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CLICKS & MISSES By Louise Lee
February 11, 2000
At E*Trade, There's Heft along with the Hype
Its site has all that confident investors need to make intelligent choices, and now it's pushing from trading into financial services and beyond
We all know that plenty of people watch the Super Bowl -- not for the game, but for the ads. E*Trade Group Inc., one of the brokerage industry's masters of splashy self-promotion, certainly isn't one to let a golden advertising opportunity slip by, even if it does mean blowing $2 million on a simple spot featuring two guys and a chimpanzee. Go knock it: The Internet marketing firm Active Research says 69% of viewers surveyed picked E*Trade's spot as the one they remembered, and the ad took top honors as the commercial that was "most talked about" and "most interested consumers in trying the company's product or in visiting the company's Web site."
So let's say you fell for the ad. Now the game's over, and you're running for the computer to check out E*Trade's site. What awaits you?
Quite a lot. A little of it doesn't seem have much to do with investing. But financial things first. E*Trade is targeted to people confident enough to trade on their own and who take the time to research market trends and read up on the companies they invest in. If you're not confident enough to do research and trade on your own, forget E*Trade (and, for that matter, all the other online brokerages), and stick to your flesh-and-blood broker at the likes of Merrill Lynch.
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E*Trade doesn't advise you to buy or sell a stock. But it did give me enough info to decide about Wal-Mart on my own
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To test the site, I decided to bore into my favorite sector: retailing. (I like to shop.) I clicked on "stocks and options," which led me to a "What's Hot/What's Not" list of industries and sectors. A click later, I found an encouraging sign of the detail to come: The list breaks retailing down into subsectors (discount and department stores, specialty shops, drugstores, and home-improvement chains). I picked Wal-Mart as my test company. With just a few clicks, I could come up to speed on the giant retailer fast. I checked the stock's current price, and changes from yesterday and last week. I pulled up news and press releases from CBS MarketWatch, Reuters, and BusinessWire. Clicking on "profile" gave me another snapshot of Wal-Mart, including recent sales figures, description of store formats, and even the company phone number and address down in Arkansas. It was all very easy and intuitive to use.
E*Trade doesn't give explicit "buy" or "sell" recommendations. But the site offered enough information to help me decide whether I'd want to buy Wal-Mart shares. By reading a report from Standard & Poor's (which, like Business Week, is owned by The McGraw-Hill Companies), for instance, reasonably sophisticated readers could judge that Wal-Mart, as huge as it is, might still be a growth company and that its stock price will reflect that growth over time. For comparison, I read up on J.C. Penney and saw research reports detailing that it's closing stores and eroding its gross margin by cutting retail prices. That was enough to tell most people whether to get into the stock or not.
NONCUSTOMERS WELCOME. There are other content areas, besides standing reports on specific companies, that are worth paying attention to. One is "Investment Insights," which has a list of several articles from S&P's Investment Advisory Services. Its "Stock of the Week" article covered Adobe Systems. Knowing virtually nothing about Adobe, I read it and learned how it's cashing in on the Web with its document-transmission software. The "Equity Insight" article about Intuit's small-business accounting software and its popularity in the business-to-business market was equally informative.
E*Trade is also making a big push into areas other than stock trading, so I clicked over to the financial-services section. E*Trade is hitting all the big areas: There are links for banking, retirement, real estate, insurance, and taxes. I clicked on the real estate link, which passed me on to the site of E*Trade's partner, home-mortgage lender-broker E-Loan. Clicking on the retirement link led me to a page designed to educate as much as to sell E*Trade's individual retirement accounts. I already have an IRA at another financial institution, but this section got me thinking and made me consider opening another kind of IRA.
Granted, some of the material on E*Trade's site overlaps with what you'd find on its rivals'. Charles Schwab, for instance, also just launched a "retirement planning" site, which has features like an "IRA Analyzer" and an "Estate Calculator." And I can get the basic nuts and bolts about Wal-Mart and its share price there as well. One notable difference: Visitors who aren't customers can't get to news stories on Schwab's site.
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Probably E*Trade's most intriguing area is the "community" section -- something many bare-bones brokerage sites don't have
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Probably the most intriguing and unusual part of E*Trade's site is the "community" section. It's something that many bare-bones brokerage sites don't have. But E*Trade has dozens of chat and discussion groups, ranging from "Investing for Your Kids" to "Technical Analysis" to "Wintel's Future." You won't be able to get into the chat rooms if you're not a customer. But I checked out the chat room devoted to Wal-Mart, and the people seemed pretty well informed. The postings indicated that people were keeping up with and trying to anticipate Wal-Mart's moves, and there was a lively debate about Wal-Mart's potential online.
One other small feature on E*Trade's site seems designed to add a dose of fun and color, since it doesn't have much to do with investing. That's the "shopping" area, which has links to the "E*Trade Bookstore." Now, E*Trade doesn't actually run a bookstore -- the link sends you to a page powered by Amazon.com. Another brings you to a co-branded America Online/E*Trade shopping site, where you can buy from Gap, Macy's, and eToys. All this is a sign of what's to come in the future from E*Trade, which is looking at hooking up with more companies beyond financial services, such as online travel agencies.
All in all, E*Trade's site is a good one. Because it gives away so much free to noncustomers, it's a good resource at the very least. It could even make investing as much fun as a barrel of monkeys.
Lee covers financial services -- and retailing -- from Business Week's Silicon Valley bureau. |
