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South Tyneside College
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The Engineering Council
The Engineering Council is the leading body for the engineering profession. In partnership with engineering institutions, the Council is responsible for regulating and promoting the profession in order to maintain a world class engineering force.
|Going Global with the Internet
In two of his seminal books, the Gutenberg Galaxy (1962) and Understanding Media (1964), author and Professor Marshall McLuhan coined the concept of the "global village". His notion was that after a half a century of electric technology it has extended our traditional senses beyond our local village or community into a truly global perspective. His observations predate the public Internet by over 20 years. Through media such as the telephone, television and most recently the personal computer and the Internet, we are increasingly linked together across the globe and this has enabled us to connect with people at the other side of the world as quickly as it takes us to contact and converse with those who inhabit the same physical space (i.e the people that live in the same village). We can now hear and see events that take place thousands of miles away in a matter of seconds, often quicker than we hear of events in our own villages or even families, and McLuhan argues that it is the speed of these electronic media that allow us to act and react to global issues at the same speed as normal face to face verbal communication.
Most companies now realize the importance of the Internet and are positioning themselves to take advantage of it for marketing and supply chain programs. Many consider the Internet to level the competitive playing field. Anyone can have a site and access is relatively inexpensive and easy. Two major schools of thought have emerged: large firms treat the Internet as part of a well thought out marketing strategy and integrated advertising plan, while other mid-tier and small firms seem to take the position that having a corporate web-site is all that is required. They often forget that in the tangled Web with billions of pages, positioning does matter! It is easy to get lost in the background "noise" of Internet activity. A "me too" strategy just does not cut it!
Big brand named companies with sophisticated marketing organizations can afford good positioning with generic search engines and can be easily found by name. What about smaller companies that don't have deep pockets and well known brand names? How do potential buyers discover them?
Both, buyers and suppliers in mid-tier companies are often frustrated. Potential buyers expect to have an easy web access to information and contact with potential suppliers. Suppliers still hugely underestimate the power of the Internet and don't make it easy for buyers to communicate with them. Many suppliers are shortsighted saying... "Why do I need a web presence? I've been operating for years now and have my base of clients. I don't need to spend money on that web thing ." Others, thinking more progressively, get on with their own web sites but often forget about the "last mile" - site positioning. A common thinking is ". we are on the web, so the world will come to us". But how?
Companies with a limited vision and no budget or planning for a permanent Internet activity are in for a big surprise in the not too distant future. The Internet is here to stay and will expand but it will only benefit those most who make an effort to understand it and use it to their advantage for both marketing and supply chain operations. It is about intelligently implementing Internet technology to improve business processes and the bottom line. Speed and amount of information which can be accessed via the Internet provide distinctive business advantage in our fast moving world of today.
According to marketing research, the failure to display capabilities and inability to rapidly respond to inquiries are the most frequent reasons why companies lose business. The problem is not a lack of capabilities. The problem is the lack of presence in front of potential clients and ignoring advancements of information technology to overcome competition and expand the market. Many recognize the role of the Internet but few take full advantage of it. They accept low exposure in the Web, forgetting that the Internet presently comprises billions of pages and finding their company in this tangled Web is time consuming and sometimes almost impossible, unless they spend considerable time and money on good site positioning.
It is interesting to note that Google has claimed an index of over 8 billion pages last year. Microsoft and Yachoo are apparently following in statistics with over 5 billion and 4 billion indexed pages respectively.
Considering the fact that largest search engines cover only a portion of the Web, the concept of a Marine Portal as a focal point to find industry specific information is becoming more and more important, but not always fully appreciated by companies.
In the late 90's and early 2000, there was promise of public business-to-business (B2B) portals. As the technology sector underwent a so called "melt down", many of the B2B sites narrowed their focus and became regionally focused private versus public hubs. There are now few such sites helping buyers and suppliers in their respective markets. The one exception is MarineTalk, which has been in business since 1998 and stayed true to its purpose serving as an information gateway for like-minded professionals around the globe.
MarineTalk has become a popular portal for the marine technical community worldwide. More than 16,000 companies covering a wide range of products and services for the maritime industry have provided their listings so far. In addition, more than 22,700 marine professionals subscribe to the electronic newsletter, and many actively participate in discussion forums. This focused marine Internet portal helps companies to maximize worldwide exposure while minimizing advertising costs. The concept is simple - MarineTalk's audience is an excellent pre-qualified market keen to learn about new products, services and suppliers. The portal acts as a "prospecting funnel" for participating companies where effective promotion is achieved by displaying relevant company information when potential clients look for products, services and business contacts.
