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![]() ![]() ![]() ![]() ![]() TATA INFOTECH OFFICES |
I was right but only up to a point. The real reason why Webvan didn't make commercial sense and showed that the dot com mania was likely to end in tears was that it misunderstood what the Internet means in commercial, market development terms. The Internet to hosts of people in the technology industry is technology. It's about Internet Protocol addresses and High Level Text Mark-up Languages, and bytes per second. It's about generating as many three letter acronyms as possible. To stock market analysts it was a new paradigm. To Webvan it was a market. Yet to consumers and citizens and people and users and students and professionals and everyone else, and even market development people, it was not a market. That was why Webvan went broke. The initial dot com frenzy was doomed because the Webvan view of the world was actually the dominant business theory behind exploitation of the Internet in this first wave. The Internet is a channel. Like any channel, it has specific qualities. Those qualities change over time. The Internet is no different from any other channel at a high level. In the early days of other channels certain opportunities were possible but not likely to make commercial sense. Imagine creating a direct insurance service during the early days of the telephone service. Even if you ignore the fact that it wasn't a mass channel, the costs of the telephone connection made direct insurance a non-starter. More importantly, people were not used to dealing with the telephone as a channel to such services. As the telephone channel matured, of course it did make sense to create direct insurance services over it. I have no doubt that over time consumers will find shopping for white goods over the Internet both congenial and effective but it just isn't the right way of looking at the Internet. What was needed, and what is needed now to make commercial success out of the Internet as a channel, is to work out what the early wins are for the Internet as a consumer medium. The wrong answer was provided by Webvan; the right answer by thinking where Webvan went wrong: the Internet is first a channel for items that don't require their own dedicated delivery and fulfilment mechanism. In fact when I did a quick survey around my office the answer was that most people had bought train, ship or air tickets over the Internet. Buying travel and holidays and related services are ideal. People had bought books and records which could be delivered by existing fulfilment services. Most people hadn't bought a washing machine or its equivalent nor would dream of doing so. The dot com frenzy is apparently dead. The Internet is alive and kicking. There are real businesses that can be developed on the Internet, seeing it as a channel. And now I expect the real money will be made out of what is still an exciting channel to market. There are real businesses that can be developed on the Internet, seeing it as a channel.
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