Editor 17-Feb-01
The Dot.coms are Dead!

The "Brick & Mortars" have won a decisive victory. Be afraid - be very afraid.


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The whole Dot.com thing was a farce to start with. All these companies, run by 24 year old kids with pride in their "burn rate" (how many millions of their investors money they could blow in a month) were going to put traditional businesses out of business. Uh Huh.

All the Dot.coms were going to sell goods at below cost and make it up selling advertising on their sites. Of course, the only people buying that advertising were other Dot.coms following the exact same plan.

Then they found they needed to spend a lot more on advertising because they had neither name recognition nor physical presence. They found that without geographic or cost of entry barriers they had a lot more competitors. Then came the "shopping 'bots" that automatically found the site that set its prices too low.

Then they found they really did need the warehousing, customer service and distribution infrastructure they thought they didn't need, and 24 year old kids don't have a clue how to set this stuff up or run it. They had no respect for "Old Economy" hands that did, so they tried to do it themselves.

Then came customer distrust - over slow delivery (or just plain no delivery), poor customer service, shoddy goods, high shipping and handling charges, and poorly managed servers that leaked credit card information like a burst pipe - and customer frustration with slow and poorly designed sites.

Then came "returns", a serious problem for any business, but at a much higher percentage of sales because the customers couldn't see and touch the product before buying. Most Dot.coms were totally unprepared to handle these.

And fraud. Every immaginable kind of fraud, and high credit card clearing charges because of the fraud.

Then the "Brick & Mortars" started to respond with commerce sites of their own. The Dot.coms learned, to their surprise, that name recognition and long term customer trust really do count, even more than price.

Then the "Old Economy" concepts of "profit" and "ROI" (Return on Investment), presumed extinct, reared their reptilian heads.

Finally, the VCs (that's Venture Capitalists, not Viet Cong) realized all this and closed their check books.

Even the Dot.com king, Amazon, starting in a perfect business for on-line - order by author and title - has yet to report a profitable quarter, and the rest that aren't already dead are dropping like flies.

So Why Should You Be Afraid?

A lot of "Brick & Mortars" responded to the Dot.com threat. A lot of B&Ms learned a lot about technology - real fast. They have learned how to use it to reduce overhead, improve customer service, promote products and services, decrease shipping time and improve supply chain performance. Some of the Dot.coms had some really good ideas, and these belong to the B&Ms now.

With the Dot.coms withering, these companies are now prepared to turn their newfound expertise against their traditional competitors - that's you.

Even worse, having implemented new technology may enable expansion minded businesses that were not your competitors to move onto your turf. This sort of thing has already been happening.

Customers have changed too

Both businesses and consumers still pick up the phone to place orders, and will continue to do so - BUT . . .

With high speed DSL/Cable Internet access becoming the business norm, businesses expect to do their product research "on line" using search engines and links from other sites. Digging through the Thomas Directory and shelves of catalogs is a thing of the past - because the Internet is a hundred times faster.

Companies locate products and services on the Internet, and when they find them they expect brochures and spec sheets to be available instantly. They expect links through to manufacturers and related information sites. They expect a discussion area where they can converse with staff and other customers. They aren't going to wait for brochures and/or spec sheets to come by mail, or even by fax.

They expect a company's Web site to provide all the contact information they need - sales people, phone numbers, fax numbers, e-mail links, the works. The site must have pop-up email links and may have order or information forms or other conveniences. Your Web site is now the communications center for your business.

If you don't provide this information and communications center you won't be considered at all by a rapidly increasing number of prospects, and your established customers will start to drift away. If you have a Web site, but it is slow, difficult to use or not informative, that will have the same effect.

The danger is: your business can go into decline without your having a hint what the real reason is ("It's the economy") or that you could do something about it.

Consumers Access Will Increase Dramatically

PC penetration into the home is nearing saturation, but a new generation of low cost, instant-on, easy to use "Internet appliances" is coming in the next wave to serve those who don't want to mess with a full PC or can't afford one. When these hit the used market, cost of equipment will be pocket change.

What is Holding It Back?

It's still too hard to find what you're looking for because there is just too much on the Internet. Search engines index only a part of what's there, perhaps 25%, but they still yield up far too much junk when you search.

This will be relieved by searchable community directories, specialty directories and specialized search engines - but also by businesses learning to design and position their sites to be informative and easily found.

There is a need for these things, so they will happen, and as with most Internet things, they will happen quickly.

What Should You Do?

To remain viable, most businesses will need an effective Web site. Let me repeat: effective. It can be very inexpensive or very expensive depending on what it's supposed to do. Those decisions are between you and your consultants.

One thing is certain, you can't just write a page with Microsoft Word, (you just lost 20% of your prospects right there), and put it up on the free personal web space you got with your Internet service. This will not bring results, and may make you look like a fool.

See our article Building a Commercial Web Site For more information.

Oh, One Last Thing

A few of those Dot.coms aren't going to die. A few will learn their lessons, and learn them well. Competing with them isn't going to be any picnic either.

- Andrew Grygus

©Andrew Grygus - Automation Access - www.aaxnet.com - aax@aaxnet.com
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