Referring to Wal-Mart’s upcoming remake of its Web site, one analyst said it will give retailing a “jolt” and another said it will “change Internet retailing.” Evie Black Dykem of Forrester Research, Inc. said it “will be the shot heard round the retail world.” When the world’s largest retailer stakes it’s claim on the Internet, many predict life will never again be the same. ”The power to navigate the world at the click of a mouse is a force that is transforming our lives like none before,” wrote the editors of Business Week (Oct. 4, 1999). A few paragraphs later, they added, “Anyone with a computer is a citizen of the world-and a richer world at that.”
The extent of the Internet’s impact on life and business can be measured by Merrill Lynch’s willingness to place at risk its sales force of 14,800 stockbrokers as the company heads straight into the e-economy. When all Merril Lynch’s explanations and assurances of protecting its brokers are stripped away, it’s clear the company sees that its future is on the Net.
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Auto manufacturers are right there, too. The move to cut costs by cutting out dealers is clear. That’s the goal. And it’s driven by the possibilities created by the Internet.
Whether it’s real estate sales or travel agencies, these are functions that will soon be Net-based.
But beyond the obvious impact of the Internet on business, such as displacing stockbrokers or bookstore clerks, it is disrupting American business. One can surmise that full employment without inflation is only possible in an Internet world where prices are actually dropping for many products and services. The deep discounts on books would not have occurred were it not for the Internet.
The individual changes brought about by the Internet are dramatic and far-reaching, but they are overwhelming when taken together. No business will escape the disruptions cause by an e-economy. Here are 11 ways the Internet is playing havoc with every business:
1. Lowering prices. A quick look around a CompUSA store tells the story. “Where are the computers?” someone asks. They are hidden away down in the back, and software is center stage along with such electronic devices as PDAs. Computer consulting firms were the first to drop hardware because of paper-thin margins. Next it will be the stores.
Whether it’s for computers or airline tickets, the ability for customers to use the Web to “shop” is unequalled.
Inflationary pressures are weak, even with full employment and high consumer demand, thus challenging a near sacred economic dictum. Is the Internet playing a role in keeping prices down?
2. Reducing costs. Whether it’s the ability to handle more business with fewer people or being able to do it faster, the costs associated with doing business are coming down.
For example, graphic design firms have long relied on what are called “stock photos” for brochures and ads. This is high quality photography that is purchased on a one-time basis for specific projects. The Internet has changed the picture. Not only can stock photos now be downloaded, they can be purchased for a fraction of the former rental fee. Graphic designers now have a broader selection available for a lower cost.
Even the use of basic e-mail eliminates the need to send materials by mail or using a delivery service.
3. Extending reach. In one 12-hour period, we received two inquiries from magnet manufacturers in China asking us to consider selling their products. Quite obviously, they had entered “magnet” as a keyword and turned up our “magnet marketing” concept.
Perhaps as much as any single Internet site, ebay.com has changed the way consumers and business persons look at the issue of location.
4. Giving customers control. Perhaps the most stressful change for many businesses is the fact that customers no longer look to them for product-type information. Today, because of the ability to do extensive research quickly via the Web, customers are informed before they access a dealer. Automobile sales is a good example. Customers now arrive in the showroom having made their buying decisions in advance and knowing what they are willing to pay for the vehicle of choice, and they resent having to encounter inept and overbearing salespeople.
This has changed the role of the salesperson. No longer the “persuaders,” salespeople are now facilitators. The most successful are those who identify what customers want to accomplish and then help them achieve it.
5. Eliminating middlemen. Distribution channels are changing rapidly. While it is known today as disintermediation, let’s call it what it is: cutting out the middleman. Why shouldn’t you get your next car loan via the Internet if you can save money and do it quickly? Although a primary goal is to lower costs, an equally important objective is getting closer to the customer.
Being “nearby” doesn’t mean that you’re close to a customer. The Internet is quite different because the focus is on the information provided by the customer. The person getting a car loan from an Internet lender will be afforded other opportunities to do business based on the data supplied. In effect, the Internet bank may understand the customer better than the one with bricks and mortar.
6. Broadening choices. Someone looking for a digital camera would never expect to find all available models in one store, let alone evaluation reports on each one. But because of the Internet, we’ve come to expect a broad range of choices. In fact, we demand it and we feel short-changed to shop in a store where we have a narrow range of choices.
7. Demystifying sales. It may not be popular to discuss it, but selling has been based on guiding, directing and influencing the customer to make a particular buying decision. Salespeople were happiest when they held the reins. Having visited a variety of Web sites, customers are loaded with data and information, and with all this the mystery is drained from the sales process.
The fallout from this is earth-shaking. Face-to-face selling is in jeopardy. Not in every industry and not everywhere, of course, but customers have discovered that they can negotiate easily and successfully for everything-from hotel rooms to homes-on the Internet. As a result, watch for a backlash. Instead of wanting to deal with “a live human being,” the trend will be to choose technology rich venues where a person does not intrude in the process.
8. Making information essential. Perhaps one of the most far-reaching changes brought about by the Internet is that the customer expects to receive worthwhile information, not glitzy ad copy. On every page of a large insurance organization’s Web site is a “Buy Now” button. In fact, it’s the first item the visitor encounters. What’s painfully obvious is the company’s inability to understand the customer, even though the site is dripping with words like “customer commitment.”
Web site visitors are not there to be sold; they are there to be better informed so they can make the best possible buying decisions.
9. Redefining service. The concept of service has changed. Just saying “we’re here to serve you” doesn’t connect with customers. The issue is now serving customers when, where and how they want. There was a time when we would wait somewhat patiently in a line at the bank or McDonald’s. Not any more. If we go into McDonald’s or Dunkin’ Donuts, we’re upset if there’s someone in line ahead of us.
10. Altering communication. Several years ago, faxing was faster than e-mail. There were times when it took several hours for someone to receive an e-mail. Now, at most times of the day, the Internet is so fast we can conduct actual “e-mail conversations.”
Rather than a send-and-wait-to-receive process, communication has been elevated to instant send and-receive, a seamless updating that does not provide for “pauses” for action to take place. This may well be the source of the stress that plagues so many workers, and it may also be driving the desire for new ways to be wired in a wireless world. The customer, internal or external, who doesn’t get an instant response feels abused.
11. Upending the buying process. Customers are performing their due diligence before they let it be known they are in the market to make a purchase. It might even be called guerrilla buying since the customer doesn’t surface until the moment he or she is ready to make the purchase.
This is why information-rich Web sites have emerged as an essential marketing tool. The goal is to connect with the customer in a manner that fits. In effect, marketing is the most critical element in the process. Its job is to send “signals,” keywords or images that serve as hooks to attract customers so they can be brought into a company’s orbit willingly. The primary job is no longer to be “out there” trying to make sales because today’s prospects remain mostly invisible, surfacing only when they are ready to reveal themselves.
John R. Graham is president of Graham Communications, a marketing services and sales consulting firm founded in 1976.
The company’s web site is www.grahamcomm.com.
