Mapping the abstraction across to the Internet

It doesn't take much abstraction to realise how many different types of e-commerce businesses could be based upon this simple principle. There are all kinds of speciality products and services that could be sourced in the bricks and mortar world and offered from a Web site. It is a way of bringing the bricks and mortar world into the Information Age.

Although selling old fur coats from a Web site might be unrealistic, it can serve as a useful hypothetical example to explain how this kind of situation can be developed even further. Supposing the Internet had been around at that time and instead of using a space in a shop off of Carnaby Street I'd used a Web site. Imagine, each of the little shops I'd been buying furs from as having a computer, an Internet connection and a digital camera. Then, every time they bought a fur, they could email me a photograph and give me a price. I could then transfer the photograph to my Web site, offering the item for sale ­ adding a small mark up to the asking price for myself as a trading profit.

If an Internet customer wanted to buy, they could pay by making a secure credit card transfer. I would then transfer the money (less my mark up) to the contact's account together with an address of where to send the fur. I wouldn't have to see the stock or even organise the dispatch. All of my activity would amount to no more than a few electronic transfers. In the bricks and mortar world, my business had been confined to the southern part of England because of the amount of travelling involved. In the world of e-commerce I could have contacts buying furs from places all over the world. and still this would involve no more than the manipulation of electronic documents.

As my part in this activity would be minimal, my added mark up to the price could be a very small percentage. This would allow the fur buying contacts to get practically all of the profit and therefore have no incentive to create a Web commerce site for themselves. Taking a very small percentage is a key element in the success of middlemen in e-commerce business.

The more contacts I could find, the better selection of furs I'd be able to offer on my Web site and this would increasing add to the attractiveness of the site to anyone who was looking to buy an old fur coat. In this way, I'd be creating what is known as a portal: a front door to a large range of a unique type of product that is not easy to find in the world of bricks and mortar. Such a situation can act as a magnet to attract customers.

If I could build up the number of contacts supplying to this portal faster than my competitors, I would be at an advantage to them. Word will spread that this is the best portal to find this unusual product and the portal will attract further customers. This in turn will make it an attractive place for even more fur suppliers to supply me with furs. In effect, the system would become self sustaining and self-organising, attracting its own Solution Point of suppliers and its own Solution Point of customers. When an e-commerce system reaches this stage, it is often called the point of critical mass: the point at which it becomes completely self maintaining. This is the principle aim of all e-commerce solution providers.

Having established a prime portal that has reached critical mass, I can easily keep competitors at bay. with a high volume I could reduce the profit mark up to a point where it would be uneconomic for any competitors to compete for either my suppliers or my customers. This is a point overlooked by many people trying to set up an e-commerce business. E-commerce is about more efficiently satisfying demand . This nearly always manifests in the form of reduced costs and prices.

Although an e-commerce business may not be practical with old fur coats, the hypothetical situation gives an idea as to how small entrepreneurial businesses can be built up from scratch. It is a win-win, non zero sum game situation where everyone can gain. It is self-organising in a way that causes the system to become optimally efficient as overheads and costs become smaller and smaller. Customers will have a wide range of choice and will be buying at best value. This will leave over priced items unsold. In this way the buyers and the suppliers will have to keep their prices low in order to make sales and his ensures that the most efficient will be doing most of the business.

This natural regulation, resulting in customers having a wide selection of goods at the most competitive of prices, is the way bottom up designed systems evolve towards maximum efficiency. Nobody has to plan it, nobody has to manage it. There are no rules or regulations. The system self regulates towards a state of maximally efficient service in satisfying customer needs.

Abstracting out the essence of this situation, anyone can create their own supply Solution Point using the same technique that I used in buying the old fur coats. Starting with nothing more than a green frog, contacts can be acquired one at a time and then whittled down and selected to provide an optimum group of people to provide an ample supply of the desired products in the most efficient way.