Dot.com Fever

No doubt about it. Throughout 1999 and early 2000, Dot-coms were hot, hot, hot! The opportunities offered by the Internet were seized by a whole new breed of entrepreneurs—bold and brave, innovative and uninhibited. Often their ideas—and their businesses—went from conception to realization in a matter of months. Their companies were unencumbered by the overhead and hierarchies of their larger more established counterparts. Many industry giants watched to learn what they could from these dot-com upstarts about starting up business-by-Internet.

Businesses in every sector hoped e-commerce success would be contagious.

Back then, if television commercials during Super Bowl 2000 were any indication, the sky was the limit. A total of 17 Internet companies paid a pretty price—$2.2 million for each 30-second commercial—to advertise their wares. But by Super Bowl 2001, dot-com ads were even more scarce than Giants’ touchdowns. Only three of those who ran Super Bowl ads in 2000 were back in 2001, and three others of the 17 are no longer in business.


What does that tell us? First, as statistics show, many dot-coms simply aren’t making it. Various forecasters predict that between half and three-quarters of the dot-com firms born in the first wave of the Internet boom will be gone in three years.

Second, the dot-coms who thrive in the months and years to come will be smarter, sharper companies—using first-hand experience and the experience of others to guide them.

Dot-Coms Are Getting Smarter

Even in a stage of infancy, many dot-coms taught established businesses some important lessons: the value of being open to new ideas, of responding and adapting quickly, of removing red tape and rigid hierarchies, of letting strategy designate structure, of thinking and working like a high-performance team, of applying a start-to-finish mentality. Dot-coms helped other companies realize that consumers today expect what they want, when they want it, and any way they want it.

The distance between Internet companies and traditional companies is disappearing as e-commerce continues to transform the way business is done. I recently read that Intel Chairman Andy Grove said that several years from now, “There won’t be any Internet companies. All companies will be Internet companies or they won’t exist.”

In this bold new world of e-commerce, dot-coms and others are finding that life isn’t always easy. How we do things really does matter. Areas such as site navigation and customer service have turned out to be two of many dot-com businesses’ most vulnerable areas.

And a third “Achilles heel”? Fulfillment! No matter how great your marketing or your product—if you can’t get it to your customer on time and in good shape, you’re doomed. In the area of fulfillment, the know-how of experienced logistics providers can make the difference between success and failure, between turning customers on and turning them off forever.

The road to knowledge, so it appears, is a two-way street.

Many dot-coms are entering a second stage of life and applying newly acquired knowledge to build a better business. They are learning, in a brand new arena, some of the same lessons all companies must learn.

They are realizing the most basic truths about finance. In order to stay in business, a company has to make money. For some dot-coms, the start-up funds ran out before the revenue started coming in. And for some, as volume increased, so did expenses, while profits lagged.

In marketing and merchandising, they are learning that customer acquisition doesn’t happen automatically. It takes time and careful management, and a big splash on the Super Bowl may not be the best use of precious resources.

In the area of fulfillment, they are finding that managing change and information in the supply chain is a highly complex operation.

There is so much to learn and so little time.

Dot-Coms Are Getting Partners

In this new phase of e-commerce partners are coming together for all kinds of reasons and relationships. Take, for example, the collaboration of Ford, General Motors, and Daimler-Chrysler to launch a business-to-business exchange for auto parts. Or the partnership of Toys R Us and Amazon.com to blend selection with deliverability. Or partnerships between logistics providers and e-businesses who want the right combination of clicks and bricks.

What we, as logistics providers, have to offer is real knowledge, proven systems, and access to information. If we can be adaptable, open to change, and ready for anything, then we just might catch that dot-com fever.

I’d like to hear what you think. What’s the most valuable lesson you have learned about e-commerce?