(formerly "A Clue...to Internet Commerce")
by Dana Blankenhorn
Volume II, No. XLVIII
For the Week of November 30, 1998

This Week's Clue: Gone Shopping 

SSP (Shameless Self-Promotion)

AOL's Netscape Buy 

The Most Clueless Trends of 1998 

Clued-in, Clueless

This Week's Clue: Gone Shopping  

Every year at this time, I go shopping online to see what's new. What's new this year is the entry of "portals" like Yahoo , Excite , and Lycos into the business of shopping. So I went to these sites first. 

Yahoo, as always, has taken an editorial approach to the subject. There's a rotating impulse buy on the left side of its screen, with categories to the right and a little search box above it. There's a profound understatement to the real Yahoo-makers here, like its Visa card, auctions, and classifieds. There are also links that are purely editorial, prominently featured. This has always been Yahoo's secret weapon in the "portal wars." They have editors who think like editors. They offer service first, with a sales pitch alongside it. 

I thought of that when I moved to Excite's page. The Excite page adds tiny text-based ads under every category, a list of common shopping search terms (like beanie babies) near the top, and a collection of other paid-links, called "other ways to shop" at the bottom of the screen. (Sell, sell, sell. Notice how they're piling on the marketing dollars.) The Lycos shop is similar, with a BarnesandNoble search box, the categories, and a box-like "shop our stores" at the top, along with resources it hosts on the left. 

What I also found, after hours of clicking, are the current weaknesses in the online shopping paradigm. Pricing, for one thing, isn't very good. You're paying retail, more when you add in shipping. If you don't know what you're looking for (and half the fun of Christmas shopping lies in not knowing what you'll get when you leave home) there's not much help here, at least not much help within easy reach. (No one thought of building gift advisory software?) As always, Yahoo is least blatant in its commercialism, and thus the most successful. (Read that last sentence again - it's a key Clue.) 

I wound up bookmarking a number of offers - at Brainplay , at Fingerhut's Andy's Garage Sale site  - we even seriously considered the whole turkey at Great Food Gifts. At the end of the day, however, the only purchase I made online was a ring at QVC (don't tell the wife), because the price was reasonable and she liked it when I showed her the picture. Even here there was a slight problem. QVC really needs to expand its "member name" field to make remembering it easier, and it insists that every customer have such a number, which means lots of extra calls go to its toll-free lines, cutting into its self-service savings. But those are small quibbles. 

A shopping trip into "meat space" made me feel more certain about my choices. I found the turkey at half the price Great Food was asking. The kids on our list wound up with something we'd previously bought our own kids (ironically, from a QVC TV ad - something we didn't learn until the product was delivered). I found, again, that thinking is still best done when you can touch what you're buying. There are, and will be, good online analogs to this - gift guides, shared conferences among shoppers, and shopping bots are just three - but the point is these are not yet useful for the average shopper. 

One more important point needs to be made. There's an assumption abroad that market share is permanent. It's true that it's cheaper to buy market share early in a game, but failure to dominate in and of itself isn't failure. Here are two examples - stock trading  and computers . Just do the math. A one percent share in a $1 billion business is $10 million in sales, in a $10 billion business it's $100 million in sales. That why so many companies  are buying big TV time  this season aiming at small bumps in market share from Christmas shoppers. You don't get those kinds of bumps buying eyeballs one at a time - mass markets require mass marketing. That's what is driving Web ad sellers crazy. It's why even second-tier Web companies are putting their names on bowl games

SSP (Shameless Self-Promotion) 

Here's a Christmas gift-giving idea for the Web-heads on your list. "Web Commerce: Building a Digital Business,", by Kate Maddox with yours truly, at the attractive price of $20.95 (regularly $29.95) from Amazon.Com. It's part of the Wiley/Upside series. You can also read a review of the book, from Dr. Ralph Wilson, by clicking here . If you're a book publisher, you should know I have two other proposals available for consideration... 

A-Clue.Com now goes to about 1,000 Clued-in subscribers each week, and is the Monday e-commerce column of Andover.Net . I also contribute regularly to such publications as Net Marketing, Boardwatch, Datamation , and Advertising Age . Your magazine can join the list. 

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And now back to our show... 

AOL's Netscape Buy  

When someone gives you free money (in the form of a ridiculous stock price) you'd better spend it, or they'll take it away from you. When it's billions in free money, you have to spend billions. (Are you listening, Mr. Bezos? ) That's the best explanation I can come up with for America Online's decision to buy Netscape for $4.2 billion in stock. 

