Silicon Valley's big sell

Internet selling systems: The way forward?

By BBC News Online's Iain Rodger

Online retailing has been suffering a crisis of confidence since the high-profile collapse last week of Boo.com, as can be seen from the most cursory glance at technology share prices.

This is an exciting area with huge opportunities but big pitfalls too

Brian Roberts
Retail Intelligence

The UK-based online fashion and sportswear retailer had high hopes of rapidly becoming a global brand but failed the all-important test of operating to a bullet-proof business plan.

As if to rub salt in Boo's wounds, a Silicon Valley start-up specialising in what it calls "internet selling systems" is now launching in Europe.

Already counting such heavyweights as Cisco, Dell, 3Com, BMW, Hewlett-Packard, Buy.com, Fujitsu and Samsung among its clients, Selectica is offering UK retailers a lesson in selling on the web.

Compliments

Not only does the company boast an impressive list of clients, if you go to its website you will be offered the chance to watch a video endorsement of its services by world leader Cisco, which sells 80% of its products online, worth $10bn a year.

They shouldn't worry about the markets but focus on getting their product right

Timothy Ryan
Futurebrand

Founded only four years ago, Selectica has about 500 employees and, having listed with great success on the Nasdaq in March, its share price is faring better than most in the beleaguered tech sector.

So what's the secret, and what does this tell us about how to sell on the web?

Selectica aims to design websites which are as consumer-friendly and easy to use as possible.

The company's UK managing director, Andrew Burford, says the idea is to allow customers to ask questions in their own way, as they would in a shop, rather than being forced to follow an inflexible online ordering process.

Andrew Burford: Give customers what they want

If you are not pleasing consumers, he says, "they are only one click away from the competition".

To that end, Selectica aims to minimise the time taken for pages to load on the user's PC (one of Boo's big failings) while making available in a simple format more comprehensive information than could ever be offered by individual salesmen.

Timothy Ryan, senior consultant in e-commerce at Futurebrand, says this is where e-tailing is going.

He says Boo had a good idea but utterly failed to deliver the concept to its customers, whereas Selectica is providing a customer-oriented service that makes buying easy.

Customers are only one click away from the competition

Andrew Burford, Selectica

Most companies that want to sell on the web don't know how to go about it.

Selectica offers a ready-made and proven service which it would take even a major retailer years to develop on their own, he says.

Brian Roberts, analyst with Retail Intelligence, says the cost of developing their own systems is also a big incentive for retailers to bring in specialist firms like Selectica.

"This is an exciting area with huge opportunities but big pitfalls too," he says.

Rocky road ahead

As one would expect, competition will be fierce. At present, Selectica is chiefly rivalled by Firepond, Calico and Trilogy - all American firms, reflecting the lead the US still has over the rest of the world in e-commerce.

Like most internet start-ups, Selectica is yet to make a profit. Andrew Burford says the original business plan anticipated profitability in two to three years.

But with confidence in all things internet sapping away, "the markets are looking for profits to be delivered sooner", he says.

Timothy Ryan says this is an area of huge danger for firms like Selectica.

"The worry is that if they take their eye off the ball to concentrate on profitability they could come unstuck.

"They shouldn't worry about the markets but focus on getting their product right if they want to be successful in the long term."

As Brian Roberts says, the Boo experience proves that you still have to operate within proper business principles and control costs to survive.

So although the retail sector seems to be moving the way of Selectica and its competitors, their passage ahead is likely to be far from smooth.

After all, it was not long ago that many people thought Boo was the shape of things to come.