The way we saw commerce working on the web for maximum effectiveness was a pretty simple model. All you had to do was three things. First, you took human contact out as far as possible. Let the website handle it Let the database provide information. Let the robot program search out the best price and then negotiate with another robot program. The idea was that if we kept people out of the equation, things wouldn't be as messy and surely wouldn't be as expensive.
The next thing you had to do to be really successful was to sell a bunch of stuff that looked, smelled, and tasted like commodities. These weren't commodities in the agricultural sense. We aren't talking about pork bellies. Instead, we're talking about a "web commodityä which is any product that is exactly the same no matter where you buy it. A book, an audio tape, a CD, just about any packaged good fall in that area. Even replacement items of certain other goods, such as clothing would come under that heading.
The third thing you did in the model that we thought would be was to compete on the basis of price or extensive selection.
Now, there's no doubt that this will work in some places, but the megaexample of this, amazon.com, is still losing money and taking on new kinds of business all the time. Other businesses, such as CD Now, seem to be heading into their final death spiral. What happened?
One big thing was the "rational human beingä economic model turns out not to be any more true on the web than it is in any of the rest of life. Sure, price is important. But only a limited percentage of people actually shop based on price alone or even primarily on price. Most of us seek a value that's compounded of the entire experience of our purchases.
What that means is that that price and selection component wasn't enough to carry us into what Bill Gates saw as äFriction Free" commerce. Folks just won't do it. Actually, they won't buy it.
The second thing that happened is that people started buying lots of things on the web that just simply weren't commodities. It turns out that net and web and database technology are great for customizing individual purchases a much as they are for automating the process. So folks are out there buying clothes, and cars, and all manner of other things. The other things include complex sales such as mortgage loans.
That, in turn, means that we're going to see lots more of the human touch in commercial websites. When either the sales process or the product is complex, people seem to expect, yearn for, and demand some kind of human contact.
So, here's an e-commerce prediction. Look for more and more websites to use more and more people and customization options despite a proliferation of price spots, negotiator spots, and other cool price-sensitive software tools. Just like everything else on the web, buying on the web is a lot like buying in the physical world because people do the buying and people are still people even when they go online.
Created/Revised/Reviewed: 3/31/01
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