|ECMgt.com: Volume 1, Issue 03 - Shopping
ECnow.com 1999 trend #08: SHOPPING: a) Wallets and "impulse buying" will take root, b) Price-driven buying: looking for the best deals will be a big play and c) Special EC function keys will appear on keyboards
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Your Link to Worldwide eCommerce Developments
March 31, 1999 *Over 1,000 subscribers* Volume 1, No. 03
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Theme: Shopping http://ecnow.com/top10trends1999.htm
ECnow.com trend #08: Wallets and "impulse buying" will take root, Price-driven buying: looking for the best deals will be a big play, Special EC function keys will appear on keyboards.
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Subject: ECMgt.com 1.03: SHOPPING: wallets and 'impulse buying' , price-driven buying, and special EC keyboard function keys
Let me talk a bit about this month's trend. My #8 prediction for 1999 is about "SHOPPING: a) Wallets and "impulse buying" will take root, b) Price-driven buying: looking for the best deals will be a big play and c) Special EC function keys will appear on keyboards.
First let me discuss 8.a and 8.c. What the online world has not successfully accomplished, except for a few rare instances, is the impulse buy. When you go into a supermarket for eggs or milk, they are typically located in the back of the market so you can pick up other items along your way. And most of us do.
How do you replicate this functionality online? Two things are necessary:
Amazon.com, CDnow.com and others use predictive software that tells the potential buyer what others with similar demonstrated behaviors have purchased. This software is better than nothing, but unless you act the same way every time you go online, the predictions are mediocre at best. Companies that store customers buying patterns in databases and tying the predictive software with the specific customers in those databases, are positioning their products and special offers in ways that will translate into sales.
Encouraging potential customers to purchase from you requires that you make it easy to do so. The "1-Click" process at Amazon.com is an attempt to do just this. It does appear to work for Amazon.com, however, this proprietary functionality is not open source and cannot be used by other vendors. For consumer-based EC to expand to the tune that's being predicted, there still needs to be universal mechanisms to purchase products as both registered and anonymous users. We will begin to see this evolve this year.
Using a non-purchasing example, our monthly survey question represents an impulse response. When the survey was part of February's newsletter we received 5 responses, either because people didn't read it or they forgot about it as they were reading the remaining (we hope) newsletter. But when the survey was emailed separately to our subscribers, we received 70 responses.
Wallets and special EC functions keys on keyboards will help move this process along. Just like pressing the print button on your keyboard, consumers will be able to press a "buy now" button. Microsoft has been working on their wallet technology for a couple of years now. There is an opportunity for portal companies to step in and give consumers a reason to want to use this type of technology. By offering wallet-based features as a solution to purchasing products, these companies will encourage ease-of-use via links from their sites. To make it work, portals would need to guarantee secure technology and address privacy concerns. We will likely see attempts at this in 1999.
Now for 8.b. Finding products will also change dramatically this year. A number of our readers have alluded to spending the same or more money online in the first quarter of 1999 as they did for the entire year of 1998. Finding product at a fair price was the primary reason mentioned. We will see a continued proliferation of price-driven buying this year. My concern is that these comparative shopping tools deal with price and unless you're looking at a commodity, products are not sold on price alone. Customer service is key. I'd rather pay more for an item and get great customer service than the other way around. Although I feel that comparative shopping tools will be used more and more this year, until these tools take customer satisfaction/service into consideration, I would use them cautiously.
I hope you enjoy this newsletter.
See you in cyberspace,
President, ECnow.com <http://ecnow.com>
Publisher, ECMgt.com <http://ECMgt.com>
Here's some comments from our readers (We did not ask if we could publish names, so they have been left out):
Returning merchandise purchased online still needs to be worked out if merchants expect to sell more goods. B2B transactions and services will likely pave the way in this area as well as working out freight, delivery and handling efficiencies. This will be perceived as a value added service to online buyers who may be willing to forgo lowest pricing lure for service. Service will become the key differentiator.
Comparative pricing will become more important as will comparative services. BBBOnline and other 'integrity' models will crop up. A standardized worldwide 'integrity stamp' will be adopted.
The Internet will not likely replace brick and mortar stores en mass, because it has trouble satisfying the 'touch-and-feel' aspect of shopping. Brand stores will be the first to offer 'merchandise touch' areas in their stores where folks can check-out the goods and go outside and place an online order at the mall's kiosks. Online purchases of unusual items will increase.
Localization of stores--sort of the store-on-every-corner concept will take root. Community publications will sprout for the same reason, maybe become part of the same.
Payment and security issues still loom large for late adopters. The Pentium III may allow more peace of mind for consumers who don't fully understand or have fear about the built-in tracking mechanism, hence equating into more PC sales and more Internet shoppers. Christmas '99 will be a big measurement factor in how well i-merchants are utilizing the Internet. Merchants should be analyzing what worked/didn't work in 1998 to prepare for the 1999 season. The Y2K issue will probably see a drop off in online sales during the last three months of the year.
