Electronic merchandising is here and due to dominate the world of commerce as Lynne Curry reports.
SIX years after setting up a tiny organic food business in the back kitchen of their home in Bristol, Phil and Jo Haughton have joined the electronic merchandising revolution. The 1,200 regular customers of the Better Food Company can now e-mail their requests for rich and mature balsamic vinegar, hard sheep's cheese and organic dry-cured bacon.

"In some ways I still can't see enormous advantages, but once people are in computer mode and use it as their answering machine, and for e- mail and surfing the net, it becomes the tool for everything," Mr Haughton says. "I have certainly realised how useful it is for desk-top publishing and doing our newsletter. I get all the stuff together here and send it off for the designer to download."

The Better Food Company, now operating from a warehouse on a small industrial estate in inner Bristol, still takes payment via its delivery people rather than electronically - the varying price of apples and the lower predictability of natural foods do not bow to commercial convenience - but they forecast that electronic payment will come. Mr Haughton says: "It's difficult because you don't know how much orders are going to come to, and we'd have to go back to the computer again and take the money, but we'll get there - it's inevitable."

The Better Food Company is on a low rung of the electronic commerce ladder, and Mr Haughton was self-propelled up the steep learning curve of electronic communication, which he says could be made much easier by more effective instruction and simple language from internet service providers. But his keenness to embrace it supports predictions that electronic commerce will be the next boom industry, with everyone from organic food suppliers, through supermarkets, to major banks grappling with its advantages and its current limitations. Sainsburys, for example, is one of the major- league food suppliers which is interested in the "virtual supermarket", with customers steering a computer mouse instead of a recalcitrant trolley.

Following the "armchair banking" revolution, the Co-operative Bank has now mailed a million of its customers with details of internet banking. Keith Girling, head of channel development, says the take-up has far exceeded expectations, with "tens of thousands" of customers registering. "Within a generation - and it may be well under that time - the internet will become the premium method of doing routine banking transactions," he says. "With ATMs (automated telling machines), within the last 25 years and starting from zero, 70 per cent of all cash withdrawals are now done through them. Each generation of technology moves far faster than its predecessors and within five years, this will simply be one of our lifestyle facilities. It will be accessed across PCs in offices, at home, on digital TV, from kiosks and in airports.

"No IT supplier is going to survive unless they have not only last year's technology, protocols and languages, but tomorrow's. The exponential growth will be in terms of customer demand and usage. The most important skills are not in terms of languages; IT professionals over the next generation or two are constantly going to have to retrain, relearn and reskill, and together with accounting and marketing professionals they will need a business focus. The issues we are now dealing with are support to market and product lifestyle, which used to be thought of in terms of years. Now, even within retail banking, we talk in terms of weeks and months." A month after launch, Co-op internet banking customers are already greeted by a redesigned "welcome" screen.

The Deloitte & Touche Consulting Group predicts a huge growth in internet commerce. From a survey of more than 1,000 heads of technology all over the world, it concludes that electronic business transactions will outweigh other modes within two years - a rise of over 300 per cent. "Companies are still wading, not swimming, largely owing to the risk of doing business in this most public of media," it summarises. "Two years from now, it will be a different story."

The growth areas, says Deloitte & Touche, are likely to be network computers, object-oriented technology, workflow management, image/document management, data warehousing, multimedia, handheld computers, voice recognition and automated call centres (the Co-op, for example, has the largest call centre in UK banking, with 38 per cent of its staff working from five centres in Skelmersdale, Stockport and Manchester).

There could also be openings in e-commerce consultancy aimed at smaller companies, which may struggle with the intricacies of web sites and electronic trading. Steve Arraton and Nicole Drouilly were fortunate when they decided to use e-mails and credit card payment for their mail order business Cyclestuff, based near Tower Bridge: Ms Drouilly was a computer scientist, fresh from a degree in information technology from North London University.

"What we have done is try to get on as many search engines as possible so that we appear when you type in the key word - anything to do with cycling, from clothes to glasses," says Mr Arraton, who was a research scientist at Guys Hospital before Cyclestuff was established from the couple's home two years ago.

"That in itself was quite a job, trying to put yourself in the way of as many people as you can. A lot of organisations do their web pages then they're not available on many search engines or links pages, and it can be quite a remote possibility that anyone actually finds them.''

Cyclestuff takes payment by Visa, Delta, Mastercard and Switch and encourages its customers to buy this way, although the majority are still happier with telephone calls and cheques. "The charges for credit cards are quite high, but you have to balance that against the ease of buying for the customers," Mr Arraton says. "There is always a small security risk on the internet at the moment, but it will be codified later this year, and a 'protective screen' will be put around it.

"We do like electronic trading although we had to iron out problems, such as putting too many images on our web page so that it took ages to download - now we just have a few, then customers go to the next page. What we don't do is junk-mail people. We don't want people saying, 'Oh, not them again'."

The Better Food Company: betterfood@compuserve.com

Cyclestuff: arraton@dircon.co.uk

Picture: Rex Features