What is really exciting is the potential that the Internet offers, especially for smaller companies. Business-to-business direct prospecting presents a revolution for the marine industry with vast opportunities. And, since everybody knows it costs much more to find potential customer than it does to keep them, this new low-cost communication media should not be overlooked. The Internet provides companies with the global opportunity to expand their business and to buy and sell competitively well beyond the local market. Those that embrace the challenge to develop business into the global frontiers will be best prepared for the big changes that are unfolding in the marine industry. The "old boys club" is still very much alive, but it will change, perhaps faster than many think. The marine market globalization is creating a great deal of change and now is the time to get involved beyond the traditional paper based marketing and communication.
The call to 'Go Global' applies to the marine industry probably more than to any other sector. With the current trends to centralize shipbuilding and shiprepair facilities and those markets shifting to remote regions, suppliers face new challenges. One is the ability to rapidly communicate across different time zones to reach their customers. Small companies that used to operate in a specific port or for specific group of clients are already facing more competition 'compliments' of the new electronic world. A conclusion stated in one of the business magazines "If you're not everywhere, you're nowhere" applies more then ever to the marine industry. However, many small companies still grossly underestimate it and more awareness is badly needed. Apart from marine portals like MarineTalk, trade associations and local chambers of commerce should take a more active educational role.
Having been around for seven years, MarineTalk has observed how the "marine" Internet is developing. The bulk of Internet traffic today is still from North America where it all began, with Europe and the Far East following. But over the past few years a dramatic increase of the Internet traffic from Far and Middle East has been observed. This is in line with the industry trends that have seen majority of activities shifting to those regions. Global pressure to be more competitive is forcing this. It should be not difficult to imagine what will happen to Internet usage when the rest of the world gets broadband connections like companies in North America while more confidence in online communication is building up.
The Internet undoubtedly represents a very effective way to interact with customers and get their attention. The fact is people are now more inclined to communicate by e-mail than over the phone or using a fax machine, or letters. The Internet is unsurpassed in its ability as a cost-effective way for companies to find new business and communicate with potential customers.
In summary, companies that view their participation on the Internet as a "me too" strategy will not be successful as the global economy unfolds. As many attempts are made to dismantle trade barriers, global competition will only intensify. It is time for all companies to review their Internet marketing strategy as part of a well thought out and integrated advertising and promotion plan. A low cost way of increasing company's image and intensifying "click throughs" to the existing web site is available thanks to portals such as MarineTalk.
|THE OLD MAN AND THE NET
1st February 2001
No, this isn't an old fishing tale, it's something you have heard so much about, and decided you don't want to be part of. It's called the Internet. Unless you are under 25 both statistically and demographically you are just not as plugged in, or comfortable trolling the sea of information on the Internet. Use by this group is vastly greater than any other age group. They are frequent regular users, particularly as a communication tool, like we are with the telephone.
Visiting a Cyber Cafe
Recently while in London visiting a Cyber Cafe to send an email back to the home office, I took a moment to look around and see who was there and observe what change was upon us. I spoke to the girl next to me who was Swiss. She was using the Internet connection as her "office." She was sending email messages back home to update the family and contact a few friends, then smoothly changing from family to business and went on to emailing her Resume to a number of companies. She was applying online for prospective work in various places around Europe. Finally, she checked her email account to answer questions received from other prospective employers. Just another normal day at the cyber office.
This small slice of Cyberlife illustrates how fast things change and how quickly they can be perceived as the norm. For her, this was the norm. So, going to the other end, if you are over 65 the statistics say you may never get it, that is, interest in and actually using the web to any significant degree. Statistically you are a minority user. Add the marine factor in and typically you're even further away from the action. This is significant for the marine industry because many of today's decision-makers are in the mid to upper side of the Internet user age spectrum. The industry is lagging others in adapting too and making use of the Internet. The rest are somewhere in between, which is part of the reason for writing this.
