The "classicals" failure
In seeking to transfer existing commercial concepts (shops
or supermarkets) into the digital economy of Internet,
nearly all these real businesses have suffered setbacks.
Internet's strategic points are not the same as those
of the real world, in other words the chain of values
is not only altered or shortened, it is completely remade.
By holding on to their preconceived ideas, the existing
big companies risk losing everything. They must try to
understand why the new arrivals have succeeded better
than they have, and above all, how they can change rapidly.
Because everything happens fast, on Internet. By the time
Barnes and Noble realised the potential of electronic
commerce, with Amazon's success, it was already too late.
Whilst Amazon was busy signing agreements with the search
engines, which in effect cornered the online book sale
market, Barnes and Noble were learning the hard way about
electronic commerce : that the selling techniques were
changing totally, the notion of customer service was becoming
world-wide, and the nature of the product itself was changing.
Secondly, whilst Barnes and Noble were picking up the
crumbs left by its rival, Amazon invested in productivity,
the next challenge of electronic commerce. Amazon hits
faster, closer, harder. To the extent that Barnes and
Noble finally decided to make its electronic commerce
activities a subsidiary of the German company Bertelsmann
in October 1998. But this doesn't resolve its basic organisational
problem, which is a waste of effort. To get back into
the running, it needs to undergo a cultural revolution.
Any business which hopes to survive, sell and
make a lasting profit in the digital economy must undergo
this same revolution. They sense it, yet find it difficult
to formulate. The proof is that most have created Websites
to test the potential of this medium : but these sites
are only a pale imitation of their printed publicity.
They are trying to experience the exhilaration of the
information superhighway by riding a bike in an underground
car park. Occasionally they manage to add a secure method
of payment to their site, which corresponds to upgrading
the bike to a scooter, but still in the car park. By the
time they realise that they have to learn to drive a car
to go on the information superhighway, and that cars are
expensive, it's already too late, and they would need
a juggernaut to compete, so fast has electronic commerce
developed. And only those businesses which earn a significant
income from Internet can afford a lorry.
The car manufacturers, whose existing influence
makes them feel omnipotent, run the risk of losing control
of their car sales. The proof ? Not one of the online
manufacturers sells a tenth of the turnover achieved by
Auto-by-tel or Carpoint, which were already selling several
hundred thousand vehicles by 1997. Surveys in the United
States reveal that, in the medium term, 20% of car customers
will buy by Internet. Thanks to their buying power, the
manufacturers will probably manage to capture a share
of this market, but it will only be a share.
Businesses are not adapting well to these ongoing mutations.
But what is this mutation and how should existing business
be adapting ?
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