Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Jon Stept who wrote (13741)	10/20/1999 1:33:00 PM
From: Rande Is	Read Replies (1) \| Respond to of 57584

Thanks, Jon. . .OMX just spent a small fortune in promoting themselves as the "premiere" supplier of IBM Aptiva. They have also spent a large fortune turning themselves into an E-commerce biz and changing their image [though not closing many stores]. . . I would think after such investments, they would be quite miffed at hearing this news by IBM. Remember the retailers have recently chosen up sides in the PC biz. . . also, it pits IBM Direct. . .against the Office Max E-site. Why buy from the middleman, when you can get it straight from the manufacturer. Another thing is that my original point was not so much about IBM, but about the Etail vs Retail battle. . .and whether average Americans are being considered in the mix. Honestly, I think that E-Commerce will undergo a MAJOR pullback in about 2002. . the year after set-top boxes reach their critical mass. E-commerce has more fad value than actual value in many markets. I don't want to order my clothing via the net, because I check the fabric, the workmanship and the fit before making a decision. . . yet people are buying clothes via the net. The thing that many don't realize is that there are as many disadvantages to buying via the net as there are advantages on time, shipping, etc. And this is precisely why Sears closed down their catalog sales and why Spiegel bought the retailer Eddie Bauer. After all, E-commerce is nothing more than glorified catalog shopping. . .correct? I started buying Florsheim shoes via online services in 1984. . .and in this same year, I started booking my airlines flights and buying items via auction. . .and bought software and other items on a fairly regular basis for a few years. . . But it was extremely easy to go back to buying in real stores. . . in fact the two areas that were most missed, when this predecessor to the internet had its plug pulled. . .was the communities. . .and the access to instant information. I never gave another thought to the E-commerce. So I see the long term of E-commerce as a 'me, too' to traditional shopping. . . and that is for both high priced and low priced items. It may one day account for 30 percent of all sales made. . .but I doubt if we will see it pass 50 percent in our lifetimes. And that is why this discussion, of whether IBM is setting a trend. . is important. I made the point about the Hershey bar as part of an argument to the absurd. . .to illustrate my point of "where does it end?" and "what criteria are the directors using to make their decisions?" and "are these directors in touch with the reality that Ecommerce is just one more avenue, not the main highway?" One rule of marketing is that once you have established strong distribution, never back out of it. . . another is to be certain that the consumer has "ready access" to the goods you advertise. This decision by IBM breaks both these basic marketing rules. Having spent 5 years as the owner of a supplier to nationwide retailers, I can tell you about the natural tendency of the head of buying for such retailers as Office Max and Best Buy [that are orphaned by the move]. When they find out that IBM plans to no longer supply them with product after a time AND to become direct competition to the retailer, it would surprise me if they don't immediately cancel orders of all products with IBM. And the retail buyers will be unavailable the next time that IBM rep comes a knocking. So when IBM decides to join the wearable PC revolution. . .and other such PC related technology. . . they may find some doors at the primary retailers closed. Remember. . . professional retail buyers do not like too many vendors. . .each new vendor requires immense paper work, phone calls, faxes and accounting. So there is not much forgiveness in this biz. . . even if it is big blue. But how does this affect other products? And the big question is which other companies will get fooled by their own PR and jump into E-commerce with both feet? Traditional retail channels will always remain a critical ingredient for the success of manufacturers. . . and E-commerce is important, but will never be a total substitution for bricks and mortar. . . at least not until we are vacationing on the moon. Rande Is