Lecture: E-Commerce hurts retailers
By JOCELYN ALLISON
News Writer
Buying plane tickets or books online can be simple and easy for the everyday consumer, but it can pose a threat to travel agents or bookstores, according to Stan Taylor, managing partner of technology research and innovation at Andersen Consulting. The business exec spoke Friday in the Jordan Auditorium of the Mendoza College of Business on the influence of e-commerce on consumer shopping.
Taylor spoke about the "threat of perfect information" to businesses trying to make money off Internet sales, explaining that in a perfectly efficient marketplace the consumer would know each company's best price and would always be able to choose the cheapest option. He said that although this does not exist in our current economy, on-line bargain finders have brought consumers much closer to achieving this level of information by increasing price visibility.
"Anything that makes the market more efficient is a threat," Taylor said. "Whoever's the winner today in the physical world is going to be threatened. Barnes & Noble were fat, dumb and happy before the Internet came along."
He said that the market can really only support two or three competitors, and that the most successful companies are the ones that are already successful in their retail sector and decide they want to cross over into their neighbor's retail sector. They can do this by maintaining a Web site.
Taylor outlined a few ways that companies may become successful in the electronic marketplace. Some companies try to build a relationship with a customer such that it makes it difficult for the customer to leave, Taylor said, thereby "maximizing entanglement of the customer to achieve better than average margins."
He also said that companies can become low-cost manufacturers in order to get the most sales or become continuous innovators with brand new ideas for products, though this may not always be the easiest thing to do.
"The problem with e-commerce is that soon as you do something everyone sees it and they can copy it," Taylor said. He used Amazon.com, the country's largest Internet book-selling company, as an example. He said that many companies tried to follow in the footsteps of Amazon.com, yet none were very successful.
Taylor said there is still question as to how successful Amazon.com is. "They don't make profits," he said. "They are only successful in market capitalization. They were first, and that's why they survived."
Taylor said he believes the effect of the Internet on commerce is huge, and that the next wave lies in wireless communication that specializes in "location and context customization."
"What should the mobile phone do at the beach?" Taylor asked. New technologies are working on making the mobile phone do the same job as the hotel phone, which is to give the customers the information they want based on the environment they are in at the time. So if you are at the beach, Taylor said, instead of receiving faxes from the office you could receive a listing of drinks from the bar or a schedule of volleyball games for that afternoon.
Taylor said the hand-held device of the future would have three capabilities that will impact commerce: the ability to sense the environment, deliver service and initiate action. "Think of your phone as a programmable remote control for the world," he said.
Taylor said it would also be possible to bring up product comparison information on the spot, so that a wireless device could act as an "unbiased super salesman" providing information used to make an informed purchase.
The new wireless technology will go beyond merely allowing you to browse the Internet or read the newspaper on your mobile phone, Taylor said. "These are first-generation ideas that are so lame. New technology has new capabilities. We want to be able to do things you would never normally be able to do on the Internet."
Taylor added that these new technologies will not only reinvent the way the world does things to become more efficient, but they will revolutionize the way people do business in order to successfully "unlock the efficiencies in the marketplace."
All News Stories for Monday, December 4, 2000
