The move from traditional
forms of business to "net-enabled" business is
causing a lot of debate about the likely future for
traditional businesses with what was once thought to be a
handy thing called “established Track Record”, but is now
being ever more frequently perceived as “dangerous
means entrenched attitudes, unnecessary premises, surplus
staff and uncertainties about Y2K IT issues. Some or all of
which are increasingly inappropriate for online economy.
Indeed, any IT hardware and strategy that is more than 24
months old is a serious millstone that most traditional
industries cannot or do not accept as not just worthless, but
An eHare like eToys
appears, and same day as it floats on the NASDAQ stock market,
is worth more than ToysRus! And this is only one of many such
examples where the US markets are suggesting that established
businesses are worthless dinosaurs when set against the first
online brand that looks like establishing in their sector(s).
There is even a widely
voiced opinion that these ratings are there to encourage the
e-businesses to use their paper worth to absorb the
traditional businesses that simply don't have the management
and desire to cope with the "new paradigm".
It costs relatively little
to set an eHare running. Typically there are no barriers to
entry into online markets. The eTortoise takes a more studied
approach, with the benefit of the first full year of US
eTrading to guide them, and perhaps in many cases to provide
the nerve for those who initially wondered if they were right
to declare "paradigm shift", when so many wise heads
espoused the conventional wisdom that the Internet is
"just another channel".
So why did ToysRUs (which
has had a web site for ages) fail to cut it with the markets
when an eTortoise came whizzing past..? The ToysRUs website
has apparently outsourced its design and commerce engine, and
there is very little apparent "soul" of their
business apparent in its execution. The ToysRUs management
have displayed that that they are still focused on
"leveraging their present assets" - huge volumes of
real estate, traditional advertising and legions of staff.
This is a very typical
"gesture response" to online trading that many
larger established feel is doing their bit for them. Their web
presence appears to have been outsourced in a cosily familiar
way to IBM or another "safe pair of hands" outfit
that knows how to talk to the IT department in terms of
reference that they understand, and it is virtually an
interface to their accounting system software, not a genuine
eCommerce proposition in the spirit of the net.
eToys also dares to
suggest that parents really don't enjoy taking their
kids to stores and having them throw tantrums and cling onto
the displays when they can't have everything they want.
ToysRUS marketing is largely predicated on the idea of getting
the kids to pester their parents to take them, with an almost
"McDonalds" style of family marketing. As any parent
will probably agree, this is questionable thing.
Most competent web-savvy
designers can cobble together a site that would look
superficially the same (or better) as something ground out by
the MIS division of a £100m company. Whether or not it
operates smoothly in terms of database integration and
scalability doesn't even really matter until the action on the
site is sufficient to pay to get those things taken care of
In broad terms, it costs
less then the price of fitting a single high street Dixons
store. The running costs are negligible - 2 people at most
would be required in "front desk" roles to manage
Now there is only one
issue left: marketing, and that has amplified the importance
of brand in the minds of many. But is brand synonymous with
"globalisation"..? I don't think so. There is still
no evidence to suggest that net has anything to offer that
must change the habits of the past 5000 years where people
trade 80% of their goods/services in a 20 mile radius of where
they live and work.
Despite the best
efforts of politicians to defy nationalism (and if you saw the
Eurovision Song Contest voting, you will realise that there is
no such thing as impartiality in the EC) the scale of business
in Europe is still done mostly on a country-by-country basis,
and the much vaunted concept of globalisation is probably just
limited to very simple brand marketing - witness car sales
across Europe today.
In fact be grateful, it
all makes work for the workers, because if the US continues to
embrace the notion of a single central “warehouse” web
site in every main consumer commodity, there is going to be a
problem working out how to employ the legions of displaced
workers from the traditional retail and channel businesses.
So perhaps the UK and
other Eu countries present a range simpler and more manageable
route to online than in the US. This raises the question if we
actually need to really worry about the issues facing US
companies when servicing a market some 10-20 times larger..?
So how come IBM - of all people – appears to have made the jump to the new paradigm..? It appears to be a new company to all the word, and a jolly successful one, too.
One answer is to this conundrum is that they have not actually changed anything, and that this new eFacade magnificent example of smoke and mirrors: IBM has basically been doing what it does best - selling the same technology over and over to its traditional
Anyone who imagines that
its large corporate users at places like Sainsbury have been
provided individually tailored eBusiness systems are kidding
themselves. IBM does this by taking their age-old CICS
transaction management system (a cosy comfort blanket for many
senior MIS staff) and other elements from its library of
pages around them. Perhaps this leopard has changed its spots
to e-spots by simply adding the "e-"
Sainsbury has done nothing
revolutionary by paying IBM or another of the big “systems
houses” to connect their legacy systems to the web, and thus
they have actually changed very little. And they are probably
congratulating themselves at how smoothly it’s all gone and
how little disruption there has been to their traditional
However, the US experience
suggests that they have probably just slightly postponed the
evil day when the likes of eGrocer.co.uk and eCars.co.uk will
rule the roost.