The marine industry has been slow to embrace the technology
We have a real challenge ahead of us. I am part of the group collectively, between the ages of 26 and 64 closer to the top than the bottom end. I wanted to be part of the revolution which is unfolding and embrace it rather than have it continue to be a mystery. I have become modestly familiar with the Internet and its use, but what really excites me is the potential that it offers. The business to business prospects present a revolution for the marine industry with vast opportunities. Many have taken a "business as usual" approach, and have been slow to accept that there is a need. They, as yet, have chosen not to investigate the opportunities that exist and how the Internet will allow them to be more competitive and do a better job.
I've tried to analyze why, and it always seems to come back to the age question. For you to get the latest information, would you go to a computer? Probably not, - it is a bit of a hassle just to get the computer up and running, unlike say a magazine that you can pick up instantly, see it, feel it, thumb through it and drop it. It boils down to 1) "I've never liked the computer." 2) "I don't like typing.that is why I have a secretary or personal assistant." Or, 3) "I have others in the office to look after this." Force yourself to try it, maybe with the result that it will provide some inspiration that you can apply to your company.
You just kissed off the biggest change that is happening in business today
If you don't get connected, well, you may have just kissed off the biggest change that is happening in business since the Industrial Revolution. You've just said, I don't care about it, and passed it off to someone else in your organization or to the competition, .and that's not the way you built the company in the first place. These little frustrations never bothered you earlier in the business. You followed trends adapted and made the necessary changes to make your business a success, but you steadfastly refuse to use the computer and get connected to "the net." You rationalize, it is for the accounting department, shipping, receiving, procurement, bookings, transactions, etc. all the other office staff, but not for me.
Marine Internet activity is now only about four years old.
OK, so let's take a look at the marine industry to examine how the Internet business has developed in this sector. We all know the marine industry is one of the oldest businesses on earth, but remember that marine Internet activity is now only about four years old.
The total industry represents about $600 Billion in business annually with about half (50%) of it in the shipping business. Any sector this large is going to attract attention, so it is natural that the greatest Internet development has occurred in the shipping sector. There have been well over 100 Internet sites that have been developed, some have already come and gone, many with a great deal of fanfare, millions of dollars having been spent and nothing to show for it. Fortunately or unfortunately, it is part of what happens in a rapid growth industry. Look what happened to the automotive industry at the turn of the century in the 1900's, with all the consolidation that took place, and the same thing for the airlines after deregulation in the late 1970's. For those who diligently try to educate, inform and grow the industry it can be a terrific struggle, and hard for the user to sort out those who are credible, but it's all part of what happens in a new, rapidly growing revolution.
Another 15% of the business is focused on the leisure and recreational boating industry. This too has attracted substantial Internet development activity. It's the sizzle and splash side of the industry, so naturally this has attracted a great deal of attention as well.
The remaining 35% of the market is in the Shipbuilding and Repair sector where it has been slow to emerge. In addition to the other areas mentioned, this is where some great new opportunities will emerge over the next five years. The availability to do instant research for the latest products and then to purchase the goods is fantastic. New opportunities presented by the Internet provide companies with the global opportunity to expand their business and to buy and sell well beyond the local market. Those that embrace the challenge to develop business into the global frontiers will be best prepared for the big changes that are unfolding. The "old boys club" is still very much alive, but it will change, perhaps faster than you think. The fact remains, our global competitiveness is creating a great deal of change and now is the time to plan your involvement.
Slower development outside North America
Let's back up for a moment and look at how the Internet has developed. The bulk of Internet traffic today is still from North America where it all began, with Europe and the Far East following. General availability and access to the Internet has slowed development outside North America due to the lack of de-regulation and the higher controlled costs. This has and will change as more deregulation occurs in the telecommunications market and as other technologies develop to compete in the market. Global pressure to be more competitive is forcing this. It is interesting to see that in North America, which does about 1% of the marine industry business, that it currently generates about 50% of the Internet traffic. Just imagine what happens to Internet usage when the rest of the world is connected like companies in North America.
Use and proliferation of the web has created vertical segments called Portals. In the future it is generally acknowledged that those companies who are vertically integrated with a portal, in the particular industry they represent, will become more dominant as the web becomes even more cluttered. Unless your address is known there is less and less chance of your company being found. A portal acts as an important link to your business. It should act as a funnel to represent and refer business to your web site for more information and sales activity.
