We're in the Internet Age. Well, this is the way everybody in the fashionable business press thinks, including the scores of various magazines devoted to the Internet. Everyone speaks of a global village, forgetting the fact that the penetration rate for computers in the U.S. is still around 50% (at the household level), and most of the world doesn't have a telephone. So much for the idea of one world, via the Internet.
But as you can tell by the fact that I am a firm believer in the uses of the web (this web site is my most credible demonstration of this belief), I have never been one to believe in the idea of a new concept for internet marketing, or really for new business models as a result of the internet. This flies in the face of most web observers who become lyrical over the ideas of how the web totally flips upside down the business models as we know them. Read any issue of Red Herring, Wired, or other types of magazines to hear an almost spiritual tone towards the web.
But most web-based businesses are built around business models we know very well in marketing. Take, for instance, the advertising model that many web businesses are built on (think magazine and TV). Or the old "sell them the server and give them the client or plug-in" (a la Real Player, etc). Doesn't this sound very much like the razors and blades story of long ago? Oh yes, there's the build-to-order business (Burger King had a slogan in the 70's that went "Hold the pickle, hold the lettuce, special orders don't upset us, all we ask is that you let us have it your way"). Or the models based on the coming together of buyers and sellers (think eBay), that has been around for years in the so-called physical world (think flea markets and McKesson).
My point is that the basic ideas of marketing haven't really changed and we've seen most if not all of these ideas before. Sure, branding is important on the web, but so has it been since the early 1900's when soap was branded (Camay, Ivory, etc.). In fact, I have yet to see one idea on the Internet that really raises new questions in marketing. To underscore this point, look through the last 3 years of any respectable marketing journal and you will find only 1 article about the web (and its not because academics haven't thought about it, there just isn't anything new to study).
Recently, people are even questioning the conventional wisdom about the cost savings accruing to web based companies. In this month's issue of Money Magazine, for example, several myths about web based businesses are dispelled ("Internet Myth and Reality," December 1999). For example, Myth Number 4, "The Internet is a superior business model because costs are so low." Reality: Whatever costs are squeezed out from by eliminating inventory and carrying costs are often overwhelmed by huge advertising and marketing costs (Ameritrade, for example spends 27% of revenue on advertising, while Merrill Lynch spends 2%).
Also, many web business that are supposedly doing away with bricks and mortar are finding that order fulfillment is the name of the game. So what are they spending money on these days? Well, Amazon, for example, is building distribution centers so that they can get books to you faster. What are these distribution centers made of? Bricks and mortar!
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