Dan Bricklin's Web Site: www.bricklin.com
What's been successful in B2C
There have been successes with eBusinesses when the selection is appropriately wide, enough details are available for purchase, and getting what you want is likely.
In some previous essays, I've been talking about what has been unsuccessful in the eCommerce and eBusiness space. From that, you might think that I'm pessimistic about the entire "New Economy". That's not the case. I think that there have been many successes, even in the area of Business selling to Consumers (B2C). By looking at some of these successes, I think we can learn valuable lessons about what works and what doesn't work.
When the Web started becoming popular, early growth of the popularity of sites such as Amazon, eBay, AltaVista, Yahoo, Whitehouse.gov, and Godiva Chocolates caught people's imaginations. Suddenly it seemed that not only was it possible to sell things in this new way without sales people or storefronts, but that this could become the dominant way to conduct all business. All sorts of companies worried about being "Amazoned". The press was filled with theories about how "bricks and mortar" were huge unnecessary expenses and of "first mover" advantages. Whatever seemed to work for one company was assumed to be good for all. Then, in mid-2000, it all stopped. The "dotComs" struggled to become dominant, or even to turn a profit. By 2001, the press was filled with reports of companies ceasing operation. "dotComs" became "dotBombs". It seemed the Internet was not the way to sell. (The mood was summed up nicely in ETrade's "Chimp on the horse" SuperBowl ad.)
Here it is in the second half of 2001. The Internet and the Web are still here, and usage is growing. The aftermath of the events of 9/11 showed the value of the Internet to regular people, and its suitability to many tasks. Some eBusinesses are still here, some making real profits, and others may not be profitable yet, but show their dominance over other forms of doing what they do.
What has worked?
Let's look at some of the successes and see what we can learn. By successes, I mean that regular people routinely turn to these types of eBusinesses and those businesses are major players in their area, online or offline -- many buyers have permanently changed their behavior in favor of the online version.
Amazon for Books
I see Amazon as quite successful for books. They are one of the largest sellers of books, joining the top ranks of that industry in a very short time, and have claimed at times to be "profitable" in that area. Buying books from Amazon (and similar sites) is well accepted by millions of people. The reasons for their success, I feel, include the fact that you know they can get you any of millions of books at a decent price (they are often not the lowest, you have to pay shipping but stores have tax, etc.). Also important, though, is knowing that almost anything you want is available. In addition, for many of these large numbers of books, they have extra information, such as readers' comments.
What we see here: Standard commodities (you often know in advance what you want -- not as much "shopping"), huge universe to select from (larger than could be in a catalog for home use or most stores nearby) which people care about -- anybody may want any book even if they overlap heavily with popular ones (people often buy more than one book over a year, and when buying one there is often a tendency to impulse-buy others), convenience (by time of day and location -- do it right now when you hear of a book), certainty you can buy it (compared to going out to a store where it is very possible you'll have to order it and come back), price.
Not only is eBay quite profitable, but it is also becoming a major marketplace for selling many types of items. Sales "through" them are running at an annualized rate of $9B, they expect to help sell over $1B in used cars this year (making them number one in used cars online), and have 5% of the entire coin and stamp marketplace. At this point, 30% of their sales are for "collectibles", 13% autos, and about 50% "practicals". They view their main competition in the US as other shopping experiences, mainly offline.
What we see here: Huge universe of diverse, very specific items not easily available elsewhere, huge audience available to sellers to find people interested in niche items, fun / excitement of auction with possibility of good price, price benefit when purchasing used items.
Napster and equivalents
While Napster has not been financially successful, its incredible usage and "share of mind" success means it needs to be looked at.
What we see here: Huge universe of diverse standard items and anybody could want any mixture of them -- very personalized list of desired items, ease of searching (online, by song name, by artist, with naming done by other listeners who think like you, etc.), likelihood of success, price, convenience (by time and location), unbundling of songs from albums, access to material not available through normal means (e.g., old material not in stores, variations, unpublished artists).