BANKING & FINANCES
Banking and financial services are only beginning to see value in doing business online. Expect big developments in this area as banks begin offering more EDI-like payment options for individuals as they have offered to businesses. This will help i-merchants with offering small dollar items--charges that today fall under the credit card minimum.
More opportunities exist with travel and auto vertical markets. Online ticket pricing/purchasing still gouges business travelers.
Marriage of TV and Internet will see some late adopters accept online shopping--it will legitimize Internet shopping.
Lower PC prices and increased availability of Internet appliances will move late adopters to accept online purchasing.
Opportunities exist for sw vendors who can develop web-based solutions to the many problems real/imagined that consumers have regarding shopping online. Open source will become a gating factor.
RealNetworks Conference & Exhibition '99
Attention Northern California WebMasters
A wonderful time saving service for your website users or company employees
Get Paid to Surf
ECOMMERCE BUSINESS-TO-CONSUMER (B2C) DEVELOPMENTS
Barrel Furnishes the Web
The upscale housewares chain will launch an Internet store sure to be duplicated everywhere: the online wedding registry.
National Semi Launches E-Com Site
Chip manufacturer National Semiconductor is expected to officially launch an electronic commerce Internet site today, which will allow customers to buy directly from the company or through distributors.
Niche-Oriented Shops Next For Lycos
The Lycos navigation hub is planning to launch a string of niche-oriented online shops, as part of a significant expansion of electronic commerce efforts that could begin even before the company completes its planned merger with USA Networks' interactive unit.
Boosts E-Commerce Efforts
InfoSpace is taking a Trojan Horse strategy into the world of electronic commerce. The company, best known for its widely distributed online directory services, today said it will begin incorporating impulse-oriented electronic commerce offers into its directory services. The company initially aims to sell flowers, gifts and greeting cards via its service.
Telecom Eireann to Open Global e-Commerce Centre
Ireland's state-owned telecommunications provider, Telecom Eireann, is creating a major electronic commerce transaction centre that will be capable of handling large-scale global online shopping projects.
Yahoo Italia enters online shopping
The Italian site of the popular American portal launched a new guide for helping people choose shopping sites. The service provides links to Italian and American electronic stores, grouped in 10 categories and 30 subcategories.
Launches New E-Commerce Superstore
Dell Computer Corporation (Nasdaq: DELL), one of the best known and largest direct computer systems vendors, today unveiled Gigabuys.com, a new online superstore.
House to Probe Net Pharmacies
A group of House Democrats has ordered a congressional study into how many online pharmacies are filling prescriptions after "virtual" doctors' visits in cyberspace and who is watching them.
Amway to Take Business to Web
Amway, whose army of independent distributors has made it synonymous with the direct-sales model, confirmed today that it is launching a consumer e-commerce venture.
Buying Service for Consumers Set to Launch
Accompany Inc. is planning a new online buying service designed to leverage the power of the Internet "to bring people together in real time to pool their purchasing power."
The Online Bookstore That Makes Money
Powell's, a quirky Oregon-based retailer, has become a Web powerhouse, selling used books through its site - and through Amazon.com.
Revs Up Shopping Engine
Inktomi is rolling out its Shopping Engine, a back-end technology that provides customizable comparison shopping, product information, and transactions to Web sites.
Video Promos Go Online
Video Pipeline Inc., of Haddonfield, New Jersey, a long-time provider of in-store video promotions, is now offering the service to Internet based storefronts...
Auctions Take The High Road
The Net has become a great venue for unloading Beanie Babies or adding to your Pez collection. But will it work for a Picasso? Last week Auction Universe completed a two-week-long auction of vintage works from legendary American photographer Ansel Adams.
the Internet Shopper Should Beware
GLOBALISATION brings consumers a smorgasbord of opportunities and risks. This movement of goods, services, capital and ideas across borders grew on a platform of new technologies. The Internet is the champion of our global links but, alongside all the hype, on Global Consumer Rights Day we need to ask: what problems are consumers experiencing and are consumers empowered with the rights to cope with these problems?
If Andrew Brooks is successful, online consumers not only will turn to the Web as the first place to shop for coffee-table books and the like, they also will turn to cyberspace to buy their coffee tables.
Merchant's Monster: Price Obsessed Consumers
by Ed Lehrman (mailto:email@example.com)
The Internet world is filled with prophets and soothsayers who claim to know what the brave new e-world will look like and when it will arrive. Unlike the Oracle at Delphi, Internet prognosticators probably wont have to wait decades to see if their declarations come true.
