TA, my answer has to do with what I believe is a fundamental shift in the way we do business. As an engineer once pointed out, it is cheaper to move electrons than it is to move molecules. The immediate consequence of this is that it is cheaper to move funds electronically than it is to move them physically. Therefore, if for no other reason, I expect electronic commerce to burgeon. But there are other, more compelling reasons.
Traditional marketing has held that the most efficient way to distribute goods is through a series of channels, ultimately ending up in the hands of the consumer. But a variety of pioneering companies proved a long time ago that catalog sales can effectively replace the traditional channel, which translates into lowered costs. I believe that electronic commerce is the modern version of catalog sales, and its inherent efficiency promises much greater efficiency and cost reduction by cutting out unnecessary layer of distribution. Look at Dell as an example, where inventories are kept at around 7 days, and there are no middlemen. Now consider the idea that electronic stores are really nothing more than a series of independent sales reps whose function is to funnel orders directly to the manufacturer. e-commerce together with SCM programs can allow a virtually seamless interface which can trigger the production of the good on demand.
The kicker in all of this is that to make it work you need a shopping center -- an electronic mall. It must be easy to use, and it must instill a sense of confidence in the consumer. I believe that AOL is e-commerce replacement to Sears, and that is where I see the incremental growth.
TTFN,
CTC |
