NEW YORK--Now that consumers can cross-check prices at the click of a mouse, online retailers will have to differentiate themselves through product offerings, partnerships with popular Web sites, brand recognition, and other factors if they are to survive, the chief executive of CNET: The Computer Network told an audience at PC Expo here today.
Unfortunately, CEO Halsey Minor noted, it won't be easy. While the Internet has freed local and specialty merchants from many physical and economic constraints, these merchants must now contend with new parameters.
Although the Internet displaces the need to invest in inventory facilities, online retailing also requires flawless technical execution, Minor said. Local advertising is gone; instead, retailers have to carve out space on the most popular aggregation sites.
"It will be as brutal and Darwinian, and perhaps even more brutal and Darwinian, than business in the bricks-and-mortar world," said the chief executive of CNET, which publishes NEWS.COM.
Although the medium remains in its infancy, standard guidelines for success appear to be emerging, he said. First and foremost, retailers can distinguish themselves from the competition by the quality and coherence of their Web sites. Speed, flexibility, and the quality of data delivered to the customer will determine whether or not customers use them. Merchants also need to heavily invest in their technical facilities to prevent outages and to maintain a reliable service.
As an example, Minor said Amazon.com and 1-800 Flowers have struck a chord with the public through their delivery of the buying experience.
Distribution deals also will loom heavily in the equation. While merchants will have their own sites, most will have to tie into "vortex" sites, aggregation sites such as Excite, to tap into the huge amount of traffic that flow through them.
Price will continue to be a factor in purchasing--especially on complex products where quality differences exist--but its influence will be reduced, he said. Price checking is simply too easy on the Web. Commodities especially will gravitate toward a single price.
While still young, e-commerce is booming, Minor emphasized. By 2002, close to $8.2 billion in computing hardware will be purchased online according to conservative predictions, he said. Interestingly enough, e-commerce is taking off despite warnings in mainstream publications that credit dangers abound on the Internet.