.com & .go! (The Future of the .com Industry)

Member Name: Technical Tobes

Product:	The Future of the .com Industry
Date:	03/12/00 (37 review reads)
Rating:

Advantages: .com shops are fast, general cheaper & open all hours

Disadvantages: Reliability & service sometimes not up to scratch.

Internet or .com companies are here to stay, although a large portion of the current internet companies will not be with us for much longer.
A huge deluge of internet companies started springing up a little over a year ago, all trying to cash in on the potential of the internet.
There are many different kinds of internet business; indeed some of them could not exist without the internet (ISPs for example). Stockbrokers are one of the biggest services that have embraced the internet and have revolutionised the way we deal in shares, bringing share dealing to Joe Public in general.
By far the most common and what is probably really referred to when we think .com businesses, however, are online shopping businesses, be it selling shoes or holidays. Many of the businesses mentioned above were already in place and have just moved into the internet; the companies that we are really talking about here however are the new shopping .coms or portal sites which have sprung up out of nowhere. When it comes to portal sites, these are basically sites which link to lots of different shops & chuck in extra things like chat forums, competitions and the like in an attempt to get people to use them as a starting point for the web. They exist by making money out of advertising & referring people to various online shops.


But what is so special about the internet as a basis for a shopping business?

Well, the internet business has several big advantages over traditional businesses, some of these being:
/#1/ Worldwide coverage – customers can, potentially, be in any country and thus you have a much much larger potential customer base.
/#2/ 24 hour access – you customers can place orders at any time.
/#3/ Massively reduced real estate – you don’t need a branch in every major town, thus saving a fortune on rent and maintenance. In fact you don’t need to even be in a town, you can put one big warehouse on a
n industrial estate where rent is really cheap. Further still you don't ‘have’ to have a warehouse, direct manufacturer to customer deliveries can be made.
/#4/ Reduced staff – with less/no physical outlets you won’t require the cashiers, cleaners etc that go with them.
/#5/ Increased product range – since you no longer rely on shop floor space, you don’t need to physically display goods and thus the capacity is only then limited by warehouse space. In fact you don’t even have to reply on warehouse space since a lot of goods can be ordered & even delivered by the manufacturers themselves.
/#6/ Cheaper goods – with the above reductions in running costs, you have the ‘ability’ to undercut traditional high street shops on price.

It’s these kind of advantages coupled with the huge increase in internet surfers out there that made investors pump large amounts of money into new online shopping ventures. Currently you can find a .com shop for just about anything you’d ever want to buy, however it is the speciality shops that have been the most common to jump on the internet bandwagon. They have the most to gain in terms of an increased customer catchment area.

So, on the face of it, you have a shop without a large portion of the cost overheads – got to be a winner & thus investors went crazy investing in these new companies and thus more and more online shops sprung up.

This would all be all fine if it wasn’t for the following factors, many of which a lot of entrepreneurs and investors failed to realise:

/#1/ It takes a lot of time, effort and cost to get noticed on the internet – unlike traditional high street shops, people are not going to notice internet shops by simply walking past them. To compensate, many millions of pounds had/has to spent on advertising, either on TV and/or by plastering ‘banner’ ads on as
many other websites as possible. Hence the ‘portal’ site was born.
/#2/ Saturated market – the .com boom saw hundreds of similar shops popping up, but there is only room for so many to be profitable; the actual number depends on the market size per sector.
/#3/ The internet is cutthroat – all your competitors are now just one click away, and comparing prices now takes seconds. Attracting customers just got harder!
/#4/ Smaller customer base – despite more people than ever using the internet, there is still a large percentage that do not.
/#5/ Security concerns – although all over-hyped, the media has done great damage to the success of online business in terms of security concerns. Although in reality a much safer way to shop if sensible precautions are taken, many internet users would not shop online purely because the idea of typing in your credit card details online scares them.
/#6/ Reliability & delivery concerns – many people are put off by concerns of delivery and service, stories of items not turning up for weeks, or not turning up at all, damaged goods and returns problems have also served to put people off buying online.
/#7/ The personal touch – A lot of people don’t like the fact they can’t touch and in many cases see the products they want to buy online. Often you can only gauge an item's quality by the touchy- feely approach!
/#8/ Set-up costs – It costs a lot of time and money to setup an internet business; obviously you need all the premises, computer hardware & software, plus the design of your website. This all, initially, costs a lot more than the cost of setting up a normal business. You then also have ongoing development and maintenance costs.

