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E - Commerce

Thanks to new technologies and rapidly increasing Web access, the selling of Johnson and Johnson products have went up dramatically. Last year, very few European retailers were taking orders on the Web, but this year has seen phenomenal growth. One reason is simply that more potential consumers are connected to the Web. On-line access almost doubled in Europe this year. Within five years the Euro e-penetration rate will be more than 50 percent. Almost a fifth (18 percent) of companies and medical institutions that are working with Johnson and Johnson have launched a product that is only available on the Internet. In addition, nearly three quarters of respondents have, in the last three years, launched a new product or an existing one, using e-commerce technologies. The research of Johnson and Johnson e-commerce strategies revealed that the gap between the electronically sophisticated companies and "the rest", identified in last year's report, is now narrowing. In the last 12 months, European business has grasped the monumental scale of e-business and e-commerce opportunities. All business leaders now know that they must respond quickly or they will die. In order to keep in tone with rest of the world Johnson and Johnson have operating many of well organized Internet sites. There are some of them: Advanced Sterilization Products, ALZA Corporation, BabyCenter, L.L.C., Biosense Webster, Inc., Centocor, Inc., Cilag AG (Switzerland), Codman and Shurtleff, Inc., Cordis Corporation, ETHICON, INC., Independence Technology, L.L.C., Janssen-Ortho Inc. (Canada) Janssen-Cilag (International) est.Barriers to entry are increasing as the first movers mature. The action is moving from pure e-commerce to the re-engineering of the whole enterprise to e-business. Last year's report makes a distinction between "sales attributable to the Internet", where Johnson and Johnson use the Internet for marketing purposes but use conventional channels to complete the purchase, and "Internet transactions" where all aspects of the sale, including payment, are concluded over the Internet. Major findings of the year's report include:Sixty-three per cent of company now say that they have sales attributable to the Internet, up from 45 percent last year, representing a 40 per cent increase. Currently, 23% of respondents make Internet transactions. By 2002, 83 % of respondents expected they would be making Internet transactions. On a sector level, manufacturing and retail wholesale distribution are the most advanced. Overall, 12 percent of respondents now claim to be fully automated with on-line customer purchases linked to back-up office systems such as stock control (Ernest, "Digital dealing" p.27). However 51 percent of company's potential are only at the stage where they have established two-way communication, but are still unable to carry out transactions on-line. The ability to reach new markets or customers is seen as the most important benefit of e-commerce by 36 percent of respondents (Ernest, "Digital dealing" p.29). However, speed and cost savings of e-commerce are now regarded as less important factors than a year ago. This may be because business has discovered that implementing e-commerce strategies is more expensive than they had originally calculated. The traditional barriers to electronic trading still remain but, as expected, are shrinking. Security continues to be the greatest cause for concern, cited by 78 percent of respondents. Most significantly, in 1998, 67 percent of respondents saw lack of understanding of the benefits of being on-line as a barrier, whereas this year, only 37 percent saw this as a barrier (Ernst and Young: Realizing eCommerce Transformation; Powerful E-Commerce Insights p.227). Marketing budgets for e-commerce are increasing but are still disappointingly low as a percentage of all marketing spending. Research demonstrates that Johnson and Johnson is now fully aware of the transformation that e-commerce will bring to their dealings with both customers and suppliers. The company surveyed in taking steps to embrace e-commerce technologies and they can be certain that all their competitors are doing the same. In reality the Internet is a territory which should be viewed from two perspectives: technology and business, as both an end point and a starting point for business managers. This is the beginning of the early stages of an entirely new style of business and competition. Although the Internet, and its business applications, is still in its infancy, business managers should strive to integrate the Internet into their organization's infrastructure. The fast paced and unrelenting revolution in information and communication technologies has made this new competitive resource known. Information is the new raw material and that material is applied to products, services, companies and entire businesses. The Internet provides a number of opportunities which may be exploited by Johnson and Johnson, in a systematic way, on what the Internet can allow Johnson and Johnson to do. In broad terms there are three distinct opportunities available: Establishing a direct link to customers to complete transactions or trade information more easily, allowing companies to bypass others in the value chain and in the supply chain. Creating Internet technology to deliver new products and services for and to new customers. Enabling Johnson and Johnson to become a dominant player in the health product industry and Internet can help to control access to customers and setting new business rules. By exploiting these opportunities, an organization may capture the critical mass within an industry, through Internet technology, and in this way be able to deliver three forms of services to customers, namely: To provide the same level of direct selling service as a salesman through live and on-line interfacing with customers, with details of products and previous purchases, both in transit and delivered; To establish customer retention and customer loyalty programs which are personalized/customized interactions to build customer loyalty; and. To provide a new product service and to launch a platform this can be used to introduce valuable new services inexpensively. ...



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