Heres what we know today about retail sales on the Internet: Internet shopping rang up about $3 billion in sales in 1997, tripled to $9 billion in sales last year and is expected to reach an estimated $30 billion by next year if you believe statistics by Morgan Stanley Dean Witter, Forrester Research, and other companies. Net sales still account for less than 1% of the total retail sector, according to David Pecaut, senior VP and head of the electronic commerce practice at the Boston Consulting Group.
Its easy to accept these numbers as true, and while they seem impressive from an annual growth standpoint, the question to ask is so what? Do they foretell the future and, if so, then what kind of future? And as retailers, shouldnt we really be asking what gross or net profits were generated on the Internet? There appears to be a new Internet business model and paradigm shift every other day, however, retailers in their quest to acquire market share dont seem to be asking themselves what kind of market they will own once competitors are eliminated. They seem to be forgetting the consumer and how the new medium is affecting the way people shop.
Lets take a quick look backwards before we guess forwards. Proctor & Gamble is arguably the largest advertising and promotion spending company in the world. A few years back, P&G decided that they no longer wanted to spend their money to get the price of their detergents, etc. down to a sale price every two weeks. It was costly, inefficient, open to corruption, and frankly the consumer seemed to wait until the product went on sale before they would buy any. So P&G tried to go back to their long-forgotten strategy of everyday low pricing (EDLP)to no avail. They and their competitors had trained consumers to focus on the sale period, and there was no convincing them that everyday low pricing was in the consumers better interest.
What is the lesson here for the Internet? If you train the customer to always focus on finding the lowest price (via search engines, search agents), then the market that eventually develops may not be profitable for anyone. In a recent Motley Fool article, Louis Corrigan looked at the lowest-price/negative margins retail concept, ...e-Commerce may work like a poker game in which the players capable of raising the stakes high enough will never lose because competitors will simply have to fold. That may be true for the retail Goliaths, but what about the far more numerous Davids? Is there an Internet world where price isnt the only factor? Is profit margin forever a dirty word on the Web? Can a small business compete?
Last week, New York Times Op-ed columnist Tom Friedman wrote the story http://www.nytimes.com/library/opinion/friedman/022699frie.html of a guy named Lyle Bowlin, who built an online bookstore for about $150 a month, offered a million titles for sale and was using his spare bedroom to take on mighty Amazon.com. Friedman revisited Mr. Bowlin a week later, http://www.nytimes.com/library/opinion/friedman/030999frie.html and with good reason. Seems after his last piece, Bowlin's business exploded from $2000 per month to $2000 per day. Obviously, the Times has pull. But what's more interesting is the kind of e-mail the entrepreneur's been getting - hundreds of pieces from folks who want to do business with him because he's not Amazon.com. "There is still a deep hunger out there for that old-style, Main Street feeling, built on human contact," wrote Friedman. "This suggests that the really successful retailers in the Internet Age will be those who can combine the efficiency of cyberspace with the intimacy of the backyard barbecue."
In the old days, we called it added value. I owned and ran (until recently) Passport Wine Club, a direct marketing company that sold wine and monthly wine club memberships. Our proposition to the customer from the very beginning was, Look, wine is complicated, its hard to get the really great boutique wines if you live in Idaho.
The big world of wine can be a lot of fun, and not overly expensive, if your wine experimentation isnt just a stab in the dark every time. We never ever mentioned the word discount or lowest price. And sometimes we took the heat from customers who happened to run across a bottle that they paid 2 dollars more for from us. We would explain to them that the odds of their knowing about that particular wine, were it not for us, was close to zero, and that they should thank us for showing them a great buying opportunity in their local store. We developed a very loyal following that way, and lost very few customers due to price competition. Given the chance, customers do realize the added value of information and personal service over raw price.
Perhaps the question as a retailer comes down to this: Am I selling a commodity or not? Or better yet, Are we turning specialized products into commodities? My oracle tells me that while the business models come and go, the entrepreneurs ability to find profitable niches in- between the price-driven Goliaths will save the Internet from its wholesale club mentality. It shouldnt take long to find out.
Expands E-Commerce Strategy
New Commerce Server technology and online marketplace take aim at retailers Microsoft will introduce an E-commerce strategy this week that combines software upgrades and a service for hosting commerce sites on its MSN Web portal. Like other portals, Microsoft's MSN is targeting millions of small and midsize merchants that have yet to open shop on the Internet.
Boating.com, an e-commerce and content site that aims to be the yellow and white pages of the boating industry, is now afloat.
5-Second Rule for Internet Advertising
The FAST Forward initiative launched by the Internet advertising community last year came out with its first guidelines on March 2, and the five-second rule was prominent among them...
Teams Up to Launch Ariba.com
On Wednesday, Hewlett-Packard announced that it has partnered with privately held Ariba to launch Ariba.com, the world's largest
business-to-business commerce network for operating resources over the Internet...
