September 06, 1999 New Thinking:
Feast or famine?

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• A study by Forrester Research predicted that the Internet is set to work in favor of national US retailers at the expense of local competitors, with sales at local sites expected to drop by 6 percent by 2003
• An eAdvertising Report indicated that the top 50 Websites got 95 percent of all Web advertising dollars
• A report from the Monterrey Technological Institute estimated that 80 percent of online purchases by Mexican consumers are made at US based sites
• According to study by ORCl, Amazon.com is recognized by 60 percent of the US adult population, Priceline.com by 55 percent, and Ebay by 46 percent.

I have been connected with a number of ecommerce projects recently and it is amazing how much money is been spent on advertising and marketing so as to build brand and market share. It is hard to imagine how someone in their garage can today effectively compete with such highly capitalized entities.

Numerous other reports and studies that I have come across this year show that the big brands are not just taking the lion’s share of advertising spend. They also generate most of the ecommerce revenue, and, of course, traffic.

The crucial problem is in the very opportunity that the Web provides in allowing you get a website up and running very quickly at little cost. As a result we have millions and millions of websites. Practically every entrepreneur has been led to believe that they can be a Net entrepreneur and join Fortune’s list of the richest 40 under 40 (most of which are Internet people).

In reality, every new website makes it more difficult for those already there to grab attention, traffic and revenue. The human mind can only take so much. If you give me 100 options of things to do then I might choose twenty. If you give me ten million options, I might choose thirty.

In fact, the massive overload of choice may in fact make me even more conservative, and I might end up making ten choices out of the ten million! These ten choices will be brands I know and trust, and I will depend on them to sort out this crazy, mixed-up Web-world for me.

Yes, the small business has a chance if it really specializes. However, there are millions of others who are thinking just the same way. The Gold Rush has gone to too many heads. There are just too many gold diggers. Most will walk away with blistered hands, looking at their cheap shovel websites, and wishing that someone else would bury them.


Gerry McGovern


 

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