January 17, 2000
The Do-or-Die Quarter
Competition is getting fierce in the e-tailing world
With the holidays past, look for some on-line jewelers to merge, form partnerships or change their concepts to avoid going out of business.
A top tactic is focusing on a smaller niche, reports ZD Network News. Instead of trying to be everythingjewelery.com, a Web-based retailer may reinvent itself as something like onlypearls.com or rubiesrus.com.
"Instead of being a category killer, offer a smaller but more consciously chosen selection," advises Jupiter Communications analyst Mike May. "It's like Martha Stewart. She may only carry 11 lamps, but any one of which reflects her taste. Consumers will not be looking for endless selection,
but how to find the right product."
Other companies may seek to partner with off-line retailers as, for example, CheckOut.com did by recently agreeing to serve as the on-line arm of the Wherehouse chain of record stores, or Global Sports' deal to run the on-line store for the Sports Authority chain.
The problem is that, in many e-commerce categories, there are simply too many businesses chasing the same dollars. More than half a dozen firms each have sprung up in the beauty, furniture and pet supplies categories.
"You can't have 10 or 12 leading retailers in a particular category," says Elaine Rubin, chairman of Shop.org, an industry group for on-line retailers. "At the end of the season, those who have built loyalty, those who have built databases, will be in a position to acquire or merge with smaller companies or even one the same size."
Companies that didn't rank high during the big Christmas buying season will be forced to choose among these options when they run out of venture capitalist funding. "We'll see a lot of companies that just go away," said Allen Weiner, a Nielsen/NetRatings analyst. "There may be some consolidation, but companies will disappear off the face of the Web."
- by Mark E. Dixon