Inks E-Commerce Deal with Excite
Bluefly, Inc. (Nasdaq SmallCap: BFLY), an Internet clothing retailer announced today that it has signed a comprehensive marketing agreement with Excite, Inc. The agreement includes a combination of e-commerce, advertising, and promotional programs...
to Aid e-Commerce, Experts Say
While most wouldn't disagree that Europe is behind the U.S. when it comes to the adoption of e-commerce, things may get an additional boost here in the next few years due to the gradual phase-in of the euro, said several industry members speaking Thursday in Brussels.
Set to Explode
E-commerce is poised to boom, and some of the leading online merchants and service companies may fall by the wayside as competition on the Web increases, a market researcher says.
eFraud On the Rise
On the bright side, eCommerce is booming. Unfortunately, there is a dark side to the story, too. According to the consumer watchdog agency, Internet Fraud Watch, complaints about fraud online have jumped sixfold in the U.S.
When it comes to shopping online, whom do you trust? The big guys, certainly: Amazon.com, CDnow. But what about small retailers you've never dealt with before? How do you know whether you're dealing with a reputable Web merchant or a fly-by-night operator? And even if you're certain a site is legitimate, how can you be sure it's reliable?
They're at Your Site, How Do You Slam the Door Behind Them?
Alas, cattle prods and barbed wire are not viable tools for keeping e-customers corralled. That's too bad for retailers, since the age of the Internet is the age of fence hopping--the cost of switching brand allegiance is nil, since all a customer has to do is insert a bookmark pointing to his or her new favorite bookstore or what have you.
the Store to the Shopper
With the millennium approaching, online companies are all the wiser in using traditional advertising and promotions to attract customers. In July 1995, only 10 percent of the ads in BusinessWeek, FORTUNE, Newsweek and Time contained a URL. By July 1998, that number reached 91 percent (survey by Scituate, Massachusetts-based Interacumen).
President Says E-Commerce Will Be Holy Grail
There's no doubt that streaming media is going to affect how we purchase information and entertainment in the next millennium. However, the problem with this kind of new media right now is that it's often simply a pain for consumers.
E-commerce Gives Lands' End a Boost
Catalog company Lands' End (NYSE: LE), which sells apparel and gifts, reported disappointing, encouraging earnings on Thursday. This is not a contradiction. Overall fourth-quarter earnings fell 38 percent, including charges, to $25.7 million. But the mail-order company's stock climbed more than 10 percent on Thursday largely because e-commerce sales more than tripled last year, climbing from $18 milliion to $61 million...
Get Ready For Internet Sales Taxes
A spokesman for Rep. Billy Tauzin told the E-Commerce Times that the Louisiana Republican was serious last week when he warned Web merchants that states and localities will win the right to impose sales taxes on their transactions...
Web Site Privacy Program Finally Arrives
The Better Business Bureau will finally launch its Net site privacy program tomorrow, the latest in a string of industry efforts to stave off regulation and to quell conflict between U.S. and European officials over data collection practices.
Students On To Online Shopping
The goal of many businesses is to create brand loyalty and attract lifetime customers who will eventually spend thousands of dollars over many years. This is what makes web-savvy college students such attractive targets for e-commerce companies...
struggle to find Net-savvy talent
It isn't easy for brick-and-mortar retailers to hold onto top-level executives intrigued by the pioneer spirit of e-commerce startups, but it's even more difficult for those companies to attract seasoned talent to head up their own Internet sales strategy.
Online Sales Take a Bite Out of Traditional Retailing
The recent explosion in e-commerce has made it increasingly clear that a big change for brick-and-mortar retailing looms just around the corner. A new study conducted by Greenfield Online, Inc., indicates that online sales have already begun to take a bite out of offline sales, at least among Internet-savvy shoppers...
Sidewalk Goes Shopping
Microsoft's Sidewalk has snapped up CompareNet, a San Francisco-based comparison-shopping site. Sidewalk, originally conceived as a community information site, recently relaunched with more of a focus on e-commerce.
Street.com Stock Soars After AOL Deal
Shares of 7th Street.com (Nasdaq: SEVL) soared more than 80 percent on Friday after the multimedia training company announced a deal with America Online, and the stock is rocketing today, as well.
iMall Goes Vertical with Pure Payments
E-commerce hosting service iMALL, Inc.announced the acquisition of San Francisco based Pure Payments Inc., which provides a critical component for Internet-based credit card processing...
CNET Swallows KillerApp in $46M e-Commerce Deal
Online publisher CNET, Inc. announced that it has acquired KillerApp, Corp. in a stock deal valued at approximately $46 million (US$). KillerApp Corp. owns and operates KillerApp.com, an e-Commerce site which provides online comparison shopping services for computer and consumer electronics products...
buys E-Travel for $35 million
Oracle today said it bought closely held E-Travel for $35 million in cash, adding self-service travel to its stable of e-commerce offerings.
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