For the Shipbuilding, Conversion and Repair sectors the leading portal is MarineTalk (marinetalk.com ), designed exclusively for Marine Professionals. I am probably biased, because I work there, but the fact remains the portal has exclusively represented this sector to educate and inform by providing the content to develop the community and resources.
Free Buyer's Guide access
One very valuable part of the content is the free Buyer's Guide access that offers the search capability that instantly puts you in touch with over 12000 companies around the world, so you can find the equipment, parts, suppliers, articles, links and other information that you are looking for.fast. All companies are entitled to a Free Listing which they have complete access to edit, so that they can easily update their listing and data at any time. Now there is no reason for your company data not to be up to date and correct. It also makes those old, costly, out of date the moment you receive them, "hard copies" of various Buyers' Guide's, obsolete. Management at many marine companies today, still don't understand the power of being represented in a dedicated marine Internet directory that provides instant access to thousands of other technical and professional people, who are searching for the best products and services from around the world.
.like printing a bunch of expensive brochures and leaving them in the cupboard.
For companies that have their own web site, it is even more of a reason and creates a stronger presence with the link from the Buyer's Guide directly to your web address. Many companies have built an impressive web site and believe that as a result, (because it is there) they have done their Internet marketing job. It is a little bit like printing a bunch of expensive brochures and leaving them in the cupboard. Like any other corporate communication program, it requires a coordinated seamless integrated approach to get the greatest value. For instance, when you spent money and created your web site, many at great expense, did you also make the changes to integrate your web site address into your advertising, letterhead, business cards etc.? I have been to a number of international trade shows in the past year and it is amazing to see the number of companies, both large and small, that don't include an email or web address on their business cards. On the flip side have you allocated an advertising budget for promotion on the Internet? We have proven that Internet publicity generates business traffic. It also keeps on working around the clock and with "key word" links, the information can be distributed to other search engines, and thus linked back to your company through those key words.
Yahoo charging for certain search capabilities
Up to now a great deal of Internet access has been free, but I noticed recently that Yahoo was beginning to charge for certain search capabilities. I know it goes against the grain, because everyone thinks that everything on the web is free. Information has and will continue to be free but over time this will change. It brings up the issue of where people will get the information they want, and how they will pay for it. Already companies like The Wall Street Journal, USA Today and the New York Times are doing this, packaging various "versioned" pieces and "bundling" this with various other products and services, and selling it on the Internet. It is called digital commerce.
MarineTalk has been in business for over two years, a lifetime in the Internet world. They recognized early on that this would be a long-term program. It would need a commitment to inform and educate long before the industry was ready to pay for participation, with the goal to develop the e-commerce business to business potential over time.
A number of companies have already acknowledged that Internet e-commerce will reshape the way they do business. The result is that the companies and people that participate now, and do their homework today, will understand the new opportunities that are being presented and position their companies for this revolution that is unfolding. They will be the leaders in the new marine Internet economy of tomorrow, that will be taken for granted in the next five years, just like the Cybercafe that did not exist five years ago.
The Internet is getting faster and more secure
Sure, people and relationships will always be paramount, but technology will help us get our job done better and faster. There is a culture change in the way we are doing business. More and more people are using the Internet, which is getting faster and more secure. So get ready, try it, participate, make some mistakes, just like you did earlier in business, but the bottom line is to embrace it. Even if you physically don't want to put yourself in front of a keyboard, get someone to show you your site, play with it, designate someone to give you a personal briefing on where your company is going with its Internet development.
Visit your web site
Allocate a budget for Internet advertising, understand what you web site objectives are, and develop it accordingly. Have you visited your web site lately? Pretend you are a visitor. Are there answers to your questions? Was it easy to navigate? Did it take a long time for the site to appear? Does it reflect your business? Did you like what you saw? There are hundreds of questions to ask, but in your short tour, was it a good experience or were you are frustrated? Chances are if you didn't like what you saw, others will have a similar reaction.
A revolution is unfolding around the world
So why is it likely to change what hasn't changed in centuries in the shipbuilding industry, because there is a revolution unfolding in this and every industry that will change the way you currently do business. People in the past once said that the automobile will never replace the horse and buggy and if man were meant to fly he would have been given wings. It may not be quite as tactile, but it really is happening. Take a few minutes and explore some of the new ideas that are beginning to reshape the shipbuilding industry now, that will be taken for granted in a very short period of time. Young or old, prepare so you can be part of it, and cast your fate to the net, - the Internet.
