I think most people would clearly prefer to buy from Joe's -- and therefore brands will become less important in the future. I also think E-commerce investors who are betting primarily on the future value of today's brands will be disappointed.
Schwartz: Tom, I respectfully disagree. All the evidence so far points to the fact that strong brand names are becoming more and more important in a world in which we can't rely on the typical visual clues. People will always need strong brands to cut through confusion and clutter.
And the brands that dominate the Web economy are not the ones we grew up with in TV commercials. There are no new brands of soaps and deodorants, cars and trucks, jeans and sneakers and such that have been made prominent on the Web. The brands that are thriving are what I call "solution brands" -- the ones that help you find the right information and services and complete tasks and transactions in a unique way. I think that Yahoo, E*Trade, eToys, Dell, and many of the emerging business-to-business start-ups are good examples of this.
Malone: I completely agree with you that, so far, strong brand names are becoming more and more important in the world of E-commerce because they are the best way we have of establishing trust. But what's coming next? I just think people are more interested in trust than in brands, as such. When services that aggregate and refine the opinions of real people are widely available, brands will be less important.
Schwartz: Well, Tom, perhaps these new aggregators become solution brands in and of themselves.
Owen: Doesn't the answer to all this depend on what you are selling on the Web? There's a difference between selling your own product and acting as an intermediary. You may have a brand that the manufacturer is selling directly on-line. Fedex.com, for example, has Federal Express behind it, and people want the FedEx customer experience. But if you are an "E-tailer" like BestBuy.com or Buy.com and simply act as a low-cost, on-line intermediary, the brand belongs to the product you are selling. A Sony microdisc player is branded Sony regardless of whom you buy it from. In these markets, some branded intermediaries are already having a tough time, and things will only get worse.
What Can Go Wrong
Inc.: What are the biggest mistakes that the dot-coms are making today?
Briggs: I think the biggest mistake dot-com merchants have made in the past was pricing their items so low. Now they have two problems: They can't cover their own costs, so they are losing money. And they have set consumers' expectations for these low prices, and it's tough to ever go back.
Schwartz: Dot-coms are also spending prodigious amounts of money blitz-marketing their domain name, as if a general awareness of their brands were the only important factor. Just because a brand is well-known doesn't mean it's a strong one. Look at Music Boulevard versus CDnow. Everyone knew the names, but no one knew why one was better than or different from the other. So they merged. Then the merged company couldn't even survive on its own -- it was swallowed up this year by Columbia House.
McLemore: I think the biggest mistake of dot-com companies today is not satisfying the customer. For instance, eToys was famous last holiday season as the poster child of perfect customer service. A few other sites, however, evoked so much rage that their own customers launched special anti-dot-com Web pages in protest.
Also, strange as it may sound, many dot-coms aren't spending enough on technological infrastructure. It isn't always easy: just ask the folks at eBay -- an auction site notorious for its technological hiccups. Sites need enough sophistication to be reliable, quick, and friendly.
Owen: I agree. Many sites are struggling with performance and reliability. Ironically, many of the fundamental challenges with information technology have not gone away. Dot-coms also fail to invest in the quality of physical operations so that supply-chain performance is up to scratch. Many companies have the "nice site, shame about the product" problem, because they focus too much on customer acquisition and not enough on retention. Customer retention through excellent service will be the primary economic differentiator.
Inc.: Which emerging technologies will matter most to the success of Web commerce?
Schwartz: Ten years from now, I don't think there will be any such thing as an Internet company, per se. Every company will be an Internet company, and the technology will be ingrained into everything we do. Just think of all the everyday objects joining the Web and becoming Internet devices -- everything from industrial equipment such as oil rigs or factory machinery, to consumer devices such as refrigerators and children's toys, to cars and trucks. As more and more of these objects get embedded chips that can send and receive information from anyplace in the world, there will be thousands of new applications that we haven't even thought of yet.
McLemore: I foresee a huge boost for E-commerce when people become able to order anything they can imagine from anywhere on earth just by pulling out a PalmPilot.
Briggs: Technologies that save people time and money will have a big impact. The "one-click" payment used by many merchants is a good early example. On-line registries that simplify gift-buying for weddings, holidays, birthdays, baby showers, and housewarming occasions will be big.
I also think that technologies like shopping agents and alerts that notify customers when a product they are looking for is found in their price range could be popular. Those technologies essentially do the shopping for you. And if one on-line wallet standard ever emerges, it will also help simplify the checkout process and save consumers time.
Malone: In a certain sense, however, I think that new technologies will matter less than we think. Sure, all kinds of computational things will get smaller, faster, cheaper, and better. And as new technologies dramatically lower the costs of communication, many new possibilities are becoming economically feasible. But even if we had infinite bandwidth at zero cost in all parts of the world, the question becomes, What do we do with it?
