Overview
Electronic markets, facilitated by the Internet and the World Wide Web, have experienced explosive growth over the past year. Thousands of companies are conducting business solely on the Internet while tens of thousands of additional companies are discovering electronic markets as a means for promoting and selling products and services.
Given the fragmented and dispersed nature of the furniture industry in Louisiana, an effort is underway to develop improved exposure opportunities for producers. An electronic based marketing tool on the Internet was developed that will afford companies, regardless of size or marketing expertise, the opportunity to promote their products nationally and internationally.
Electronic Commerce on The Internet
The popularity of the Internet as a media for doing business is increasing daily. With the Internet, the marketplace for any product is not restricted by geographic constraints. Moreover, since the marketer is dealing directly with the consumer there are savings accrued due to the elimination of paperwork and distribution or marketing intermediaries. Many corporations are using the Internet as a tool for marketing, sales, and customer support as well as a low-cost alternative to fax, express mail, and other communications channels. It is also becoming a way to establish a new relationships with customers.
Estimates of the size of the Internet are difficult to make due to explosive growth. In March 1994, some 10,000 networks were part of the system and by July of the same year, there were over 14,000. Already, the network reaches 75 countries with full service, while computer owners in 77 additional countries are able to send and receive simple Internet E-mail. In the six months that it has been available in Russia, more than 6,000 host computers have joined, says John Quarterman, editor of Matrix News, a newsletter that tracks the network's growth. The Internet's growth will inevitably slow; at current rates, everyone on earth would be connected by 2002. A reasonable estimate is that 100 million people will be using the system in five years.
Companies that facilitate the electronic commerce on the Internet include on-line services such as America On-line (a publicly held listed company), CompuServe (a unit of H&R Block Inc.), Delphi (Rupert Murdoch's company), GEnie (a General- Electric Company), and Prodigy (a joint venture of IBM Corp and Sears, Roebuck & Co). Of these, Prodigy and CompuServe have about 2 million subscribers each, followed by America On-Line with around 900,000 subscribers. About 16% of these subscribers shop on-line. Total sales in electronic markets for 1993 have been estimated to be about $200 million, with the largest electronic market being the "Electronic Mall" on CompuServe.
The World Wide Web
The Internet global network is akin to a sanctum of information and commerce with the World Wide Web (WWW) as the means to enter this domain. The WWW, which has only been in existence since 1992 offers the benefits of the "information superhighway" with protocols, client/server technology and takes advantage of the global telecommunications infrastructure that is already in place. The WWW presents the first tangible example of the world of the future with information just a click away and low barriers to entry for information providers. Companies with World Wide Web home pages on the Internet generate substantial customer interest, with an average company receiving at least 1,000 to 2,000 hits a day, while well-known companies can get more than 100,000 hits a day.
The latest numbers show Web use doubling every couple of months (twice the rate of overall Internet growth), as literally thousands of new businesses of all sizes and types have opened up Web Home Pages-the Web's version of storefronts-in the past year.
Early tests show that, for smaller companies, the savings from using the Web to replace traditional direct-marketing and service costs can be substantial-and many small and mid-sized companies can rely on the Web service providers to take care of the dirtywork. Considering that there are more than 7 million current Internet users and more than a million Web browsers up and running, having a Web Home Page is becoming a potentially important competitive necessity for many businesses.
The Internet and Wood Products Promotion: A Case Study
The furniture industry in Louisiana can be characterized as fragmented and consisting of many small establishments. Over 75 percent of the companies have 10 employees or less with over 50 percent having 4 employees or less. In an industry estimated to have $485.2 million in annual sales in 1993, nearly 62 percent of respondent companies had annual sales in 1993 of $250,000 or less with only 13 companies with sales over one million dollars.
Most companies have only a rudimentary application of marketing principles or strategic planning with most companies relying on word-of-mouth to promote products directly to consumers. The use of other modes of promotion, either printed media or other forms of outside support are minimal. Sixty-five percent of Louisiana based companies market their products within a 250 mile radius, primarily in only Southeast Louisiana, with very few occurrences of respondent companies selling products nationally or in international markets.
The constrained geographic scope and small size of companies in this industry have created a limited system of distribution and promotion options with direct sales to consumers being the primary sales channel.
Given the fragmented and dispersed nature of the furniture industry as well as the lack of resources to effectively market products, an effort is underway to develop improved exposure opportunities for Louisiana producers. An electronic based marketing tool was developed that will afford companies, regardless of size or marketing expertise, the opportunity to promote their products nationally and internationally via the Internet.
Working closely with the LFIA, a database structure of text files with linkages to photographs and other images was constructed. Individual catalog sections were developed for each company participating in the project. The catalog of participating companies is accessible on the Internet through a World Wide Web site established at the Louisiana Forest Products Laboratory at Louisiana State University. This affords access to information about these companies and their products by anyone in the world with Internet access. This electronic catalog contains photographs of each product as well as a text description of the product. Product and company information, including text and digital photographs, could be downloaded and printed.
All "hits" to the World Wide Web home page and catalog are being electronically tracked. Information is also being solicited from all participating companies on a regular basis to discern the effect of global exposure to product information solicitation, other inquiries and sales.
In addition, a survey resides at the WWW site which will help us understand the profile of the individuals who are accessing the site and their opinions about the catalog and the products. The information thus collected from the survey will be analyzed to provide a demographic profile of the potential customers. It will also help in providing a better catalog in the future. It will help the companies in determining the product mix which is likely to benefit from advertising on the Internet.
If the project is successful, the next step is to recruit the balance of the 750 companies in this industry and aggregate them into a comprehensive internet accessible master catalog. Hyperlinks and search routines would allow users to subset product categories across catalogs. For example, if someone was interested in Cajun style end-tables made of red oak, they could conduct a multiple parameter search and see which companies sell these products.
Summary
This project could have a profound impact on this industry sector by creating an opportunity for small, rural and somewhat unsophisticated companies (in terms of marketing promotion and strategy) to conduct promotional activities across a wide geographic scope. Participating companies would not incur any costs or be required to develop marketing expertise. The ability for these firms to engage in promotional activities can stimulate demand for Louisiana furniture products. Increased demand often translates into company expansion and concurrent employment expansion. Community and regional economic growth can ultimately be stimulated, an attractive proposition for the rural communities in which most of these companies reside.
Note: the World Wide Web site for the Louisiana Forest Products Laboratory and electronic catalog is:http://wwwlfpl.forestry.lsu.edu/