Notes to Editors:
Other MarineTalk's articles related to the information technology and how it impacts the marine industry can be found at marinetalk.com in the About MarineTalk section.
By Ralph Fraser
|INTERNET - WHO IS CONNECTED?
14th August 2000
Internet is not new anymore? Well, maybe it is true for some but not for all and not everywhere. It is very interesting to look into some statistics how the web technology is being accepted within the marine industry.
MarineTalk was one of the first marine Internet portals and for two years has had a unique opportunity to observe the trends in the Internet penetration and the level of the industry's familiarity with this new technology.
We, who are connected, often think that the use of the Internet, as a means of communication at least, has been widely accepted. Today about three quarters of our industry is still not connected. Most of them still don't have Internet access or just don't use the computer for online communication. Many still send faxes in response to e-mails, while at the same time proudly display an e-mail address in their letterhead. Some big companies in Europe still use email/fax conversion. An astounding majority of our Internet users (92%) want to receive text only messages. In many cases, the software would allow them to receive graphic enhanced (HTML) e-mails, but most users don't know or don't even want to try. We see many companies spending thousands of dollars on expensive advertisements in trade magazines that don't carry any information on how to contact them by e-mail. Some have also spent a considerable amount of money to develop a web site but have no policy, budget or program to use the site to develop more business.
Low access speed and high cost are still major barriers in many countries. MarineTalk has often seen clear signs of these factors preventing companies from using the Internet more frequently. Many countries, with a very well developed marine industry, but relatively low level of Internet penetration, have still a long way to go. Even when the cost and access obstacles are removed there will be some time before those people start using the Internet on a daily basis. It always takes time for people to become familiar with a new way of going about business. We must consider the human factor.
How big is the representative market?
MarineTalk began focusing on the technical sector of the industry two years ago and have developed the largest Internet access database of over 12,000 companies having their own web site, e-mail or both. In addition, it has a large subscriber email base of over 12,500 marine professionals to its NewsLetter. MarineTalk maintains frequent communication with this huge forum. These company and email databases as well as the daily site visitors make a very good representation of the overall marine industry market. The 12,000 companies in the database comprise about one quarter of the world industry, which is significant. MarineTalk has provided a broad range of information, news and resources that people want, so that they keep coming back. These are some of the major reasons that the site is growing so fast, getting somewhere between 500 and 2000 visits (not hits) a day. MarineTalk's portal therefore provides a large statistical sample of the representative market.
Frustration and a lack of understanding
Both, buyers and suppliers are often frustrated. Buyers expect to have an easy web access to information and contact with potential suppliers. Suppliers still hugely underestimate the power of the Internet and don't make it easy to communicate with buyers. Many suppliers are shortsighted saying... "Why do I need a web presence? I've been operating for years now and have my base of clients. I don't need to spend money on that web thing ." Others, thinking more progressively, get on with their own web sites but often forget to provide contact/email information, relevant and timely data, and think ". we are on the web, so the world will come to us". They tend to forget that the Internet presently comprises over one billion pages and finding their company in this tangled web is time consuming and sometimes almost impossible, unless they spend considerable time and money on good site positioning. Considering the fact that largest search engines cover only a portion of the web, the concept of a Marine Portal as a focal point to find industry specific information is becoming more and more important and understood, but it is a hard educational process.
Companies with a limited vision and no budget or planning for an Internet activity are in for a big surprise in not too distant future. The Internet is here to stay and will expand but it will benefit those most who make an effort to understand it and use it to their advantage. It is about intelligently implementing Internet technology to improve business processes and the bottom line. Databases and information, which can be accessed via the Internet and help to make business decisions are indispensable in our fast moving world of today. Business professionals must learn to access the information and portal providers must make access as easy as possible.
The call 'Go Global' applies to marine industry too! Even small companies that used to operate in a specific port or for specific group of clients will soon face more competition 'complements' of the new electronic world. With fast and limitless Internet communication means spreading rapidly, and e-commerce entering the marine market, the reality may hit them hard. A conclusion stated in one of the business magazines was "If you're not everywhere, you're nowhere". It applies more then ever to the marine industry. However, from MarineTalk's experience, many small companies still grossly underestimate it and more awareness is badly needed. Apart from marine portals like MarineTalk, trade associations and local chambers of commerce should take a more active educational role.