Google and other Web searching techniques
I already wrote an essay about the success of searching for information on the Internet among regular people. An interesting thing about Google is that it did a better job than the then current dominant players, and was able to win over users. This shows that the users care about what they are looking for. They are not just looking for the serendipity of finding something related. They are looking for real answers.
What we see here: Huge universe of diverse, unique, but often similar items, anybody could want anything, convenience, timeliness, likelihood of success, all-in-one tool.
Browser-based email (HotMail, Yahoo Mail, etc.)
Of all the web based "applications" other than eCommerce, I think web-based email has been the most successful. It is even popular for reading "for pay" email, such as with corporate email. It is an application that is tolerable using browser-based user interfaces (not great, but easy enough to learn). The success comes, I think, from a few factors. First, it let you get a free, private, perhaps anonymous, email address that you can use from work. It also let you give email addresses cheaply to more people in your family when you didn't have the multiple screen names like those that AOL provides. The main thing, though, is that it is accessible wherever you can use a browser. This made it popular at work, despite the UI, where you could get to a browser. You could use it when traveling (for work or fun) wherever you can rent/borrow Internet access, no matter what type of computer it was. Installing software for reading email, or modifying someone else's to access your mail server, is just too cumbersome and error prone for "just checking" your email. Most computers connected to the Internet have a browser that works. The likelihood of getting any other program that uses the Internet working when you first install it (or being allowed to) are slim.
What we see here: Large number of diverse locations to access without hassle and with likelihood of success, price. Also, its success is part of the general success of email. Email is very popular in its own right because you can reach, or be reached by, anybody else with email -- a huge set of people to exchange email with, any one of which you may need.
Expedia and other travel web sites
Travel web sites are becoming a major force in the airline ticket and hotel reservation business, accounting for over 10% of all travel reservations already.
What we see here: Large number of options with different attributes (cost, time, location, brand) to be compared and chosen, repeat purchases if satisfied and low risk to try, convenience, price, fun / excitement of finding bargains.
Additional sales for brick and mortar
Many normal retailers are finding that also "selling" off of their web site brings in added revenue. Once they have the customer using their web site, the added convenience to some of online purchase, or the catering to impulse buying of additional peripheral items (e.g., company logoed items), can cause a bump in sales that more than pays for the web site. Unlike the applications I listed above, online is not the main source of income, it is just another part of the mix, often part of marketing with the option to close some sales right there.
What we see here: Additional channel that benefits from, and is synergistic with, other marketing efforts.
What do we learn?
There are other successes, but I think we can see some trends here.
A common theme is a huge, diverse set of items for the person to choose from, where most people want access to the wide list, not just the few most popular with everybody else. Another theme is the ability to inspect items enough to determine which particular item is desired, or providing known commodities (like books) that can be described by title and source/author. Finally, likelihood of success at getting what you want is important.
When you compare these applications to alternatives, you see that being online has clear advantages to the buyer, and not just price. (And eBay is even better: It provides a huge diverse set of buyers to the seller, too, not available elsewhere.)
So, for example, for most people in the USA having access to 10,000 types of cheeses is not good on two counts -- most don't choose among that many varieties, and the name and a text description or pictures is probably not enough for most people.
Originally it was thought that online merchants had a cost advantage, and that that would be the main benefit to buyers. We now see that the costs of distribution of many types of goods, of acquiring and keeping customers, and the maintenance and support of a web presence, may still be high enough to offset any such benefits. A small difference in price may not be enough of a benefit to change buying behavior so greatly. The other benefits, though, of huge choice, of appropriate, inspectable details, and of likelihood of success, may tip the scales in favor of online.
Other things to consider are cost advantages for the types of items that don't require you to ship anything -- when you can just change information in a database and perhaps notify others. This, along with huge choice, has helped the success of the travel sites, eBay, and even resume services like Monster.com. (Online stock trading has a labor cost advantage but doesn't have the advantage of larger selection, and perhaps convenience.)
The things I'm talking about here are about general applications and whether or not the online version will become an important form. Whether a particular company leads that area or not, though, is another issue.
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