Network: Electronic Commerce: Captive customers are only a click away

A new study of has found a lack of innovation and imagination is preventing UK businesses from taking full advantage of the Internet's potential as a sales channel.

Picture the scene. Charles Edward-Ogilvy, CEO for short, is on the golf course. It's a grey Sunday. Mike Deluce has just beat him again.

"Well done, MD," obliges CEO. "I don't know how you do it."

"I got some tips off the Internet," replies MD, so glad that he had that meeting with his sparky new IT manager. "Have you got a Web site yet?"

There is a pause. But, sure enough, first thing Monday morning, CEO calls his IT director demanding a Web site by the end of the week, throwing pounds 20,000 at him to do it.

The next 12 months will be a crucial time as UK plc learns to use the Internet. And a new report out this week, from Fletcher Research and sponsored by McKinsey, has lifted the analysis of Web-based electronic commerce to a higher level just in time. It is Internet strategy that needs to be assessed, and not just Web site demand, as has been the case so far.

The results are disheartening. UK businesses are showing little imagination, and less application, when it comes to exploiting the new medium. Commenting on the results, William Reeve, who headed up the Internet Practice project, says: "On the whole, companies' Web strategies seem to involve keeping up with the Joneses" - setting up a Web site because they feel they have to - rather than to further their business.

"There are innovative, exciting companies on the Web who are building businesses that utilise the Web to its best advantage, but these are few and far between, and depressingly few have been set up by Britain's biggest companies."

That the Web is being used as an ill-considered means of communication is the first of several findings Fletcher Research reports. Sixty-five per cent of sites have no commercial aspect at all, simply displaying companies' information, with no obvious revenue-enhancing aspects or clear strategy. But information-only sites need not be unimaginative. Reeve singles out the Shell site as a great example of what can be achieved. It is targeted at groups which often draw heavily on corporate communications, such as investors and environmentalists. It is well laid out, easily navigated and updated frequently, on a daily basis when it comes to share price information, for example. It is progressive and interactive, encouraging environmental discussions in a well-used online forum, that is explicitly not censored in any way.

The 35 per cent of companies that use the Web as a marketing tool miss the opportunity advertisers would traditionally die for - that of being able to capture the customer in the moment they respond to the advert, which in Internet terms need only be a click away. Standard technology now allows an advert to be linked to a form, which could immediately lead to the close of a sale.

Even those companies that regard the Web as a brand-building medium are failing. For example, the Pepperami site Reeve describes as a "one hit wonder", looking great but offering no reason to return to it. On the other hand, Bass's Carling Net is a success. Employing the company's association with football, and providing endless information about the game, it has achieved a hit rate of four million per month, putting it in the top 20 UK sites by traffic. "Not bad for a site basically just promoting beer," comments Reeve.

Thirty-five per cent of sites do attempt to generate revenue for the company, though not usually by selling products. Fewer sites now require users to pay a subscription for access, reflecting a global challenge to get consumers to pay for online content. Most revenue-generating sites are bringing in money from carrying banner adverts.

Another error UK online is making is gearing sites to a consumer audience, when most Britons access the Web from work. Business products and services companies such as Office World or Viking Direct, which could find the Internet an ideal means to reach their market, have some of the least- developed sites of all. IBM's UK-specific site is a notable exception to this rule. Unlike many service organisation that originate in the US, it is well-tailored to the local market, providing news and dealing with issues which are important to customers based in Britain.

Those few Web sites that are successful are notable because they try to utilise the Web's interactivity and build communities, offering users the opportunity to search for what they want, customise the site and voice their opinions. Communities on the Web are where interest groups can interact.

If many sites are just dull, a handful of sites have made "questionable decisions" about their Web presence, as Reeve puts it. Tesco, for example, working in conjunction with Microsoft, has produced a good-looking and functional site, but only if you are using Microsoft's own Internet Explorer browser. "This is a clear limitation, a bit like saying you will open a store that only allows men in," comments Reeve.

Another weak contribution comes from the company that took the insurance industry by storm with the invention of telephone or direct sales. Direct Line's Web site is surprising for its lack of application. "There is even a waffling section saying why they are not offering quotes online," says Reeve. Online insurance quotes may not be straightforward to provide, but with competitors already on the act, one is forced to ask where Direct Line's innovation has gone, an important element in its brand identity.

The UK Internet Survey February 1998 can be ordered by phoning 0800 068 1101.