FYI...for those of you who think the Free ISP model is good for CPQ...consider this latest report:
"Net Firms Offering Freebies Are Paying Dearly: Consumers Expect
Even More"
Los Angeles Times (02/07/00) P. C1; Shiver, Jube Jr.
Many online firms are offering products for free or at a
significantly reduced prices in order to establish themselves in
e-commerce, but experts say this business model might not be
effective. For example, IWon.com, which is supported by CBS,
awards $1 million each month to one of its visitors. The
giveaways often require that consumers provide personal
information; FamilyWonder.com last year gave a $20 check to
visitors for filling out a survey and purchasing at least $20
worth of goods. However, the business model of giving away
products is proving unsustainable in some instances, and some
online firms have now been losing money for four or five years.
EMachines last week announced that it cannot continue offering
its customers free Internet access. Online companies typically
bring in money by selling products or services, advertising, or
transaction fees from sales advertisers make as a result of the
site. Still, these sources of revenue are being challenged as
the Internet lowers the cost of becoming an e-commerce firm, and
the number of companies competing for online consumers
multiplies. While online companies try to compete by offering
freebies and discounts, most giveaways are not successful and
simply encourage consumers to seek bigger bargains, according to
a Jupiter Communications study. Experts note that giveaways
would only be an effective business model if consumers were
loyal, but consumers often look for the lowest price rather than
a familiar site. |
