Once a sale is made, a Web store's challenge is identical to that of a mail-order merchant. You have to scale operations when sales grow, or your failure to execute will cost you business down the road. A lot of Web merchants may want to change their names (and URLs) after this last Christmas season, when these holes in their business plans were exposed big-time.
I'm going to concentrate here on my own experience, not to embarrass the merchants involved but to be certain of my facts. I've talked to enough folks in similar straits to know this is a trend and not just my hard luck. The fact these merchants made their mistakes with my money is their hard luck.
Let's start with Andy's Garage Sale . This Fingerhut division did a lot of things right. Maybe I just thought I backed out of one purchase - it went through anyway. But I got order acknowledgements via e-mail, and as far as I know the merchandise got there. Most important, my credit card bill has a phone number for Andy's on the line below the merchant's name. My wife (who works on credit card processing programs) tells me this is mandatory for mail-order merchants, under Visa's regulations. So here's a Clue for Visa (and MasterCard) - make that mandatory for Internet merchants as well.
Yahoo Store is really just a set of links to other merchants, and the link I used was to Mentor Mercantile of Painesville, Ohio . Yahoo was encouraging me to send something to grandmaand grandpa, so we sent them some microwave cookware. It arrived OK, but there was nothing on the package to indicate it was a gift. There was no acknowledgement of the order from Mentor, and no reply to my subsequent e-mail. The grandparents thought it was one of those deals where someone sends you stuff and follows it with a bill so they just put it up and forgot about it. There's also no phone number for Mentor on my MasterCard statement. My problem here is with Yahoo, not Mentor. If they're putting together a gift list they need to make sure merchants know that, so they'll respond appropriately. You don't just put up a link and forget about it - portals need to understand their reputations are on the line.
The biggest disappointment was Brainplay.com , which sells toys. I ordered two toys there for two little cousins. I got an e-mail saying the deliveries would be late and a second e-mail weeks later, telling me one item was out of stock and would go out in late January! (The other shipped around December 20, too late to hit my bill but also too late to get there for Christmas.) Fortunately, I wasn't charged for the failed deliveries. The Clue a merchant should follow here, when you know Christmas is coming, is to offer worried clients a second selection of items via e-mail, with one click ordering.
Let's review what we learned. In terms of merchandising and advertising, mail-order merchants have been late to the Web, and their performance has been poor. (They've just added URLs to their catalogs, and made their sites clones of them.) But once the order is taken, it's the Web merchant who needs to take some lessons.
SSP (Shameless Self-Promotion)
I've got a new daily gig. EcommerceTimes , a news site specializing in electronic commerce, has signed yours truly for a daily "viewpoint" feature, which launched last week. If you are a heavy user of Internet stock trading sites, I'd also like to profile you for an assignment I have with Salon Magazine . You can still buy "Web Commerce: Building a Digital Business," , by Kate Maddox with yours truly, and I have two other proposals available for consideration...
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And now back to our show...
Some points became clear in 1998, and one of the clearest points was the importance of broadcasting in driving traffic to Web sites. The top content sites are all connected to cable networks. The purchase of Web sites by broadcasters will drive traffic to those sites. And TV commercials also work in driving traffic.
Given all that, there's a crying need for TV ads that work for Web sites. Most of what I've seen doesn't work. (Yahoo is an exception, so here's your first Clue - hire their agency if you can.) Barnesandnoble.com has spent millions putting best-selling authors on-screen, but best sellers don't drive Internet store sales since you can get the same stuff down the street. Excite's ads look like beer commercials that seem to say "our users are idiots but they get use out of us, so you will too." Buy.com's ads just look cheesy, and the Outpost.com ad with a pack of wolves attacking a marching band was just sleazy.
The best ads for Web sites I've seen are for stock trading sites. Schwab's straight investor stories are not flashy but they're effective, which is the key value the site is selling. Ameritrade's ads personalize the benefits of low commissions by letting real people deliver the lines. The best of the lot is for WebStreetSecurities, showing some guy eating a donut while ruining a mogul. A version of that is today's investment reality (see below).
The task is to grab attention and show the real benefits of using your site in an arresting, visual way. For a book site it means finding a customer who found a hard-to-find book, say for a 50th wedding anniversary, rather than a best seller. For a computer store, it's customers singing the praises of low prices, quick delivery and excellent support. For a "portal" like Excite, it's dramatizing how people with esoteric interests find community, and how vrtual communities transcend vast distances in time and space.
