Competing in the Information Age

Popular View of E-Commerce in 2000 Billions of consumers buying all their possessions over the net Ultimate 21st century business model: the electronic flea market Low prices kill profits in race for market share Lose money, get eyeballs, profit form IPO Set up a web site and conquer the world Home shopping dooms conventional retail Intermediaries, distributors, and salespeople are all headed for oblivion The dawn of a new era in human history: “the Internet changes everything” Credit: Dr. Michael Hammer; Copyright: Hammer & Co.

Popular View of E-Commerce in 2000 Billions of consumers buying all their possessions over the net Ultimate 21st century business model: the electronic flea market Low prices kill profits in race for market share Lose money, get eyeballs, profit form IPO Set up a web site and conquer the world Home shopping dooms conventional retail Intermediaries, distributors, and salespeople are all headed for oblivion The dawn of a new era in human history: “the Internet changes everything” Credit: Dr. Michael Hammer; Copyright: Hammer & Co.

E-Commerce in Jan 2001: Reality Sets in Revenge of the “dirt world” Delivery and customer service are non-trivial You can’t lose money forever The law of gravity applies to all stocks B2B and B2C = “Back to Banking, Back to Consulting” Credit: Doug Kinsley

The Future of Commerce

Age of the Choiceboard by A.J. Slywotzky Customers become product makers The coming dominance of Choiceboards information collection devices and customer relationship builders Dell, Mattel, Schwab, Chipshot.com

Who will Control the Choiceboards Three types of competitors are vying for the early control individual manufacturer or assembler (Dell or Schwab) consortium of existing manufacturers (MetalSite launched by metals producers) New intermediary (Point.com)

War of the Choiceboards According to Slywotzky, the victors will be those with the best-designed choiceboards (?) the most responsive supplier networks the closest customer relationships

Patterns of Disruption in Retailing by C.M. Christensen & R.S. Tedlow Essential mission of retailing Product, price, place, and time Disruptive technologies department stores; mail-order catalog; discount stores, internet retailing Profits determinants margin and inventory turnover

Earlier Retailing Disruptions Department stores - portals of their day Catalogs - virtual department stores Discount stores - low-cost, high-turnover model Shopping Mall?

Upending the Discount Stores Department stores became retailers of soft goods (i.e. products whose key attributes are more complex and harder to communicate). Most of the surviving discount stores have followed suit.

How should we expect the revolution to evolve? Repeating Patterns? How should we expect the revolution to evolve? generalist to specialist upmarket momentum from simple merchandise to complex products

Hypermdeiation by N. G. Carr Transactions over the Web involve all sorts of intermediaries. A future of “hypermediation” Volume and efficiency Two Profitable intermediaries owners of content sites infrastructure company

What is Choiceboard Choiceboards are interactive, on-line systems that allow individual customers to design their own products by choosing from a menu of attributes, components, prices, and delivery options.