To all: . . . . . . . . . Estimating the Future. . . . . . . . .
How often do we hear that E-commerce is going to grow into the trillions of dollars. As this word spreads, the mom and pop retailers are worried that people will soon stop shopping their stores. . . Travel agents are led to believe that either they get their own websites or go out of business. Corporations are told that if they don't get online, they will fail miserably and fall into obscurity.
While I believe E-commerce will grow by leaps and bounds, I do not buy the estimated growth rates that are quoted all over cyberspace. I certainly don't believe that it necessarily follows that if a particular company is making 10 million in revs this year with E-commerce, which is expected to triple in say 2 years, then it should follow that that company should be seeing 30 million in revs in about 2 years? Right? Wrong.
In the time it takes E-commerce [in general] to triple, chances are that there will be a half dozen new equal competitors in that same field, all vying for that same dollar. . .So, rather than the given company seeing triple sales, they would actually encounter a LOSS from E-commerce revenues over the prior year. They would only see half the revs of the prior year.
EX: 1 X 300 percent divided by 6 = .5
As the internet [the pie] grows, the market share [slices] shrink.
Predictions about the habits of a society are about as accurate as predicting the weather in Tennessee for Memorial Day in the year 2003. IDC Forrester, like other such firms, "estimates" based on current growth rates, advances in technology, marketing effectiveness and saturation levels and perhaps a sleu of other fantastic data. . but guess what? In the end, it is nothing more than an educated guess.
In 1982, some brilliant social/technological scientists predicted that by 1990, Americans would be doing most of their shopping on-line, communicating with family and friends on-line and getting virtually all of their information on-line. Companies were scrambling to determine if this meant that they would be put out of business. It was predicted that by 1991 newspapers would become obsolete. Retailers might eventually be closing their doors forever. The future role of the telephone, television and other mediums in the lives of the American public were in question. And like fuel to the speculative fire, by the mid 1980's, France had incorporated videotex phone books into the telephones of nearly every home.
Companies like Times-Mirror Publications and Knight-Ridder Newspapers were told that the newspaper would become obsolete by the 1990's. So between the two companies, they spent about 25 million dollars to find out the answer to that question. The answer was no, they would not.
A.T. and T., Southern Bell, GTE, were told that the telephone lines would link Americans via on-line services, for all of their transactions, information and communication needs and that lives would be changed by this transformation. Together, these companies spent about 50 million dollars to determine whether this would be the case.
By 1986, despite that people were given a beautiful, fast, color graphical interface, similar to today's internet; with the option of booking their airline reservations on-line; paying their bills through a number of on-line banks,; chatting with people around the world; bidding on items in on-line auctions; buying clothing, groceries, furniture, perfume, appliances, office supplies, books or music by simply entering your credit card number; accessing encyclopedias, text-books or other vital information; playing real-time games with friends all over the world; getting real-time quotes and making on-line stock transactions; getting up-to-the-second news from major wire services; searching massive databases for information on literally any topic; and doing all this from your own IBM, Apple or Commodore or from a dedicated set-top box with a remote control keypad, looking similar to the ones being designed right now for broadband. . . .how could this fail?
But the public was just not ready for it in the way the scientists had estimated. They STILL wanted their newspapers. They still watched news programs for their primary source of information. They still went grocery shopping and called their friends on the phone. And they still went to the bank. These convenient services cut out many of the chores from the lives of those that used them, but the important factor to keep in mind was this. . . . .
. . . the world was not changing as a result of the new technology.
Everyone, even the most diehard users, wanted to KEEP their newspaper subscriptions. They were using the on-line service as a "me too" and not a replacement to what they had always done.
So, while movies will one day be sent on-demand into your home in real-time. . .it is important to know that they will not completely displace the movie rental store. And while Amazon is huge, the local Barnes and Noble bookstore is NOT in jeopardy of going out of business.
In with the new, but NOT out with the old. . .the old and new will co-exist.
So once again, while I believe that E-commerce will grow by leaps and bounds, I don't believe it will EVER achieve the dominance that is being predicted.
Viewtron of the 80's had a Florsheim shoe store, that did well because a Florsheim was a Florsheim. . .and if you knew your size, you were certain that the fit would be correct. But to buy a pair of lesser known shoes on-line could lead to some awful disappointments, not to mention some blisters and nights spent soaking your feet.
The conveniences that are brought to our lives via the internet enhance our lives and save us time. But if we are to believe that the internet will be infinitely more than a time saver or a convenience appliance or entertainment device, then we are kidding ourselves. And if we invest accordingly, we could be plunging blindly into someone else's guess of what our future will be.
Rande Is |
