Some E-Commerce Companies are Profitable
from the the-companies-we-never-hear-about dept
BCG has told us that some e-commerce companies are actually profitable. In fact about 40% are. Of course, we never hear about those because it’s a lot more fun and fashionable to just trash all the unprofitable dot coms and pretend that they represent the entire e-commerce world.
Comments on “Some E-Commerce Companies are Profitable”
Pure Plays Still Deserve Trashing
The study says that the profitable e-commerce sites are generally associated with existing catalog companies, so the prevailing scorn toward flash-in-the-pan “pure play” dot coms is still somewhat justified. But more seriously, it might be some cause for concern: the hype surrounding dot coms is supposed to be justified because the Internet is supposed to be a new way of doing business that will fundamentally change the economy. If it turns out that the Internet is just an evolution of the existing mail-order catalog business, then where is the fundamental change and how will the “new economy” sustain itself?
Re: Pure Plays Still Deserve Trashing
Well, I think it’s an overhype situation, where things got totally blown out of proportion. When Amazon first hit the VC radar screen it was “revolutionary” because it was a bookstore that didn’t have any infrastructure costs to build stores, and could serve the whole world immediately *and* didn’t have it’s own warehouses, and the potential seemed huge… So, the VCs invested. But, then they realized that didn’t really scale, and suddenly they did need to build infrastructure and warehouses and such, but VCs forgot that was why they had invested in the first place.
By the way, I do tend to blame VCs for a lot of the problems also. They tend to try to push these businesses to be a lot more and a lot bigger than they can be. So things that could be nice profitable small businesses get forced into being huge unprofitable ridiculous dot com plays that get mocked.
As for the “new economy” however, I think there is a ton of potential, but it’s not about just moving stores online, but it does have to do with companies that do fundamentally change the way companies do business.
Re: Re: Pure Plays Still Deserve Trashing
Some e-commerce ideas are a fit for the web and some aren’t. Despite Amazon’s losses, bookselling is a good fit, perhaps the best fit discovered so far (which makes sense, because that’s why Bezos picked books). If you think of a B2C e-commerce site as an infinitely large catalog that can be updated continuously, then you can identify items that fit. Books fit because of the infinite catalog size. Computer peripherals fit because of the continuous updates. Pet supplies do not fit. Here’s another one that obviously did not fit: http://www.herring.com/industries/2000/0515/ind-bbq051500.html
The current problem is that, until recently, VCs have been willing to fund anything e-commerce. There’s a huge grain of truth in the “IDontWantMyToothpasteDelivered.com” protest/parody; eventually the “pure play” companies that don’t have a compelling reason to sell their wares via e-commerce will wither and die. That’s the way it should be.