Robin Miller explains the basic power of the Internet and how businesses can use it to achieve their goals.
The Internet is the lowest cost communications system ever developed with a potential audience of hundreds of millions of people all over the world. Even locally, the cost of a simple Web site is usually less than the cost of a modest ad in a business telephone directory. A Web site can also give more information than a telephone directory ad, including color photos, detailed descriptions of products and services, and price information that can be changed at any moment, for any reason, instead of waiting for a printed directory's next publication cycle.
As a news medium, the Internet is faster and
more flexible than a newspaper or magazine. A story can be added to a
Web site instantly at any time of the day or night. There are no deadlines
(except self-imposed ones) for Internet news. The "printing press" is
always on, you might say. Even television news, aside from a few 24-hour
news channels, must usually wait for scheduled news broadcast times instead
of breaking into entertainment programming whenever a new story comes
along. Television is also constrained by its necessarily linear information
delivery format. It must tell a story, then another story, then take
a break for advertising, then tell another story, and so on, in sequence.
A viewer cannot choose to view only a few stories that he or she finds
interesting, which may occupy only five minutes out of a 30-minute newscast.
On the Internet, a reader is free not only to choose to view just those
stories in which he or she is most interested, but also gets to choose
the order in which he or she sees them. If sports scores are the highest
item on today's agenda, click and there's the sports section, as easy
as turning a newspaper page. Another click and there's the score from
the game that just ended, possibly with video highlights only one more
Corrections, changes, and updates to a story
published on the Internet can be made as fast as they come in without
waiting for a printing press to roll. Breaking news alerts can be sent
instantly by email to subscribers who request this service, and a reader
can instantly communicate with an online publication's editors via email
or, if the publication has this facility, post his or her comments on
a "message board" for other readers to see right away, without
waiting for a fax or mail to get through and an editor to look the message
over and perhaps include it in the "letters to the editor" section
several days after the original story ran.
An online publication can also offer an advertiser
something that is not available in any other medium: ads that link directly,
with one click, to a Web page full of compelling reasons to buy the advertised
product or service. Even if only a fraction of one percent
of all people who see a Web ad click on it, that is still an infinitely
higher percentage than can click on a magazine ad or TV spot for additional
information—or even to buy a product directly from the advertiser
right now. Even if few readers click on an individual online ad and buy
right now, a Web ad still has the same branding and general "get
the name out" effect as advertising in other media. If the cost
of an online ad is similar to the cost of one in another medium, it represents
a better value because of the ability it gives an advertiser to give
an interested person an entire Web site full of information right away,
only one click removed from the online publication in which that ad is
But the most direct way to make money online,
no matter how a merchant gets traffic to his or her Web site, is to sell
over the Internet. Ecommerce has had its ups and downs, but the overall
trend is upward, and it is likely to stay that way for many years to
come. Putting up a "catalog" Web site is far less expensive
than printing and mailing paper catalogs, and the Web site can have "instant" ordering
and credit card acceptance built right into it, whereas a paper catalog
can generate only phone orders that require a horde of (expensive) live
operators to process or mail-in order forms that a customer must fill
out, fold, place in an envelope, and mail instead of going click right
now and spending a few seconds typing in an address and credit card information,
then going click once again to buy, right now, without having to look
for a stamp.
An online catalog, just like an online news source,
has the advantage over its paper counterpart of instant update capability.
If a supplier's price changes, the price to customers can change nearly
immediately. A blurb for an overstocked item can be placed on a Web site's
front page to boost sales today, and email can alert valued customers
to special values or sales faster and cheaper than postal mail or any
kind of mass media advertising.
Even a business that doesn't sell directly online can use the Internet as an advertising medium. A restaurant, for example, can post its entire menu on its Web site, right down to daily specials, at less cost than any other method of putting detailed information about the establishment into prospective customers' hands. A local business such as a restaurant may be "wasting" the international potential of the Internet; there may be only a few thousand Internet users within a reasonable distance of that establishment. But that localization factor doesn't really matter. If a reasonable percentage of nearby Internet users see the restaurant's site and come in to eat, the site will more than pay for itself. As a bonus for a local business, a Web site will draw trade from out-of-towners because of its international reach. Consider this scenario: You are in Seoul, Korea, and you're traveling to Charlottesville, Virginia, USA. You need to find a hotel and places to eat. You almost certainly don't have a Charlottesville telephone directory handy, but if you have an Internet connection, it takes only a few minutes to use a search engine such as Google (www.google.com/) to find a restaurant that suits your taste, either directly through Google or through one of the many localized directories that will show up on your screen if you use the words "Restaurant" and "Charlottesville" as your key search words. So, hypothetical traveler from Korea, you have found a place to eat in Charlottesville, and probably a place to stay and even a nearby store or two, all through the Internet. From a merchant's point of view, you represent a business which he or she would never have gotten without the Internet (and a well-designed Web site). The question for even the smallest local business owner isn't, "Can I afford a Web site?" but, "How can I make an effective Web site without spending too much money?" Actually, companies of all sizes should be asking themselves, "How can I make the most effective use of the Internet without spending too much money?"
Let's start answering that question by focusing on what the Internet can and cannot do for your business.
There are only three kinds of commercial Internet
activity. That's all. Three. You can use the Internet to provide news
or information, to sell goods or services directly online, or as a promotional
device for an offline business. You can't use the Internet to ship physical
goods, cook food, or build a house, but you can certainly use it as an
advertising medium, and possibly as a direct sales channel, for a business
that does one of these things. You could use a Web site designed to promote
the sale of new homes to provide news about the neighborhood where the
development is located, and many Web sites that are promotional brochures
at heart do this sort of thing, but I don't believe this is a good idea.
