3Com Expects 80% of Revenues from E-Commerce

3Com Corporation (Nasdaq: COMS), the second largest networking equipment manufacturer, is projecting that its revenue from online, business-to-business transactions will increase from 30 percent today, to 80 percent by the end of this year. The company also expects to save $100 million (US$) by shifting to an e-business strategy, conducting virtually all aspects of its business online.

Currently, 3Com’s online business-to-business transactions produce about $2 billion in annual sales. By the end of 1999, the company expects to increase that amount significantly, thanks to a new Web-based e-commerce infrastructure.

One Million Visitors Per Week

Based in Santa Clara, California, the company estimates that more than 200 million customers worldwide use 3Com connectivity and networking products. The company also reports that 3com.com is the most frequently visited Web site in the networking industry, averaging more than one million visits and 500,000 unique visitors per week. One of the key challenges the company faces is building a system that is sufficiently robust to handle such heavy, and fast-growing traffic.

3Com indicates that its evolving e-business system will offer expanded e-commerce capabilities for ordering products online, plus real-time information on product availability, shipping schedules, and related logistics.

Tom Thomas, 3Com’s chief information officer and senior vice president of e-business operations, reports that the company is creating a whole new model for working with customers, partners and suppliers.

3Com’s e-business operations will enable the company to take advantage of operational efficiencies and opportunities for increased profitability. Sun Microsystems, enCommerce, TIBCO Software, and Inso Corporation are among key companies working with 3Com to target the e-business market. Sun will provide back-end computing systems, while TIBCO will provide integration technology that helps deliver real-time information throughout the supply chain.

Specific E-Business Initiatives

In a statement this week, 3Com outlined five key components of its new e-business structure, that will help reduce operating costs by an estimated $100 million. The key components include:

Integrated Order Management that provides real-time information on pricing and availability of products, order status, backlogs and returns.

Global Customer Support, including the 3Com Knowledgebase which enables customers to input their questions and receive answers instantaneously, through the Web. This type of service reportedly cuts costs from a minimum of $10 when a phone call is answered by a technician, down to $0.50.

Supply Chain Management that allows companies and suppliers to share information and work together more efficiently. Inventory can be replenished automatically as needed, eliminating large amounts of products from being delivered until they are required.

E-Marketing that enables 3Com and its partners to capture demographic information about their Web customers for use in targeted marketing campaigns.

An Employee Communication Intranet that serves the company’s 13,000 employees, providing answers to work related questions through the Web.