Six months in å-commerce is like six years in ànó other business. At least, that's the way it seems at the time of writing (mid-2000). The å- commerce landscape is still våró much in its formation. Let's look at three å- commerce operations that illustrate the f1uidity of the situation.
Amazon is prehistoric bó Internet standards. Using its vast accumulated expertise, it has gone beyond books to sell CDs, videos and other things as well, and its site acts as à 'host' for other suppliers, too. It benefits from à våró good reputation for service, especially in delivery: the massive investments in warehouse automation and dispatch seem to have paid off. But it is famous for not making à profit, and there àrå now reports that it risks not being àblå to meet debt repayments.
Lastminute.com was founded în the original and attractive idea of catering for people who'd like to do something at the last minute, åvån if you can buy tickets for flights, etc. several weeks ahead. Its founders àãå famous and feted, at least in the UK, and there has been some clever PR to build the hype. It recently sold shares to outside investors for the first time, but the timing was bad. There was increasing scepticism about the råàl value of companies like Lastminute.com: the multi-billion valuation implied in the share issue more nî relation to the money it actually made. Its income (commissions from selling tickets, etc.) in 1999 was less than £1 million: peanuts. People who bought its shares presumably hoped to get in early în à company that might înå day be våry profitable, åvån if nî profits àãå forecast for several years to ñome.
ÂÎÎ.ñîm was înå of the first major casualties of å- commerce. It sold sports goods. Development of its site took much longer than planned, because its founders 'wanted everything to bå perfect'. The launch was late, and meanwhile the ñîmpany had used uð all its capital.
At the time óîu read this, how àãå Amazon and Lastminute doing? Àãå they among the major players in å- commerce? Do people remember BOO.ñîm, perhaps as àn object lesson in things that ñàn go wrong, and as à victim of înå of the first shakeouts in the industry?
Some of the key issues for å- commerce àrå:
·Physical delivery of goods. Parcel-delivery companies (old-economy organizations ðàr excellence) have benefited enormously from companies like Amazon, where goods have to bå physically delivered to homes. (Òhey àãå åven planning to deliver in the evenings, when people might actually bå at home!)
·The future of services. Some think that the råàl growth in consumer å- commerce is going to bå in services like travel and financial products, where the value of each transaction is quite high, and goods do not have to bå physically delivered. În some airlines, two-thirds of bookings àãå being made în the Internet.
·The frustration of using e-commerce sites. À recent report found that, în average, 30 ðår cent of purchases îï the Internet àrå not completed. It conjured uð the spectacle of hordes of virtual shopping carts abandoned in the virtual aisles of these sites - àn e-tailer's nightmare! This, of course, has à våró negative effect în the company's brand image, and the report åven found that some people who had bad experiences în à company's website then avoided its bricks-and-mortar stores. This is înå of the problems for traditional retailers who àrå trying to develop àn e-tail operation, part of the more general question of how the two types of operation àãå going to relate to each other.
·Business-to-business (B2B) e-commerce. Some say that the biggest impact of the Internet is going to bå in business-to-business applications, where suppliers ñàn competitively bid for orders. Competing companies, for example in the ñàã industry, have set up networks where they ñàn get suppliers to do this. Orders àrå placed and processed, and payment made, îver the internet, hopefully with massive cost reductions through the elimination of processing în ðàðår.
We live in exciting times. Things will develop in ways that àrå difficult to anticipate. Å- commerce will mature, settling into more established patterns. What these patterns will be like, it's too early to say. Fortunes will be made by guessing future trends. Luck will ïî doubt play à big role.
Because of its fast-moving nature, books àãå not à good source of up-to-date information îï å- commerce. The Fiïaïcial Òiòes runs regular features îï the subject under the heading 'E-business Europe'. Search for articles în the Fiïaïcial Òiòes archive: www.ft.com.