A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
Retailers and catalogers are finding success on the web these days, but without the innovators profiled here, they`d still be finding their way around the Internet.
Every great movement in history has them—the trailblazers
who show not only what can be done but also the possibilities that lie ahead.
The five innovators that we profile on the following pages
showed, in various ways, what retailers could accomplish on the web—and
what the possibilities were that many had yet to think about. From Jeff Bezos
proving that consumers would buy products on the web, to Pierre Omidyar re-inventing
eBay as he went along to the point where today it is a major factor in the liquidation
of excess inventory, to Elaine Rubin, bringing e-retailers together to solve
common problems and debate best practices, these five have had a huge impact
These are the survivors and just the fact that they have
survived makes their experience and insights valuable. But we would be remiss
to leave out the trailblazers who have not survived, for they surely contributed
to the web as well. They would include: Cliff and Lisa Sharples, whose garden.com
showed that consumers would buy more than books online, even if they didn’t
buy in large enough quantities to save garden.com; Toby Lenk, whose eToys.com
demonstrated the power of the Internet in attracting families to buy online;
and Joseph Park, whose Kozmo.com was a spectacular failure but also demonstrated
the demand for same-day delivery, even if it’s not to be executed using
the Kozmo model.
As with any movements, these pioneers will eventually be
replaced by the people who make things run on a day-to-day basis and who get
those margins up. But without these five, there’d be nothing for the next
generation to do.
Face of Internet Retailing
Would the Internet retailing world
exist without Jeff Bezos?
By Mary Wagner
Was it just luck that Amazon.com’s
Jeff Bezos started the company by selling a product so perfectly suited to online
sales? Put it this way, if he’d started out with sweaters or shoes instead
of books, chances are you would not be seeing his name in this magazine. Because
there might not be a magazine yet—or a burgeoning online retail industry
out there for it to cover.
Bezos instead picked the ideal demonstration product for the new sales channel,
one that took unique advantage of technology available only on the web to make
the experience of buying the product online better than buying it in a store.
“You don’t have to know an author is a mystery writer to be able to
find the book online like you do in the store; you just type in the author’s
name,” points out Mary Brett Whitfield, director of the E-Retail Intelligence
System at Pricewaterhouse-Coopers. And by harnessing the web’s interactive
capabilities to generate consumer reviews and customer-specific product recommendations,
Amazon.com gave book buyers more of what they couldn’t get by walking into
Borders or Barnes & Noble.
Bezos’s early success in attracting shoppers to the new medium was fundamental
in firing up others to create an entirely new $65 billion-and-growing industry
where there was none before. “He spawned a whole legion of entrepreneurs
who believed that Internet retailing was possible,” says Whitfield. That’s
one reason history will remember Bezos and Amazon. “And he created this
belief that selling anything online was possible,” she adds. That’s
another, at least among the ranks of failed dot-commers.
Like other trailblazers, Bezos has shown not only how it’s done, but also
where the pitfalls are. Buoyed by outside funding and blessed with investors
who haven’t demanded returns until lately, Amazon has been allowed to experiment,
winning big-time with some enterprises and losing with others, while everyone
else gets to watch and learn.
“He’s certainly pioneered a lot of service techniques and has been
much more forward-thinking in customer service,” says Jupiter Media Metrix
analyst Heather Dougherty of Bezos. “Other Internet retailers emulate Amazon’s
initiatives. One-click buying is one of the obvious examples. He’s also
set the standard for taking and tracking orders by giving consumers power over
their own account information through online access.”
But in addition to some big scores, the company has stubbed its toe big-time,
too. Early on, the still-profitless Amazon spent wads on marketing. It invested
millions in major partnerships with online companies such as Living.com and
Pets.com that ultimately tanked, taking the investment dollars with them and
vaporizing hoped-for revenue streams. Those experiences taught everyone a key
lesson: whiz-bang technology notwithstanding, it simply doesn’t pay to
sell some things—like furniture and pet food—online. “They’re
still learning as they go what product categories work,” says Dougherty.
“Lawnmowers, for instance, are not an easy category to sell on the web.
They’re better suited to Sears than Amazon.”
While Bezos has pushed the envelope on driving retail sales over the Internet,
he’s also been out in front in addressing its limits. That’s taken
the form of more recent deals with retailers Toys R Us and Borders. “Amazon
has proved it’s superior at Internet retailing, but the brick-and-mortar
retailers still have a lot of advantages in their physical world presence and
in the relationships they have with customers,” observes Dougherty. “We’ll
see them move more toward that in the future, acting almost as a service bureau
The constant at Amazon is Bezos, the vision he created for the company, and
the enthusiasm he brings to it. It helped charm funds out of early backers and
it helps keep Amazon’s image shiny among consumers, even when it gets dented
on Wall Street. You’ve got to like a major player that doesn’t take
itself too seriously, and a CEO who would put his stamp of approval on something
as goofy as the “Sweater Men,” a holiday 2000 ad campaign that featured
a retro-looking chorus caroling the virtues of shopping at Amazon. Are they
still having fun over at Amazon? You bet. Now, about those profits.
By planting his brand online early,
Jim McCann will harvest web site profits this year