Re: Barrier to entry.

From: Kim Brooks <kbrooks_at_bardo-brooks.com>
Date: Wed 29 Mar 2000 23:39:04 -0800

ROB FRANKEL WROTE:
> Technology is no big deal. It may be convenient, but
> it's hardly the stuff that's gets people to stand up
> and swear allegiance. Besides, name one web technology
> that was supposed to be invincible and hasn't been
> surpassed since the claim was made.

Ding! You hit a hot button. I must disagree with this
naive, old-world disparagement of technology (eg, "Web
server what? We've got a cool site, leave the rest of
those pesky details to that pimply guy in MIS").

Speaking of the Internet specifically here -- Whatever
value you front to users, it's still based on one of
two things: service, or technology. Translations:

  "We guarantee your privacy & security"
   (our servers our secure)
  "We guarantee it's in stock when we say it's in stock"
   (our server talks real-time to inventory)
  "Always open, always fast, 24 hours a day."
   (scalable, reliable server)
  "Confirmation on every order status"
   (automated order tracking & communication pieces)

Hullo! All these statements -- reliability, customer
service, communication, inventory, availability -- ARE
ABOUT the technology. Just because they are in plain
english instead of geek-speak, don't be fooled. You
don't think that scalability matters to a brand? Ask
Toys-R-Us about the lesson they learned when their
marketing outpaced their server capacity -- they had
denial of service, orders promised on out of stock
items, and mucho bad press to the point that their REAL
WORLD stores and STOCK PRICE suffered. Gee - suddenly,
the traditional gulf between your marketing department
and "the geeks" can actually affect your customers, and
brand.

Look at FedEx - their edge online is the tracking
technology. Getting email updates of your package
progressing across the US is great customer service -
based on great technology. Their ads tout the fact
that you -know- where your package is, down to who
signed for it. No, they don't say, "Look at our
tracking technology and network and scalability..."
They talk about the -application- of the technology and
the problem it solves. But it still comes down to
technology.

Amazon.com has a significant advantage in technology,
and yes, this is integral to their brand:

  - You buy a book, they let you know when that author
    publishes a new book.
  - You buy lots of Sci-Fi, they target mailings based
    on that pattern.
  - You buy a mystery novel, they show you what other
    books fellow mystery buyers like.
  - They notify when the book ships.
  - They help you find out-of-print publications through
    their network of used book suppliers.
  - They special order bizarre pubs and can deliver them
    as fast as a standard order.
  - Buyers complained about filling out redundant forms;
    they invented a simplified OneClick solution to make
    impulse buys as easy as possible. (I don't think it's
    worthy of a patent, but that's a different thread).

Every last one of these goodies is CORE to their
success & image -- targeted advertising, customer
stroking, special ordering, order tracking, simplifying
purchases, searching across hundreds of physical stores
for a single used book. These are all functions of
technology. No company could enter the market and make
the same claims to the same level of customer service,
selection, delivery time, and price, without
significant investment in technology. I don't think
Amazon is infallible, and I could spend time critiquing
their odd brand choices (don't get me started on
affiliate programs or their market valuation!) but to
disparage their technology as their least significant
asset is just plain naive.

Yes, Rob, ecommerce is ecommerce is ecommerce when
you're talking catalogs and price-based decisions. In
that realm, barriers to entry (in terms of technology &
capital costs) are lower. But when you build your
brand on customer loyalty and customer retention, there
are significant costs involved - in thinking out the
customer patterns, the business model, how to translate
that to a database and script, building in redundancy
and scalablitity, and continually evolving the model.

Kim Brooks

Internet Marketing
kbrooks_at_bardo-brooks.com
http://www.bardo-brooks.com




Received on Thu Mar 30 2000 - 01:39:04 CST