Virus scares also impact the growth of Internet acceptance in regions with a low level of technology awareness. It was interesting to see how simple viruses like 'Chernobyl' could devastate computer systems in the Middle East where anti-virus software is not popular, while not affecting those in North America. On the other hand proliferation of the Internet makes those advanced regions more prone to attacks by viruses that rapidly multiply, such as 'I Love You'. More awareness and computer knowledge will help to dismiss this threat as a major stumbling block. Again, more education and time is needed.
MarineTalk has, within the last two years, seen some interesting trends in the Internet acceptance and use by marine companies throughout the world. This has been based on actual records of traffic and responses received from the users.
One has to mention that the web statistical tools as they are available today, are not fully reliable and only about 60-70% of the total traffic going through websites can be positively identified and logged for accurate analysis.
While North America has been leading the world in terms of Internet access for the past few years, this trend is now slowly changing. Statistics indicate that about 70% of Internet traffic two years ago used to be generated by users from countries (USA and Canada) that represent only about 1% of the global marine construction, conversion and repair industry. Within the last 12 months, traffic generated by European users has doubled which resulted in the reduction of the North American share to about 55%. There has been no substantial increase of traffic from Asia, Middle East and Australia & Pacific Rim. These countries substantially lag behind North America and Europe. South America and Africa also show very low interest in the Internet communication compared to other regions.
It is interesting to note that the above numbers match in many respects some general statistics that quote Internet infrastructure and PC distribution around the world. It is not difficult to predict that many new developments in Europe and the Far East about making the Internet easier, more available and affordable as well as dramatic increases in 'highway' capacities spanning around the world, will dramatically impact the way our industry is shaping up. A brief analysis of statistics shows that when the Internet infrastructure in Europe reaches the same level as today in North America, the number of European marine industry users will grow by at least 600%. Similar projections could be made about the Far East where that massive concentration of the industry produces so little Internet activity at present.
This explosive growth of Internet use in the marine industry should not be translated immediately into full business use. More awareness and familiarity with the Internet will be a must in order to encourage companies to embrace this technology and fully use to their advantage.
One of the MarineTalk's initial priorities has been to build professional community around its site and generate more Internet awareness through frequent communication as well as phased and logical offerings of new programs in line with the industry needs and growing familiarity with the web.
|What's next for marine e-commerce?
A view from MarineTalk: a 2-year-old Internet veteran
2nd August 2000
MarineTalk, maintains its steady course focusing on the technical sector of the marine industry and now celebrates two years as one of the oldest, "dot COM" companies in this sector. The original plan, when the company first entered the Internet arena, was to develop the leading portal for the construction, conversion and repair markets. At that time there was very little Internet interest in this area of the industry and virtually no interest in e-commerce.
Recognizing the importance of developing content and community the company firmly progressed along its chosen path to first develop a professional portal and then gradually introduce facilities leading to e-commerce. MarineTalk's management and their unique world class Advisory Board (currently 14) were correct in projecting these trends. With this wide range of talent that knows the industry inside out, it was relatively easy to determine what was needed and map out a course of action. This philosophy of logical, phased development now proves to be correct.
During our 2 years of persistent effort, building a loyal community, we have encountered numerous challenges. The biggest is the general familiarity, or rather lack there of, with the Internet. Understanding the advantages that the Internet offers is also a problem. As we all know, the maritime market is very conservative, and although it is slowly embracing the Internet, the majority of marine companies don't even have the ability to access the web. Many struggle with old software and are repelled by high costs to "be on the net" because of high access charges. Building a community of users is fun but it is also a tough task, hugely underestimated by those who have never tried...
With this background in mind, how do we now explain this over optimistic explosive proliferation of B2B shipping portals? Why just shipping portals and not the other - technical areas of the marine industry such as new construction, conversion, repair which are equally big? It is fueled by the desire to improve business processes but I think, hugely it is driven by hype. For many, huge marketing and infrastructure costs mean that profits are a long way off. How long will investors hang on? How long will it take to turn the market around and start making profits? The potential appears big, but how big? Everyone is guessing!
