It's not surprising that so many big-name Web retailers and media sites have bitten the dust lately. There have been many factors at play. Here are some that don't often get mentioned:

The biggest of many big fallacies in the e-retailing arena has been the mantra that the Web is global. Baloney. From a retailing standpoint, the Web is a strip mall.

How many pet stores, video stores or CD stores can a strip mall support? Two at best, if it has a huge territory all to itself. The Web market may seem huge, but consumers" ability or desire to try new things isn't. If something works for them, they stick with it.

The second huge fallacy is the arrogant belief that "America" equals "The World."

Corporations have been seeking global brand hegemony for at least 10 years, and the Web seemed to offer them the perfect tool. But the Web has been a huge bust for them so far in this pursuit.

Putting a media brand name on the Internet doesn't make it any more likely to spread its power or reach than distributing physical copies of its product did before. Why should the media giants be shocked when their Web ventures hemorrhage money and eyeball counts flatline after a few months? Start with the fact that they exist only in English.

Think Outside the U.S. "Box"

Spend time in Europe, and you quickly realize that even brands as widely known in the U.S. as Amazon.com don't register so much as a "huh" with most Europeans. They have their local variants. Dot-com is hardly meaningful to people who are used to ".de" or ".co.uk."

IBM Corp., undeniably a global brand, ran commercials in France last fall for its newest ThinkPads -- but they were the original U.S. spots dubbed into French.

If someone with that kind of cash, reach and recognition can't understand why the French were appalled that IBM didn"t bother to create for one of the world"s richest markets an ad that spoke their own language, culturally or linguistically, how can we expect Web retailers who think "It's a small world after all" to succeed?

Here are the lessons: First, all business is local. Even a behemoth like Wal-Mart knows that you have to conquer one town at a time. The Web doesn"t change that equation.

Second, know why you're in business. It seems ridiculous, but did the people behind, say, Pets.com really know about the pet business, or was it a case of "Hey, let's put up a pet-supply Web site"?

Like lots of other e-retailers, their failure at least implies that they didn"t know what consumers really wanted. Finding a rare book is a valuable service, but saving me from having to go to the pet store to buy some cans of cat food each week isn"t.

It sounds like heresy, but in the biggest sense, the Web has changed nothing. The world is still a tough market, people are still stubborn and parochial, and a business needs to give people a compelling reason to patronize it.

Ideas are easy; implementation is hard. Too bad millions of Americans lost billions of dollars on Wall Street over the past few months because too many companies forgot the second part of that truism.

» posted by ITworld staff

Computer World

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