December 26, 2000, 9:55 AM

E-retailing success requires that merchants look at the entire consumer interaction

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So what is the future of web retailing long term? The increasing use of home computers to manage billing and payment, combined with always-on cable modems and the proliferation of Internet-enabled appliances will result in a new type of household management application that will manage utility costs, buy groceries, and perform other routine optimization tasks based on a set of household management rules chosen by the consumer. As this model kicks in, web site look and feel will become irrelevant.

Household management applications will use replenishment agents to search the web, purchase goods or services, and integrate the results into the home management application. Their role will be to assist high-end home owners in managing buying of goods and services. Examples of the type of value we expect home management systems to provide by 2003 include online monitoring of:

• Special deals at a group of merchants for a pre-set list of products, and automatically placing orders for pre-set quantities;

• The household’s inventory of consumables (e.g., via barcode scanners in microwaves and/or refrigerators), and placing replenishment orders;

• Bank and other account balances, shifting money based on pre-set rules, and paying bills; and

• Shifting prices of telephone, cable, electric and other digitally switchable services, and shifting providers to optimize savings and service.

Internet retailers that thrive will focus their limited capital on tactics that have a clear payoff, rather than on television or online ads that have questionable retention power, or on visually impressive interfaces that do not improve shopping efficiency. Building an online brand and a supporting strategy must go beyond advertising and web site content to focus on customer service, strategic alliances and well-defined joint marketing efforts. As we evolve toward a more automated shopping model, web retailers should invest in relationships with software and services vendors who can deliver the next generation of small business and household management applications.

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