Despite all of these questions it is clear that marine B2B portals have a big future. According to predictions based on current statistics the volume of web based transactions for all industries will grow twenty-fold in the next five years! There is no reason why this dramatic increase in volume cannot be duplicated in the marine market! But a temporary shakeout is unavoidable. It has already happened in other industries and investors are suddenly getting "cold feet". This reality will also sift slowly throughout the marine industry as well.
Developing even the most sophisticated platforms and launching them is not that difficult with the current state of technology and with enough financial support from investors. The biggest challenge still lies ahead, - how to attract traffic and real trading customers? It appears that most of the current developments ignore this most important component, - community. It is thought that once a platform is launched customers will come. Well, in theory yes, but in practice it takes a very long time to build the brand. In addition, the lack of general familiarity with web-based services still poses a serious problem and hampers this process.
I have no doubts that the focus should be on what a company developing a portal can actually bring to the e-commerce table. Understanding, and the intimate knowledge of the industry, is a must and it has to be supported by a real existing trading potential in terms of a developed professional community of users. And, it has to be a large community. In addition, a web site must provide interesting content and make its resources freely available that keep these professionals coming back. A company like MarineTalk can offer a strategic advantage in the marketplace.
The Internet trade volume will depend on massive participation of marine companies of all sizes matching up many buyers and sellers. The present efforts of many portals to sign-up equity partners and form a "base of traders" will not bring substantial savings since these are typically driven by the competition. But it will most certainly help people to understand the process and start making the industry familiar with it.
I believe the biggest trends in the next 12 months will be the following:
1) Large company's approach
Large companies will continue to move aggressively and take part in localized electronic marketplaces where the number of trading parties will be very limited. Trades will be following the existing patterns enhanced by paperless technology. It is doubtful that they will benefit from anything more than lower procurement administration costs.
In recent years large shipyards have been pushing to reduce their number of suppliers in order to have better control and reduce their administrative costs. If they continue on this path there will be not much incentive to introduce a full e-commerce solution. The trend should now be reversing. A better flow of information coupled with easy transaction processing and tracking will encourage shipyards to look beyond their existing relationships.
2) Majority of the industry's approach
Trust and familiarity with a trading intermediary, a portal, will be important for rapid trade development.
A majority of the companies, in our visibly fragmented industry, will move at a slower pace and will tend to participate in a neutral large marketplace. For the majority, e-commerce is about intelligently implementing Internet technology to improve business processes, and not just transactions, although these will play an important role in future portals' profits.
It will be essential to reach a critical mass in terms of the number of items available before one can expect any active trading to happen. Buyers always want to go to the place with the most sellers because that is where they will find the best selection. Typically, they will be reluctant to conduct electronic transactions over many different marketplaces.
In general there will be major consolidation among many of the electronic marketplaces that are still being launched daily. The industry will not require dozens of e-commerce portals. The consolidation will reward those that can attract a large community of users and can execute transactions with value added, through its mature content and comprehensive professional services. Initially those value-added offerings, rather than revenues from transactions, will most probably help to secure a strong position in the market.
4) Early revenue sources
Subscription or membership based revenue models will gain in popularity. Databases and information, which help to make business decisions, are valuable. While transaction fees have tremendous appeal due to their recurring nature, they might be difficult to generate during the initial "confidence and infrastructure building" phase that may take anything from 2-3 years.
The true value will be generated through lower inventory costs, better forecasts, better purchasing decisions, reduced purchase costs and better customer service. Therefore, it may be difficult to justify charging for the transaction when the true value is being generated elsewhere. A subscription-based model is not only more encompassing in nature, but it also provides an incentive to the user to use the system as frequently as possible.
The full benefits are not going to be achieved overnight. Companies who now are willing to enter the Internet marketplace must see and enjoy some early advantages by taking their business to the web. Many benefits helping to improve the bottom line can be offered without actual electronic transactions. It is important to offer this entry-level service and show the effectiveness of the Internet; otherwise they may abandon the idea of e-commerce.
The biggest challenge is to involve all of the players in the supply chain and generate enough confidence among such a community to encourage at least the initiation of transactions within the portal. A common collaboration and communication platform supported by a large community of users is the most important part of any successful portal.
The foundation that MarineTalk has erected during the past 2 years is an important first step and will provide an opportunity for value creation by utilizing collaborative strengths within the industry.
This fundamental MarineTalk philosophy, that the community must come before e-commerce, has already been proven successful.