So, as you can see there are a lot of disadvantages for online businesses selling via the internet. Many of these points were only really realised after the investments were made; aft
er all who could tell what would happen in a whole new market place? Most originally, though, that everyone would love the idea of online shopping.
As a result, many online retail businesses are now failing and closing down; even the best and most successful online businesses have struggled to make actual profit, and most have yet to achieve this. It takes a long time to recover the original investment, which is why many tried to raise revenue on the stock exchange. Sometime ago I got a portfolio for iii.co.uk for their float on the stock market; it basically stated that they would make a bigger & bigger loss for the next 3 years, with profit not forecast for 5 years!! Needless to say, I didn’t invest & watched the share price plummet within a few weeks!
As I said earlier, it is not just online shopping internet businesses that are failing; there are many other types of online businesses that have failed due to many of the points I have made above. Just recently, TheStreet.com was sold for a mere few hundred thousand after spending over 10 million acquiring its user base.

Overall, it would seem that it is extremely difficult to be a successful internet business by way of exclusively using the internet for business.
The successful online shopping businesses have been those that have added internet trading to their normal & core traditional trading.
Some internet businesses have now realised this and have opened up high street shops to complement their online counterpart; for example, I recently bought a Christmas present from gadgetshop.com, not via the internet but in a shop in The Mall in Bristol.
I think that this is the way to go for online shopping business; many people are simply not ready for online shopping, and it would seem having a few ‘real’ shops in major retail centres like The Mall is good for both increasing customer awareness that you actually have an online outlet and gaining the extra non-online sh
oppers. I’d never heard of gadgetshop.com until walking into the shop in Bristol!

Having said this, the internet has transformed sectors like banking and share dealing, and many online shops have succeeded & will continue to succeed. There will be many more casualties before the marketplace stabilises and the share price will continue to fluctuate until this happens.

As for me, well I’ve been shopping online for years - it’s more secure, shops are open any time and it’s much faster than trawling around town. Prices are also generally much cheaper - although you should always compare: amazon.co.uk is one example where you better off going to a high street bookstore unless you buy in bulk!

For those of you still worried about online security, please take note of the following…
/*/ Choose a sensible password for your username, i.e. make it reasonably long, 8 characters or more and never ever use the same password as your username!!
/*/ Install a virus checker and keep it updated. Viruses have been known to send back information (i.e. usernames & passwords) discreetly, e.g. the recent Microsoft hacker. Although these viruses are rare (I’ve never had a virus in my life, touch wood!)
/*/ Only ever use a ‘secure’ site, i.e. one with the little yellow key in the bottom right-hand corner of your browser (should also begin ‘https:\\…’).
/*/ Never discard credit-slips outside supermarkets etc; on some less secure websites, many of these slips give enough information for a hacker to use your credit card to buy goods. NOTE: This has nothing to do with whether you shop online or not!
/*/ As any bank will tell you, look after your credit cards!
Since the only two ways a hacker can ‘commit’ fraud at your expense is by using your username and password or credit card details, the above precautions have prevented any way of getting at it.
>As for hackers hacking into your computer - well, in the first instance this is very difficult with first having to have some information about your computer and secondly, think how many computers are out there - billions! Why would a hacker want to target your computer when there are millions of big servers like the likes of Microsoft out there? Unless you’re a major multinational business or organisation, it just won’t happen!
Remember, you're more likely to get mugged in the street than be a victim of online fraud, and in any case it’s the company that is liable, not you, should it happen!

Online shopping and other online services are here to stay. Take advantage or be left out, that’s my opinion - it’s all a matter of personal choice at the end of the day; some people will just never like the idea of shopping online. Indeed I would never buy food online - I’m always very choosy about what I pick, e.g. the milk with the longest expiry date etc etc, I don’t want some spotty youth chucking my shopping across a warehouse and it being piled into a lorry for who knows how long!
Naturally, there is one type of online business that’ll always make money, but I won’t go into that. Suffice to say, sex always sells!


Of course, the one thing I’ve not mentioned much about are the ‘portal’ sites; these basically rely on advertising and referrals for income and are likely to suffer from many similar pitfalls as online shops. Indeed, the effectiveness of online advertising is a lot weaker than first thought and referral and advertising ‘banner’ click payment rates have dropped steadily over the past 12 months.
Again, and as always, the biggest & best will succeed while many smaller sites will simply wither away.


Well, that’s my opinion, please feel free to comment, particularly if you disagree with anything I’ve said or want to poi
nt out something I’ve missed.
Thanks for reading,
Tobes.

Summary: