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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 ?

next:Species threatened with extinction due to global warming ?


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If you enjoyed this site, we obviously share values: we have written it in 1999 !

We haven't updated it online as the vision still is more and more relevant: the more the internet matures, the closer it gets to our vision.

We still believe in innovation, creativity, rigour and results control.

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Raphael Richard, founder

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