AOL has proven incompetent at selling software in the past, so from that standpoint the deal makes no sense. Speculation, instead, has centered on traffic, specifically Netscape's Netcenter and Media Metrix figures showing that yahoo.com had 26.480 million visitors in September, aol.com 23.321 million, and netscape.com 15.892 million. Take out your calculator, and in theory AOL gets 50% ahead of Yahoo with this deal, in raw traffic count. But that's just a theory. Starting in December Media Metrix tells me they'll be able to count all of AOL, and you can date the next Internet stock crash from the release of those figures. (Yahoo shuddered badly just on the AOL-Netscape announcement, while Microsoft rose sharply.) No, AOL doesn't need Netcenter. 

Instead, this looks like another of its Conquer & Divide deals, like the buy-out of CompuServe a few years ago. (In the case of CompuServe, the network went to Worldcom. In this case, the software goes to Sun.) Sun gets a huge order in exchange for taking on Netscape's system integration operation. Taking that deal is a no-brainer, especially since Sun also gets a valid base from which to attack Microsoft's franchise in NT tools. 

What made the deal necessary, however, was AOL's own relationship with Microsoft, which slipped further when its executives testified in Microsoft's anti-trust trial. (I knew Zona  would talk about AOL joining the anti-Microsoft keiretsu before they sent me the note.) Gaining independence from Microsoft is no mean feat for anyone, but does this really mean Microsoft no longer has a monopoly in PC operating systems? 

The deal makes all kinds of sense for Netscape. The company has been in an end-game mode ever since Microsoft hammered it into the ground in server software - a business the Apache shareware program still leads. Mike Homer's portal efforts, like InBox Direct, never seemed to make much of a bottom-line impact, and I suspect they were never meant to. In fact, Jim Barksdale has long looked at his business the way Al Davis looks at his Raiders . Who cares if you lose money every year? Just gain equity, baby. 

But is Netscape really worth $4 billion? C'mon. This price just proves what AOL really thinks of its equity value. It's play money, to be used as such. Which, believe it or not, is evidence someone in Vienna, Virginia has a Clue after all. 

The Most Clueless Trends of 1998  

I've mentioned the move by media sites to eliminate (or restrict) external links in their news stories before, and that remains the most Clueless trend of 1998 on the Web. But it's time for a rant on the other trend, that is the elimination of contact information on commercial Web sites. 

When I do news stories, it's becoming harder and harder to reach the people I need to reach in this Age of the Web. Here's an example. Lsoft offers no prices online for its popular mailing list manager and mail server programs. There is a phone number, but there's no operator there, and if you punch buttons for major departments you can't leave a message - the recording insists you send e-mail, which usually draws no response. And there are no names attached to these addresses, just departments. Could we be a little more impersonal, please? 

All this really came to head this month when I was working up a feature concerning hospitals' Web efforts for Datamation. WebMD , for instance, offered no phone number on its site. (I found a number at BellSouth's Yellow Pages site , but it was incorrect.) Other vendors linked to press releases from PR Newswire, but now PR Newswire's taken contact information off the releases. (Here's a Clue - real reporters don't use releases without calling to confirm the details.) 

The most egregious example of this came when it was suggested I contact an executive with a Delaware hospital. It's a pretty site, but even the hospital's main switchboard number can't be located online. I even tried checking the Human Resource Department's job postings for help - the only number there is a fax number. (Did I mention there are no e-mail addresses anywhere on the site? There aren't.) We're talking about a hospital with hundreds of beds and an extensive, expensive site giving people no way to make contact. 

Worse, this is becoming common practice! First they eliminate hyperlinks, now contact information. It seems 1998 will go down in history as the year bureaucrats really tried, hard, to kill the Web. They won't succeed at that, but they will succeed in angering many, many people, including their customers. If it continues, they'll lose those customers as a direct result of their Web efforts. 

Clued-in, Clueless 

Clued-in is Jupiter Communications' study on self-service, released November 9 to its Strategic Planning Services (SPS) clients, which revealed 42% of top-ranked Web sites studied fail to follow-up on leads their sites generate. Of course, if you have to spend $4,000 to learn to answer your e-mail, do we have to tell you what you are? 

Clueless is the Medical Center of Delaware  in Wilmington. The site is very pretty, with lots of information, but try to follow-up. I dare you, just try! 

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