Your Business Online | Professional Jeweler



March 20, 2000
Dangerous Internet Myths
The rules of doing business have changed in the new economy

Internet years are like dog years – seven for every one human year. It's developing so quickly e-commerce companies must constantly rethink their strategies. Complicating this are eight myths of the new economy.

These myths are especially tricky, says Computer User magazine, because they once were true. But what was true in 1995 is "grossly false" today, the magazine says, and an illustration of how far the medium has come.

Myth #1: First to Market is Victorious
This was true when the Web was shiny and new, but less so when a new e-business can disappear among a slew of competitors. Better to learn from others' business strategies, successes and mistakes. In an industry that values constant innovation, first-to-market Web sites may be most likely to be outdated.

Myth #2: If You Build It, They will Come
As e-commerce pioneers have learned, Web sites must be aggressively marketed with synchronized campaigns on the Internet and in other media.

Myth #3: E-commerce Is Cheap
Customers expect more than static Web pages. According to a 1999 study, expect to spend at least $1 million just to get a Web site developed and launched, a figure projected to rise 25% over the next two years. To compete effectively, expect to spend another $2-$4 million, and up to $20 to become a major force in a specific market.

Myth #4: E-commerce Systems Are Plug-and-Play
They're more sophisticated now, but expect to spend lots of time (read: money) tweaking and customizing the technology. "Customization can eat up a budget," says Mark Cooper of the Athens Group, a technology consultant.

Myth #5: Top Brand-Name Sites Will Prevail
Brand names do lend credibility but, according to Forrester Research, they don't translate into sales. Sites for such brands as Coca-Cola, Nike and Levi's are registering minimal traffic while less-popular brands' sites set records. Loyalty is also fickle: Both eToys and Toys 'R' Us lost customers this past Christmas when they were unable to deliver ordered toys.

Myth #6: Online Shopping Is Not a Personal Experience
Personalization software is proving otherwise. Many sites now offer immediate response to inquiries, searches through "intelligent" bot agents, access to experts through special forums and personalized content. At Garden.com, customers can design a garden based on the climate and soil in their yards.

Myth #7: E-Commerce Is Global
While you can call up a Web site from anywhere, e-commerce remains fairly regional in transactions and currency. On the flip side, companies must decide how to handle the fulfillment issues shipping, paperwork, customs, taxes and currency conversion that attend unexpected international orders.

Myth #8: Any Web Presence Is Better Than None
It's better to wait than to slap up a poorly planned site. Besides the technical and logistical nightmares of system integration and alignment with business strategies, rebuilding costs can be high. Don't rush it. "We're still in the early days of the Internet," says Mark Resch, COO of CommerceNet, a consortium of e-commerce businesses. "There are lots of fortunes to be made and lost."

- by Mark Dixon