-commerce, leading to higher levels of greenhouse gas emissions.

Although, none of the panelists were able to predict the full future impact of e-commerce on local sales, there was general agreement that in order to succeed, businesses must adapt to the internet, learning to use it to their advantage.

Quality of product and service, availability, accessibility of product information, convenience, price, warranty, ongoing service and brand loyalty are all factors in the customer's decision to buy or not to buy. The sum of these factors can be expressed as value. Whether businesses operate over the internet or locally, or whether as is more and more the case they have both a "brick and mortar" and internet presence, their ultimate success will generally depend on the value or perceived value of their products.

What the internet does is to provide a reasonably priced opportunity for local businesses to expand their markets and successfully compete with bigger companies in a wider region. What it also does is to give more outside businesses a foothold in the Summit County market, potentially drawing down sales for some local businesses. In a very real sense, there's a new game in town. Businesses that succeed will be those who hook into the internet. Businesses that pretend the internet doesn't make a difference may be headed for failure.

E-commerce and local business are part of a larger debate about Summit County's economic future and its sustainability. The Summit Chamber is presenting the third annual Economic Summit in partnership with the local Chambers, the Summit Leadership Program/Keystone Center, Colorado Mountain College and Our Future Summit.

The event will be held on Jan. 11, 2007, from 8 a.m. until noon at the Beaver Run Conference Center in Breckenridge. More than 150 leaders from Summit County and the region are expected to attend. Alan Parisse, a nationally renowned business strategist/futurist will be the keynote speaker. This year's event will be a macro look at Summit County on issues that will impact our future sustainability from the environment, transportation, housing, immigration to healthcare.

All those interested in Summit County's economic, social and environmental future should plan on being there. For more information on the Economic Summit, contact the chamber at (970) 668-2051 or go to www.summitchamber.org.

Howard Hallman is president of Our Future Summit.