This shouldn't be so hard, but let's repeat the rules. Show real benefits in a visually arresting way. Let users carry the humor. Don't talk down to people. And about that Borg the kid was carrying around for the StarTrek (http://www.startrek.com) site IBM put together. It was Locutus (Patrick Stewart's Piccard captured and turned against his own people) and it was completely irrelevant to "The Insurrection." Know the product you're advertising and you won't look stupid.
Don't Fight The Tape?
With every other excuse for $400 Amazon shares gone, "don't fight the tape" has become the mantra of Wall Street when it comes to Internet stocks. Anyone who predicted the Internet stock mania would end (I first did it in 1997) is looking very, very foolish. The failure of stocks to follow-through on their summertime blues (instead they rose to new highs) has driven all bears to the sidelines, allowing the bulls to run rampant.
Why am I so grumpy? Is it just that I missed out? Well, I did miss out, but as a part-time student of history and economics I have reason to be grumpy. All manias end in time and the faster the rise the harder the fall. Manias also have causes, and that's a story I condemn the business press for not following. The obvious cause in this case is a limited supply of Internet stocks. The less-obvious causes are the rise of Internet trading sites, day trading rooms, and a shortage of other opportunities. It's the last cause, I submit, which should be most disquieting. International stock markets have crashed, deflation is taking the prices of all commodities lower, and even bonds carry anemic returns. When money has no good places to go, it chases its tail. I submit that's what is really happening in this case. And it's just what happened in the late 1920s.
Is there any way we can get a "soft landing" here? It's very, very unlikely. (China is cracking down on human rights because its leaders see economic storms ahead.) A soft stock market landing is possible, in other words, but it has never happened before. What could bring it about? It will take real business opportunities, lots of 'em, to deflate this balloon slowly, and if I had real money I'd be looking for them. I'd look to buy Euros, and Euro-denominated investments. I'd look for stable African democracies, and if I could find one I might take a flyer on companies building factories there. I like Brazil and Australia for the long term, but the first prerequisite is to Whip Deflation Now. Any sudden upset in the world economy, which would inspire fear of instability in the U.S. market, will crack the mania and start the fatal fall. Waiting for it is like standing on an earthquake fault line with a geologist's data in hand. It's easier to think the ground's firm, but I know better...
Bad Cases Make Bad Law
Cliches often become cliches because there's truth behind them. The cliché "bad cases make bad law" is well illustrated by "Intel vs. Hamidi," now being heard by California Superior Court Judge John R. Lewis in Sacramento.
Here's the deal. Ken Hamidi is a former Intel employee who feels he was wronged. He built a Web site to spread his complaints, but he went further. He began a mass e-mailing campaign, aimed at 29,000 Intel mailboxes whose addresses he obtained. Intel, asserting it owned its users' mailboxes (and could control what goes into them) sued, and has won a preliminary judgement, pending an April 15 hearing.
Both sides here are fighting for bad principles, so the choices Lewis faces are false. Hamidi claims he's a "free speech advocate" (the ACLU and EFF are considering the case) but he's also calling for a "right to spam." Intel claims it's only defending its property rights (it hasn't sought a closure of the Web site) but it could not prevent Hamidi from mailing his screed as letters. If Lewis rules for Hamidi, the way is clear for any social misfit or unpopular political cause to attack corporate e-mail servers. If Lewis rules for Intel, corporations can keep out union organizers, alternative directors or even the government from making cases that (perhaps) should be made.
When faced with false choices, most good judges change the subject. Does Intel have a remedy other than stopping Hamidi's outgoing e-mail? How about asserting proprietary rights to that 29,000-name e-mail list? Find a solution, in other words, finesse the false choices, and move on.
Clued-in is Rich LeFurgy , chairman of the Internet Advertising Bureau, who recently joined AdKnowledge of Palo Alto, California as a consultant . Rich also chairs the FAST Forward steering committee put together by Proctor & Gamble, but the New Year is a time for forgiveness, so we won't hold that against him...
Clueless is the current coverage of Go.Com , Disney's new portal, which is filled with false choices and invalid assumptions. Go's potential success doesn't close out others' futures, and there's room for a "family" portal that could, in time, become a Disney online service. (All that said, what I've seen at Go so far is unimpressive.) Your Clue is, don't analyze a game before it's played.