Chapter 1

Entomology of the digital economy's mutating species

Metamorphosis

One of the images I find myself using when I am lecturing on the subject of electronic commerce is that of the larva's metamorphosis into a butterfly.

The idea is simple : via my computer, I have observed the main reasons why some succeed in the world of cyber-commerce and others fail (which is easy to criticise). If I still don't have the magic formula, I have identified, during the course of my observations and experiments, a strange phenomenon which is closely linked to success on Internet in 92.9% of the subjects studied.

All of the companies start by thinking of Internet as a technology. A few months later, they realise that Internet is also a good method of communicating and putting marketing techniques into effect with low costs, and finally that it represents an excellent means of distribution.

And it is precisely this word finally that makes all the difference between the business which will expand, thanks to Internet, and the rest. Because if you stop at the equation Internet = a means of distribution, you have a good chance of missing out on the real potential of the Web.

Almost all the businesses that I've studied under my economic microscope have undergone an fundamental transformation in their work method, their sales techniques, the service they provide, and have often even modified their product. This is one of the essential lessons of the early years of electronic commerce : a business has to evolve subtly to sell by Internet. A metamorphosis has to take place, to change from the larva stage to the butterfly.

The larva represents a business of the industrial economy : it likes paper, it tries to find customers for the goods it produces, it advances slowly because of its weight, and because it keeps its eyes fixed on the ground, it only sees its predators at the last minute. It sells little or hardly at all by Internet, as it only understands the terms production, marketing and distribution.

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