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Considering EDI

EDI is fast becoming a must for any firm to sell to many giant buyers and to be a dealer for many giant sellers.

Should you initiate EDI? If your company is big and you don't establish EDI, you are liable to be at a disadvantage competitively. An EDI feasibility study can show you the dollar savings and investment payback probability. Companies with a large number of transactions to a small number of trading partners may choose to build EDI networks specific to these companies. But note the following:

Small suppliers make up 90 percent of all companies doing EDI to big companies, from national retail chains to automobile manufacturers. Small suppliers, asked to join an EDI network, can do so after the purchase of a PC translator for an investment of only $1000 to $3000.

An EDI caution is warranted here: Expect some problems to start. The network must handle unpredictable peaks and lulls of EDI traffic. It must not delay customer orders, remittances, or acceptance notices coming or going. Vendors may send a large batch of orders, once a day, once a week, or, occasionally, once a season. Even with EDI, working with your trading partners will continue to require much effort. EDI transactions need to be handled with extra care. Thorough preparation is a must.

 

Marketing Information Online

Computer-based bulletin boards and online networks are fast becoming significant media_even dominant for the distribution of certain kinds of software. According to Dvorak and Anis,

Anyone can inexpensively set up shop and publish information electronically for profit. You can become an on-line service and charge others to access your information. For giant companies it's difficult to acquire, organize and maintain specialized information. Generally, they just buy it from people who create it.

For a few thousand dollars and a few years of effort, you can become the authority for a field of study. As you become known as a central point for that information, others with similar interest will bring more information to you. Collect and organize the information into accessible and presentable form. You can do it all with two PC's, two phone lines, and two modems.2

 

Online PR

Public relations is mining the rich new online "vein" in a variety of ways. Online news networks, specialized news networks, and databases are all sources of necessary background information for TV and radio stations, newspapers, trade media, professional journals, local business publications, newsletters, and other forms of communication.

No giant PR campaign is complete without putting its story online, and no big PR firm is without an online department. Many have BBSs (bulletin board systems) with all possible back-up material for a launch of a huge new project or product introduction. Even the smallest moonlighter can send releases to the appropriate online media. A one-person start-up firm in any of many fields may begin with a BBS. The Help Source Guide suggestions at the end of the chapter include help in do-it-yourself research and start-it-yourself BBS.

 

Shareware

A BBS's biggest product is self-published "shareware"–software offered free or sold for very little. People are asked to pay more if they like it. Here's how this unusual marketing concept works: Name-brand software is expensive and forbids copying. Shareware invites people to copy it. This public domain software is royalty-free, can be copied by anyone, and often is available free. But top-quality software is hard to find. The best shareware is considered by computer user groups and by experts to be as good and sometimes better than name brands.

Scott Watson is a programmer who operates The FreeSoft Company of Beaver Falls, Pennsylvania. He created White Knight (first called Red Ryder), a communications program for the Macintosh computer. Spending no money on advertising, but simply offering Red Ryder on BBSs allowed Watson to market what became the number-one communications program in the country for the Mac. He did not sell it in any store. All he asked of those who downloaded the program into their computer was that if they like it, they might send him $40. (To download is to receive data on a computer from another computer, network or BBS.) He later said: "I took advantage of a problem: piracy. Many program-users copied them free. I assumed that, if I offered something free and asked people who liked it to pay, that some people would; that maybe I'd get a bigger percentage than people who sell software."

This new kind of "on approval" selling worked beautifully. There was never a follow-up. The cost was a fraction of what competitive software sold for. Often people who gloried in copying sent in checks.

Each BBS sent the program online free to anyone who asked for it. Anyone happy with Red Ryder copied it for friends and passed the word to others, who then got Red Ryder from their bulletin boards.

Macintosh magazines rated Red Ryder higher and higher for excellence. People asked computer stores for Red Ryder. Scott rejected orders from both computer stores and distributors and just concentrated on making Red Ryder better. More new bulletin boards ran his offer.

Then Scott made a command decision. He doubled the price to $80 simply because he wanted to keep getting the $40 he always had plus a little more for his improvements. He sold to stores but still refused to sell to distributors, because they wanted 60 percent. He concentrated on making his product still better and on servicing anyone who wanted help.

Next, Scott Watson came up with a program for anyone to create a BBS. It's called Second Sight (previously called Red Ryder Host). Scott introduced the new program in the same way he started, on bulletin boards everywhere. By then, Scott Watson operated his own bulletin board. Anyone could order directly from him. He had proved the power of the simplest bulletin boards as media.

Scott explained to me how his marketing evolved:

Bulletin boards help distribution. Our store sales tripled in three years since going into stores. There has been a switch-over. As volume increased (with no overhead increase), our cost per disk dropped.

At the end of our third year selling to the trade, we began to sell through a distributor, Ingram-Micro D. At the same time we started to advertise. We began to run for six months a full-page ad in three Mac magazines. As soon as the ads started, we had a big burst of sales.

Caution! Scott's two products were perfectly suited to sell via a BBS. White Knight universalized the Mac, enabling it to communicate with most other PC and mainframe makes. Second Sight enabled anyone to set up a BBS with a Mac and modem. Both were superb and are constantly improved. Scott had introduced Version 11.12 as we went to press. Many others have also succeeded in marketing software through BBSs, and the quality of the product is paramount to its success.

Dvorak and Anis point out that putting a program into shareware distribution can cost only a few hundred dollars. Shareware authors typically offer competitive programs to many famous name brands. Every major shareware company has its own BBS and accepts payments via charge cards as well as making use of as many BBSs as possible to let anyone download. BBSs want shareware programs to upload (put into their systems) for users to download directly.

Thousands of BBSs post (announce on screen) shareware programs for downloading and libraries of shareware programs. A BBS often gets 40 percent of its income in the "connect time" charges to users downloading shareware. (Connect time is the time you spend online with a database.) Some BBSs charge $60 a year or so for unlimited access.

A BBS must have a dedicated phone connection. But local accessing is too limited for profitable marketing, because most people won't pay long-distance charges to connect with your BBS from far away. National access can be offered via packet-switching networks which take calls at local rates from almost anywhere. The BBS pays a differential as well as set-up charges and minimum guarantees. If a BBS can promote enough national accessing, this approach is practical.

To call a single-user BBS is like a normal phone call. To call a multiuser BBS is like a conference call. This makes chat lines and forums possible. A multiuser BBS offers real-time (immediate) online interaction with other people, without the delays of a single-user BBS. An eight-line multiuser system costs $160 a month at a residential rate or $400 a month if the BBS charges for access, which then involves a business rate from the phone company. (Dvorak and Anis can tell you far more about BBSs.)


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