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AboutPaducah at PCC
by Corey Dunn (May 16, 2001)
Todd Lasley, co-founder of AboutPaducah.com, spoke to Dr. Kevin Gericke's Economics 101 students regarding trends in e-commerce on Tuesday April 10th. Lasley, who is also co-owner of ThreeLogic, a Web Development contracting firm, has worked professionally in the online industry since 1996.
For an overview of the presentation, read below:
E-commerce can be defined as buying and selling goods and services online by businesses and consumers.
It can be sub-divided into three categories:
B2B - Business to Business (Intel)
B2C - Business to Consumer (Priceline)
C2C - Consumer to Consumer (E-bay)
History of E-commerce
I guess you could say, e-commerce technically began when the very first person contacted someone else by email to try and buy or sell something! But since I only have direct knowledge of the past few years I'll only go back that far for this discussion.
After the tremendous successes of the Initial Public Offerings of companies like Netscape, Yahoo and Amazon, it seemed like everyone was starting an Internet business. And since Venture Capitalists would offer start-up money to almost anyone who asked, the number of businesses online soared! Frequently, the entire business plan of these new companies consisted of nothing more than attempting to draw lots of users to their sites in order to attract investors when the company was put up for sale on Wall Street.
At first, the idea appeared to work! Nearly every online company that went public raised lots and lots of money! So more and more companies were started and more and more went public, and it was a blissful place in Internet Company Land!
During this period a lot of money changed hands within the internet industry. This enormous flow of money made the internet very attractive to investors, so more companies spent more money to get online.
One early warning sign (to me at least) was that many BIG companies were having problems at the fulfillment stage. (Which is simply getting the product to the customer). Although a business may have had great sales, they were having problems with inventory or delivery, or even simply communication problems with their suppliers.
Many companies were so involved in marketing, branding, raising money, and carrying their bags of money to the bank that they forgot that an online business is still a business! And, of course for a business to work, there are certain fundamentals that need to be practiced, even in the magical online world!
Present
Right now, as I'm sure many of you already know, it's an ugly scene in e-commerce land. Of course the entire economy is poor right now, but I believe that a down period was destined for the web industry anyway. In the online industry, this is simply reality setting in over hype.
Did you know that even Amazon.com has not reached profitability yet? Priceline.com has cut back on all their new ventures like selling discounted food and gas. To survive (and grow their business more wisely), they have returned to their original ideas of airline tickets and hotel rooms.
Most businesses that were solely supported by VC money are now history. Companies that went public with fantastic results on paper are also shutting down. Many of the biggies have fallen! I've heard estimates that 55% of online businesses have now closed. And it's also very likely that you'll see more businesses leave the arena before it's all over. You see, since so many e-businesses were exchanging money between one another it has been a chain reaction that has affected virtually every aspect of the online world in one way or another.
However, businesses which operated with no debt and were very close to profitability are still around and are much more likely survive the fallout. What we have learned from the past boom of the "new economy" is that the "new" economy is nothing more than an extension of the real-world economy in that a business, any business, must follow basic fundamentals to thrive. To be successful online, just like offline, you need a business plan that will eventually lead to profitability!
Future of E-Commerce
In the near future, people will realize that the Internet is ultimately a viable source of income for their business and there is money to be made in online commerce. But, you will see more realistic expectations and down to earth ideas. You will see more and more real-world businesses using the Internet as an extension to their business.
Online sales will increase. Even during this current financial down period, we are still seeing a tremendous rise in Internet usage. Several recent studies have shown that more and more people are spending more time online and less time watching television.
When advertisers see that more of their potential customers are online, they will begin to increase their online marketing budgets. Forrester Research says that in as little as 3 years, up to 20% of advertising dollars will be spent online.
Since more businesses will be functioning online, the B2B world is where you will see a dramatic economic increase. In fact, almost every study has shown that B2B will outweigh B2C returns in a big way!
As high-speed connections like cable modems and DSL becomes more readily available, it is my opinion that the Internet in 10 - 20 years, will become the major backbone to virtually all media.
Competition will increase dramatically as more and more businesses go online. Even now, almost every company has an online presence in one form or another. In the future most businesses without a Web strategy will not succeed.
Taxes! Eventually (probably sooner than later) governments will find a way to tax all online sales. It take the form of a universal tax or something by country, either way you can be sure that governments will find a way to get a share of the money that flows in the online economy!
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corey dunn
By: pam - 2001-08-13
woo hoo!! Corey Dunn has done an outstanding job with his work on this site. I am very impressed and I hope who sees this gives him a high-five from some silly lady in Texas:) great job Corey. I always new you were an achiever:)
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