Determine What Works on the Web
Profits matter. Cool ideas, devoid of a practical business plan, are worthless. Having lots of Web traffic without revenue is a stupid waste of capital.
Not all the hot air has yet blown out of the Web. There are many sites that are burning up their capital in a last gasp. Not all the online-grocery sites have gone under. They all will soon, but you have to wait for their death rattles. Many of the sites that give away news and information, without visible revenue, are still around. It may take another six months before their investors pull the plug.
When they have all gone, what will be left of the Web? What will survive? It seems that there are a large number of solid, profitable sites.
Let's categorize them:
Parts. Any established business can profitably provide replacement parts through the Web. Look at Hoover.com, where you can find replacement parts that are not carried in any retail store. Go to Geappliances.com, where you can find 50,000 parts that you can buy on the Web.
Travel. Any travel-related business can profit from being on the Web, including hotels, rental cars, airlines, amusement and theme parks.
I am writing this from Fort Lauderdale, FL, where I am with children and grandchildren. We needed a six-passenger minivan, but Hertz, Avis, Budget and National were sold out. I found a brand-new minivan from Payless Auto Rental (who ever heard of that?) on the Web. How else would I have been able to locate such a company?
Customer service. Billions of dollars are being spent today on toll-free calls to customer service. Most of the information provided could be given for 10 percent or less of the cost through an active Web site.
One company I worked with computed the difference. An average call to customer service costs the company $6.50. The same information provided on its Web site costs the company less than 10 cents. Everyone who has a toll-free number should also have a Web site. Those that do not are throwing away money.
Publicity. Every rock star today has a personal Web site. Vanity? Not at all. If you register at a Web site for Sheryl Crow or Madonna, you will be added to a list. When they release their next albums, you probably will get an e-mail. Industry experts can demonstrate a relationship between e-mails to fans and retail store sales. Publicity on the Web can be made to pay.
What about Amazon? What about direct sales on the Web? The jury is still out. Amazon has yet to make a profit. It is an absolutely wonderful service. I have spent more than $1,000 buying books from Amazon. But I am still not convinced of its viability.
If you already have an established business, spending a little more on a Web site is usually a good move. If you depend on the Web for most or all of your revenue, you may be making a serious mistake.
There are several reasons for this.
Since you have no established business and only a Web site, you have to spend lots of money to get noticed. Then you have to pack and ship products in quantities of one, and you still have to compete with retail stores that do not pack and ship at all.
If you are successful, you will have lots of competition, since Web sites are cheap to create and maintain.
What about catalogers? Most of them have Web sites. Are they right? From what I know, few of the established catalogers have as much as 15 percent of their sales on the Web. Of the Web sales they do have, most report that the vast majority of buyers have the paper catalog in front of them when they place an order. The Web site is an ordering system, not a sales system. Without the paper catalog printed and mailed to customers, there would be no online sales.
You cannot make a profit by putting a catalog on the Web and waiting for business. But once you have 400,000 paper catalogs out there, you are much better off if the customer places her order through the Web than if she calls your toll-free number -- to the tune of $5 or more per order.
So catalogers will continue on the Web, but there will be no concurrent reduction in the number of direct mail catalogs sent.
There are still lots of profitable opportunities on the Web. You just have to forget about all the worthless ideas you have listened to for the past four years.