In terms of costs, online retailers seem to have obvious advantages over bricks and mortar retailers. Traditional retailers need to spend $3 to $5 million to open a store. They usually can only pull from a 25 mile radius, meaning they need to make a fair margin. While online merchants can set up shop for less, and sell internationally, many have set prices so low that it is impossible for them to make a profit. Therefore, good deals consumers now expect won't be sustainable over long haul. Only ones with deepest pockets can hold out, and one begins to wonder why they would want to.

Retailers are dealing with online sales in different ways. Barnes & Noble made mistake of not being first in their category to get online. Like so many other traditional merchants, they finally realized they could not afford to ignore brand reinforcement of Internet. Now they charge more for same books in their bricks and mortar stores where overhead prohibits Amazon-like bargain prices. It seems they are betting that instant gratification of talking to informed sales help and being immediately able to read a selected book in soft in-store chairs is worth a higher price. They may be right.

Meanwhile, like Amazon, a handful of online merchants realize that they need to emphasize superior service. Although low prices might bring a customer to a site, discounts along won't necessarily keep them there or get them to return. "We recognize we're a price leader, but we don't say to ourselves every day, 'Let's just slash and burn," says online electronics retailer NECX' director of operations Brian Marley. "I think it would be irresponsible for all of us just to compete on price, without doing heavy lifting that goes into creating a value-added service," Marley told The New York Times.

One very innovative online approach comes from Fruit of Loom, which provides not only its own t-shirts and underwear but also it competitors inside its e-commerce storefront. The company got 24 of nation's top 30 t-shirt wholesalers in $5 billion industry to commit to its electronic commerce platform. Fruit of Loom provides consulting and software to t-shirt wholesales setting up online stores. The stores' customers then search for t-shirts from any number of manufacturers. Fruit of Loom only demands that its products are first replacement option offered when another company is out of stock. Online, a store that provides complete information from a variety of sources can be more valuable than a single site that provides only its own or partial information.

NECX lets customers compare their prices to other stores on same item. Customers were comparing prices anyway, they reasoned, why not help them. The result? NECX is losing customers but making money. Sales are up 20% even though comparison engine is site's most common point of departure.

Still, bricks and mortar merchants have distinct advantage of giving customers what they want when they want it -- an experience that can supercede low price. Online shopping, no matter how pleasant, cannot (yet!) provide immediate reward of buying something and then wearing or using it an hour later.

There is a long way to go before Internet commerce shakes out. At this point I'm betting that at end of road lowest price won't be winner.

Conglomerates May Become Extinct

People have had enough of businesses concerned about their bottom line. They are becoming increasingly concerned about their own needs. They are even now turning away from those who fail to recognize this. Business success in future will depend heavily upon effective customer support provided immediately upon request.

Conglomerates may be dinosaurs, so huge, so driven by their own inertia, they will disintegrate back into smaller parts from which they were created. Such companies talk of customer relationships, but often do all possible to avoid any semblance of one-on-one customer support. Smaller firms can be responsive. Those who are, will outperform those who are not.

I am excited about future for Cyberpreneurs. They will understand they need their customers more than customer needs them. Untroubled by constraints of contemporary business practices, they will see responsiveness to customers as an essential fundamental of their business. This characteristic of itself will give them a competitive edge over large businesses that do not.

The Future Is Yours For The Taking

One by one, creative people will consider ways in which conglomerates produce and deliver products. They will then discover a way in which they can do so more effectively. The much larger company will hardly be aware of tiny loss in revenue. But given many such losses, bottom line will begin to erode.

Completely new business models will emerge. They will seem so right, so perfectly attuned to both needs of businesses and consumers, we will wonder why they did not appear much sooner.

There will be a return to a "Rural," rather than an "Urban," pattern of living, one independent of where you choose to live. In this "reversal," there will be a return to individuals being valued. Once again, as was so prior to Industrial Revolution, people will be both producer and consumer, making a significant contribution in both roles.

The Real "New World"

I continue to hear Web is not real. That it is nothing more than herds of impulses stampeding about on copper or optical cables. What is reality? I will leave this to philosophers. But there is no question in my mind; Web is real. A new reality, at that.

You can feel awesome power and unlimited resources surging from collective dynamic of millions and millions of people world over. People who are real. Our interaction with each other is real, and now unlimited by national boundaries. The Web itself is but a tool. Not unlike telephone, but magnitudes more powerful. It facilitates ability to interrelate, to communicate one-on-one. And we will do so in ways not yet imagined.

Welcome to today's "New World."

(Taken from "Your Path To Success" to be released in September, 2001) __________________ *"Beyond Information Revolution" by Peter F. Drucker, "The Atlantic Monthly," Oct 1999, p47-57.