E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Gradually television is inching toward a direct-marketing vs. mass market model. At the same time, the Internet is moving toward the TV.
I’m old enough to remember “the golden age of television,” the medium’s first decade. There were only three networks, but they broadcast programs like Armstrong Circle Theater, Playhouse 90, Kraft Television Theater, Alfred Hitchcock Presents and Twilight Zone. They offered first-class drama and were based on original teleplays written by the likes of Paddy Chayevsky, Arthur Miller, and Rod Serling. They vanished in the 1960s, and television became the low-brow land of formulaic sitcoms, repetitive cop and doc shows, and ubiquitous westerns-all churned out on low budgets by Hollywood.
I think television is on the verge of a second, though very different, golden era. With the explosion of channels from three to upwards of 500 in some cable markets, television has witnessed a content explosion as well. Not all of it, maybe not even most of it, is good. The networks have sunk even lower with their god-awful reality shows. But cable also delivers the cooking shows, 24-7 news and commentary channels, history around the clock, a full range of sports, comedy and cartoon channels, religious channels, and channels separately aimed at men, women and kids. Programming that once followed a boob-tube model based on the lowest common denominator has given way to a magazine model with targeted content aimed at specialized interests.
Specialized programming is also being accompanied by specialized marketing, and gradually television is inching toward a direct-marketing vs. mass market model. Witness the Home Shopping Network and the explosion of infomercials. Television’s fragmentation of programming and marketing is moving in the direction of the Internet. Interactive TV, already available in other countries, is on the horizon here.
At the same time, the Internet is moving toward the TV. The percentage of America’s homes using broadband technology to access the Internet has about doubled in the last year to 38%, and often such access is provided by the very cable companies which control television signals. Internet solution providers, meanwhile, are exploiting the web’s tilt toward broadband by offering tools that can deliver more robust content (see page 18). This TV-web convergence explains why the Electronic Retailing Association, the organization of infomercial marketers, has embraced Internet retailing under its new chairman, Jack Kirby (see page 11). Tomorrow’s infomercials may be viewed on web-enabled televisions by consumers who can ask questions and get answers in real time and place orders by clicking on the TV screen.
What does this convergence mean for Internet retailers? I think it means that technology will soon redefine what a retail web site is and what content it delivers. It has become fashionable to think of web stores as merely another direct-marketing channel. In the face of the trends we see in media and communications technology, this view is extremely short-sighted.
While it may be practical at the moment to have a well-functioning, no-frills web site that allows consumers to find merchandise quickly and fulfill orders efficiently, the retail web site of the future will take advantage of Internet software based on broadband access to deliver much more compelling content-eye-catching video, entertainment-oriented merchandising and access to very detailed information-about anything related to the retailer’s merchandise and market. The golden age of television is over; the golden age of Internet retailing awaits.