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It is an ominous sign if the analysts start dictating how large
organizations run their business with the threat of bad press held over
their heads. Of course, there are some who will succumb to the pressure and
continue to try and "keep up with the Joneses". But the savvy and smart
businesses will realize how to integrate internet strategy into a long term
positive.
Putting all of your eggs in one basket is never a good approach. Imagine if
one of the major hubs in the Internet wheel were to experience a major
outage for an extended period. Sure the technology would eventually be able
to route around it, but how much revenue would be lost and how many people
would be idled by even a two or three day major outage. Would CEO's gamble
and put too much reliance on the online sales portion of their company at
the risk of stockholder anger when they explain how much revenue was lost
due to a computer issue they have no control over fixing or the timing to
restore it?
I think part of the rush to online is driven by several forces:
1. As yet, no government intervention on taxing. Easier to do business this
way for now.
2. Brand recognition. As the online ordering phenomenon becomes even more
wide spread, the companies who have a known reputation and brand name people
recognize will benefit from repeat business even more than today, when you
can physically see competing product on the shelf. If you are used to
ordering from company X, and cannot even see Y or Z's product without asking
for it yourself, these companies will create even more of a loyalty and base
of sales.
3. Blocking new competitors from establishing a foothold based on #2. See
EToys versus ToysRUs, and the latter's rush to get a site up and running,
and their Christmas problems by not working out the back room operations
properly.
4. People's continuing expectation of faster and faster service. I call this
the "fast food" mentality. The consumer has been led down the path to
continue to expect faster and faster service. Unfortunately, this has come
GREATLY at the expense of quality and customer service. I can't tell you how
many vendors I have dealt with that produce a product or service at 60%
quality or accuracy, and when questioning this, I've been told "You have to
expect that people will make mistakes", or worse yet, just to shrug it off
and say "it's just business, these things happen". The speed is sacrificing
the quality and this again will catch up to many organizations eventually.
5. Companies assumption that going online will drastically reduce overhead
and support staff to improve the bottom line quickly. This is somewhat true,
or companies wouldn't look at investing the capital, but how long will the
consumer be happy to have the data entry and order followup function
offloaded onto their backs?
I agree with Earl in that the smart companies that will survive any downturn
in business or computer outages or recession or even a continuing boom, will
be ones that thoughtfully and expeditiously integrate all of their sales
outlets. These are the companies I would look to invest in for the long
term. But the mania of getting caught up with technology for the short term
will definitely hurt some big boys before it's all over.
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