June 1, 2007, 12:00 AM

What can stop the e-retailing rocket

It’s tempting to think that nothing can stop e-retailing’s momentum. Tempting but foolhardy.

As I write this, we are preparing to host our third annual Internet Retailer Conference & Exhibition at the San Jose Convention Center June 4-7. It will be another record-setting event with about 4,000 attendees. We also just published the 2007 Edition of our Top 500 Guide. At 376 pages, this year’s Guide is nearly 50% larger than last year’s with more detailed analysis of the nation’s 500 largest e-retailers which it profiles and ranks. We could justify this expansion without a price increase because copy sales of the Guide are growing almost as fast as page counts. And the magazine you are now reading is the largest in Internet Retailer’s history. Like many of you, our business has benefited greatly from the 25% compounded annual growth of e-retailing.

It’s tempting to think that nothing can stop e-retailing’s momentum. Tempting but foolhardy. The easiest mistake a business can make is taking success for granted and being corrupted by its intoxicating effects. Success has a way of making you feel so invincible you forget the fundamentals that produced it. It can encourage pursuit of short-term gains at the expense of long-term values.

The risk of shortsightedness is particularly great in a new and exploding market like Internet retailing, where there are few standards and huge rewards for new players. Those of us who cover e-retailing daily see a growing number of ethical shortcomings in the online retailing industry that can harm the industry’s credibility with the very people who are responsible for its double-digit growth. Consumers respond positively to businesses that adhere to ethics of fair play and honesty and negatively to the culture of greed. We must debunk the notion that we can undertake questionable practices simply because we think we can get away with them.

Some questionable practices are noted in a feature story about ethics this month by senior editor Mary Wagner. I have some pet peeves in this area as I’m sure you do. Why, for example, do some web merchants buy keywords in search engine marketing programs that include the brand names of their competitors? I confess that we do this, but only in cases when competitors first buy our brand name in their search marketing or otherwise trade on our brand. Cases based on brand name infringement in search engine marketing are working their way through the courts now, and we believe those courts must uphold the rights of brand name holders. We also object to web sites that ignore age-old copyrights laws by lifting creative content from someone else’s web site without attribution or permission simply because it’s so easy to do. Copyright laws must be enforced on the web. The Internet must not become the Wild West.

The government in time will regulate such abuse and enforce ethical behavior. But if the industry waits for the Congress or FTC to intervene, the damage to its credibility will already be done. Think for a moment of those TV infomercials that made exaggerated claims. Sure, they sold product, but they also created an unsavory image of hucksterism.

We believe the time has come for the e-retailing industry to form an association devoted solely to the needs of online retailing, one that will educate its members in best practices, lobby government organizations for enlightened regulation, and set and uphold standards of fair competition that protect the long-term interests of this industry and the consumers it serves.


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