POV from 24 years ago..

December 1st, 1999

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This season e-commerce has spent billions of dollars on old-fashioned advertising.?Everywhere you turn from billboards, to magazines, to network TV, the dot coms have spent like drunken sailors.?Some advertising budgets going into the holiday season have exceeded annual revenue by several times.?As the 21st century dot coms market their services with 20th century tools, it is hard to imagine that some old fashioned 19th century accountability isn’t in the wings.?

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For most retailers the pounding of the drums of e-commerce has been a frightening reminder that their brutally competitive world is getting even tougher. Yet the massive expenditure of money on media is also a reminder that e-commerce has matured enough to step out of the romantic mist of the possible, onto the precipice of the actual.?

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The market capitalization of many web companies has become gargantuan.?We have seen Wall Street go from the follower of trends and technologies to the driver.?When is the dust going to settle so we can start separating the kernel from the immense trappings of the chaff??E-commerce is going to see a massive increase in sales, some at the expense of bricks and mortar, much at the expense of catalogs.?However, that increase does not justify the advertising or the market capitalization.?The sooner the bubble bursts, the better for all parties.?Let Wall Street and giddy investors take the hit and let’s get back down to business.?The best of what the web offers should give bricks and mortar a new lease on life and provide a more cost effective way of getting close to their customers.

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Let’s look at where current web business functions best.?E-commerce, as it relates to the world of business to business, is booming because both buyer and seller recognize the role of the net as the organizer of the sale.?My office buys software, hardware, and office supplies over the web.?Other businesses from hospitals to factories are buying supplies and raw materials over the web. The business to business web merchant balances communications needs, time, costs and delivery schedules.?It bypasses the telephone and sales calls.?It consolidates catalogs and order forms.?The application of technology has been used to solve real business problems.?It is not about cool web-sites, or cute animation.?The business of business to business over the web may not be sexy, but it works because all parties have a common interest.

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Once we move to selling to the general public the role of the web becomes much less focused.?While web merchants have proven they can sell books, music, porn, stocks and computer technology.?Virtually everything else has yet to be proven. To succeed, the pure pay web merchant has to offer the buyer a unique and tangible advantage.?Remember that retail put to bed in the 1980’s the idea that the right product, at the right price at the right location equaled business success.?That formula is the cost of entry.?Where the net fails, is where it does not truly solve a consumer problem, or present a unique solution.

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The web can sell books because it not only can sell us product; it can give us an enormous amount of information about a book (media reviews, reader comments, sales rankings, and chapter samplings) at comfort of our own desks.?That volume of information and comfort is sufficient to overcome the lack of instant gratification, and the reality that with shipping we are playing close to full retail price.?Information makes us comfortable with our purchase.?The flaw of traditional booksellers is that they sell us books as a consumable when to many of us books are a durable.?The goal for bricks and mortar is to get customers to “info-fuel” on the web before they come into the store.?Electronics stores can use sites not to sell product, but to focus on having more informed customers walk in the door.?In buying a stereo – what does power mean??How do I measure the power versus the size of the room where the stereo is going to live??Apparel stores should inform about styles and availability.?Steal the dressing room models used by on-line merchants to showcase how to assemble a look, but get customers to come to the store to make their final selection.?Think seamless advertising.?Use in-store promotions and demos to drive traffic to your web-site.?

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Realize too that bricks and mortar solves another major problem for pure pay on-merchants –delivery.

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If you live in Suburbia, have a garage and/or a responsible adult who can be counted on to be home for part of the working week, congratulations, lots of other people don’t.?Sure some of us can get delivery at the office, but that isn’t always the best solution as more than a few bosses would resent a constant stream of deliveries that upset the working day.?This means that if it doesn’t fit in a briefcase, a corner, or a rolling suitcase, it’s a pain in the neck figuratively and literally.?Given any glitch in the process like a return, the headaches escalate.

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For the next few years the largest opportunity for selling to the public is in conjunction with a bricks and mortar presence.?The simplest form is -order from Staples and come pick up at the store.?You can even get fancy. Coming to America from Germany for a Walt Disney World vacation? Pre-select your purchases over the web at gap.com and have them ready for you to examine at the store down the street from your hotel. Traveling to Europe? Shop Duty Free from the comfort of your living room; pick it up at the airport already bagged and ready for you to walk on the plane. The variations are endless.?

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Bricks and mortar has the infrastructure, the parking lot and the extended hours.?Shop who you know, where you know.?If you don’t like it, return it at the store for a refund.?Never pay a delivery charge or wait on the phone for ten minutes to haggle with FedEx or UPS.

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The bottom line is don’t get scared, get smart.?It is time to turn the tables in the 21st century.?