E-Biz Strikes AgainClass 7: Electronic Commerce

Business WeekCase Summary by: Derrick Chiang

Main Takeaways

The disruptive power of the internet is NOT gone simply because the bubble burst.

6 major industries where the internet will cause serious drama for your momma:

  1. Jewelry
  2. Bill Payments
  3. Telecom
  4. Hotels
  5. Real Estate
  6. Software

More in-depth Summary

1)During the giddy dotcom days, companies like Amazon and Expedia rewrote the rules for books, music, and air travel, and essentially kicked the incumbent corporate giants where it hurts. When that bubble burst, the corporate giants exhaled.

2)But now the threat is back. Net companies are again forcing down prices and squeezing margins by using new technology, new ways of doing business, and new approaches to cutting out the middlemen. Existing leaders will be forced to find new ways to make money.

3)Now dotcoms are actually making profits! 60% reported profits 4th quarter 2003. Investors are hungry again.

4)Verizon Communications (phone giant) investing $2 billion over next 2 years, because newcomers like Vonage used Net technology to offer phone services for 1/3 of the price.

 old players must reinvent themselves

5)Some old firms are fighting the digital evolution, like a bunch of grumpy old bastards.

  1. InterContinental Hotels Group cracking down on franchisees that get too cozy with web discounts.
  2. Cendant Corp. lobbying against Net companies, making it hard for the newbies to get home-sale listings.

 BUT, it’s probably only prolonging the inevitable.

6)Online Bill Paymentproductivity gains and cost savings (e.g. PayTrust)

7)Real Estate  buyers can see the floor plans and photos (e.g. ZipRealty)

8)Jewelry educates confused lovestruck men… about diamonds, not love. (e.g. BlueNile)

9)Software  more broadband connections helps programmers collaborate on open-source software development, which is shaking down the $200 billion software market.

So what do these 6 industries have in common?

  • Long supply chains
  • Lots of middlemen, each taking a cut of the pie.

“It’s going to be a wonderful mess.” – Al Lill, Gartner Research

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