Modeling On The Web For Money
By Michel Fortin
Posted Sunday, August 29, 2004
A question I'm often asked is "what should I sell on the web?" There is no doubt that this is the vaguest question one can ever be asked. Everybody has a unique perspective on things and a unique set of goals. If finding something to sell was as easy as the question implies, then people could sell pretty much anything they want. But the sense I'm getting from most of these queries is that people are looking for winning products or businesses.
A great advantage to doing business on the web is certainly the number of new opportunities it presents to entrepreneurs and business owners. The Internet targets a global marketplace. It saves time and money. It reduces paper-based information. And it significantly shortens cycle times -- such as the time for the awareness of a product to reach a larger audience than in the brick-and-mortar world. But another advantage is flexibility.
New business models are appearing each day on the web -- most of which were never thought offline. In fact, several dot-coms are completely revolutionizing the way we do business. It's not surprising as life on the web is five times faster -- creating, reinventing, tweaking, testing and measuring results, all done quite rapidly, is probably *the* advantage of the Internet.
This week in my ecommerce college class, my students learned about two recent yet important phenomena occurring as a result of doing business online. One of them is called "disintermediation." In essence, this is the result of companies going online and dealing directly with the ultimate consumer -- leapfrogging over intermediaries in the process (e.g., wholesalers, distributors and retailers). Take Dell computers at (http://www.dell.com), which boasts of direct-to-consumer pricing as a competitive advantage.
But even giant Dell is not safe from this phenomenon. Companies both large and small are contemplating the move to the web. With the help of the Internet, smaller companies are, as a result, gaining serious ground over their larger nemeses. Take the case of small Georgian company StupidPC of (http://stupidpc.com/) -- now public, it has become an ISP, an ecommerce store and a web host, in addition to being a computer manufacturer. The latest stats show 180,000 visitors in November -- mover over, Michael Dell!
This goes to show that another benefit to online business and Internet marketing specifically is the fact that one can look, act and profit as large as the big guns. But the challenge isn't over yet for larger companies. Disintermediation has, of course, angered some companies and several lawsuits have resulted -- such as distributors and retailers crying foul over lost sales.
I believe this was the case with Levi Strauss. While not stated in those exact terms (and one's guess is as good as any other), David Gumpert of (http://www.circle.com) wrote an interesting ClickZ article about Levi's recent decision to become recalcitrant with direct online selling, as they are now redirecting customers to partnering online retailers like JCPenney (see (http://gt.clickz.com/cgi-bin/gt/cz/cz.html?article=1231)). Disintermediation itself has open a Pandora's box, particularly for the music industry (see (http://news.cnet.com/news/0-1005-201-341047-0.html)).
But the Internet is an unbelievably fertile ground for new product and business ideas. Other companies have even used it to counter the challenges of disintermediation -- take the case of Ethan Allen at (http://www.ethanallen.com), which has purportedly developed an effective conflict management policy with its retailers (called "designers") with the use of the web.
Nevertheless, the second phenomena we see occurring is one called "re-intermediation." Unlike the reduction or complete elimination of distribution channels, the Internet also helps businesses to create new ones -- creating a new kind of intermediary in other words. After all, (http://www.Amazon.com) doesn't publish any books and (http://www.ebay.com) doesn't manufacture any goods (see (http://www.builder.com/Business/Ecommerce20/)).
Today, ecommerce is as easy as 1-2-3 -- with firms like online drop-shipping management company VStore at (http://www.VStore.com). With their customizable storefront-in-a-box, virtually anyone can become an ecommerce-enabled business in an instant. And that's not all. VStore also acts as an intermediary (perhaps "agent" may be a better word), enabling would-be suppliers to feed their established network of online storefronts.
Nevertheless, virtually all products sold in the offline world can be or is being sold online. If the search for a unique kind of product to be sold on the web is a concern for some, maybe a new business model or distribution channel could be the answer. In short, one can simply create a new breed of business -- many now exist in which some as young as teenagers have made fortunes (see (http://www.news.com/Perspectives/Column/0,176,355,00.html)).
The moral? When searching for what to sell online, don't stop at products or services. Look at processes just as well. You never know -- a new, profitable business model may be lurking.
About the Author
Michel Fortin is an author, speaker and Internet marketing consultant dedicated to turning businesses into powerful magnets. Visit (http://SuccessDoctor.com). He is also the editor of the "Internet Marketing Chronicles" ezine delivered weekly to 100,000 subscribers -- subscribe free at (http://SuccessDoctor.com/IMC/).
