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Strategies & Market Trends : e-Commerce the Next 100 Months...... -- Ignore unavailable to you. Want to Upgrade?

To: Toni Wheeler who wrote (2679)	7/26/1999 1:06:00 AM
From: Rob S.	Read Replies (3) \| Respond to of 2882

Hadn't seen it but the subject is familiar. About three years ago when I started to ponder ecommerce I tried to theorize how business would develop. After careful research and thought, I came to the conclusion that competition would be greatly facilitated and that the net effect (pardon the pun) would be a tremendous increase in availability of comparative information about products and a lowering of prices and profit margins. Most new products and markets go through the traditional "price supply demand curve" relationship: during the introductory stages prices are not the primary competitive factor but as the market matures more competition is drawn in and prices decline. The Internet is different from "traditional commerce" that has been developed in conjunction with the print and broadcast media as the primary drivers. The Internet empowers consumers like no other media that has come before it. For one thing, it is not a broadcast media despite all the attempts to try to harness it into being one. The Internet by it's very nature lends itself to finding out information, reviews and opinions about products far better than any other media. It is so good at it that price competition is already a big factor even though the web is hardly out of the diapers. After I pretty much came to that conclusion, I happened upon a report that was done by an open group at the IBM Research Institute. This ad hoc group is made up of volunteer participants from industry and academia. They were able to use IBM's super computers to model the evolution of the commercial aspects of the Internet. The conclusions were similar to my own, but of course, much more specific. The bottom line is that they predict huge growth of online commerce, great efficiencies but ruthless competition and price pressure. They foresaw very few barriers to market entry, the evolution of "shop bots" and a power shift away from the media centric mechanism of mass media and much more into the hands of consumers. ----------- What does that mean now? I think that going into the Christmas season we will see dramatic growth of consumer ecommerce. When you think about it, the Internet is particularly well suited for gift shopping for the types of commodities people tend to buy. Many people shop for those out of their own area so buying on line and having it wrapped and delivered is more convenient than shopping at the local store. Another factor is that sales this season will for the first time exceed the average yearly growth of retail sales. Last year etail was about 3%-4% of overall retail sales. That was just about what the same as the overall growth of retail. But this year it should hit 6%-8% of sales, which will mean that traditional retail, and catalog sales will marginally decline even though a robust season is expected. If the media catches on, this should be big news. From this point onward, store sales will start to decline as etail eats further into the breadbasket. However, etail will not supplant all retail sales by any means. And many traditional retailers are rapidly developing strategies that combine the convenience of on-line shopping with the ability to make final purchase decisions and pick up products locally. Many products will continue to be more convenient or desirable to purchase the 'ol touchy-feely way.