Trying to make a Web page or any other advertising message too broad
takes away from its focus and detracts from its main message. It is almost
always better to do one thing well than to try to do many things and
do all of them poorly.
Examples of Successful, Tightly Focused Web Sites
Selling Mexican Food Online: www.MexGrocer.com
MexGrocer.com is a sterling example of a site that sells effectively, with just enough non-sales information mixed in to make it worth a few moments' reading time even if you aren't interested in buying any Mexican food products today. Perhaps you'll bookmark it and come back to buy something another time. If you enjoy Mexican food, chances are that you will become a MexGrocer.com customer sooner or later.
Pure Ecommerce: NoteTab
Eric Fookes of Geneva, Switzerland, has been
selling a piece of software called NoteTab online since 1995. NoteTab
is commonly recognized as one of the finest (and least expensive) Windows
HTML and text editors around. It is available only as a download through
www.notetab.com. Fookes Software is privately held, quite small, and
consistently profitable. Besides NoteTab, it sells several other programs
and a few screensaver photo galleries, but NoteTab is the company's star
offering. This is an extremely focused company, and its NoteTab Web site
reflects this focus. The only news it carries is about new or updated
Fookes Software products. From beginning to end, this site is about selling
NoteTab, and it does its job very, very well.
No one would call this site great art. But does
it need to be anything other than what it is? It has all the basics in
place. It's well-placed in most search engines, and the NoteTab program
is listed prominently in all popular Windows software and shareware directories,
which makes it even easier to find than if it were listed only in search
engines. As far as I know, Fookes has never run a paid ad or solicited
venture capital. He wrote a good piece of software, and he has kept updating
it and adding useful features since day one. He gives away a "Light" version
of NoteTab for free, and sells the "Pro" version at a price
so low—$19.95—that hardly anyone who needs this kind of product
can afford not to buy it. Fookes has no shipping costs; all his software
is downloadable online. He outsources credit card processing and site
hosting so he can concentrate on his software. This is a "dream" Internet
business in almost every way.
Of course, to start a business just like this one you had better be an excellent programmer who writes a piece of software that is one of the best—if not the best—of its kind. Or you had better have a similarly excellent product or service of some sort, and sell it as cleanly as Fookes sells NoteTab.
Brochureware: Robin's Limousine
Don't try the email address or phone number on it. They are obsolete. The site itself has now been replaced by a slightly more sophisticated one, and my old friend and partner, Charles McCoy, now runs the business while I write full-time. I'm using this old snapshot as an example of a site that had no interactive features whatsoever, but was such a successful advertisement that a year after we put it up, Charles and I stopped doing any other paid advertising. We even pulled out of the Yellow Pages.
Web designers and consultants often sneer at
simple sites like this as "brochureware." They say this kind
of site does nothing that couldn't be done just as well on paper. They're
right. But often the objective of a small or local business's Web site
is exactly the same as that of a printed brochure: to get the potential
customer to pick up the phone and call. The Internet, in this case, is
being used as nothing but a means of delivering a brochure to someone
who might not otherwise find out about the business. The actual sale
takes place over the phone or in person, depending on the kind of business.
My little limo Web site, which cost literally nothing to make (aside
from a few hours of my time) and was hosted by my ISP as part of an "unlimited
Internet access" package that cost $16.95, total, per month when
I first signed up for it, has generated at least $1 million in business
since it first went up in 1994. This is an amazing return on investment,
but one that other small business owners can easily duplicate.
One of the two big reasons my limo site was so
successful was its simplicity.
A Web Site Is Not a Business
The one thing which all the examples I have just shown have in common is that the Web sites themselves are not trying to be businesses, but are used as ways to facilitate business. Wired News and Slashdot, for example, sell advertising; on the surface they look as if they exist to provide news and information to their readers, but the main business of these sites is selling ads. That's where their money comes from.
On the ecommerce front, MexGrocer.com's owners know full well they are in the business of selling non-perishable food, not in the Web site business. Ignacio Hernandez, who runs it, sold wholesale Mexican food products "the old fashioned way" for over 30 years before there was an Internet. His son, MexGrocer.com Vice President Ignacio Hernandez, Jr., worked for an online grocery company in Switzerland before coming home to work in the family business. MexGrocer.com was started with no outside venture capital. No immediate investment in warehouses or delivery infrastructure was required because the Hernandez family had already been in the grocery distribution business for three generations in Mexico and the United States.
For the Hernadez family, a Web site serves two
simple purposes: It is a low-cost way to reach customers that might otherwise
not buy from them, and it makes ordering more convenient—and lowers
order processing costs—for existing wholesale customers. These
are entirely reasonable expectations. The Hernandezes may not get rich
overnight from an IPO, but MexGrocer.com is being built on a permanent
foundation that gives it a fair chance of earning a steady profit, not
only for its current operators but for future Hernandez generations.
Contrast this with Pets.com, a company that was
founded as a pure ecommerce venture in 1998, raised $82.5 million in
a public offering in February, 2000, and closed its virtual doors in
November, 2000. Pets.com had a much slicker Web site than MexGrocer.com
and probably spent more on advertising in its short life than the Hernandez
family has spent in any whole decade. But Pets.com had no retail, warehouse,
delivery, or manufacturing capability to build on when it started. In
essence, Pets.com was nothing but a Web site. The Pets.com URL now directs
users to PETsMART.com, the online affiliate of "brick-and-mortar" chain
pet supplies retailer PETsMART, which has been around and growing steadily
When I first started advertising my limo service online in 1994, I already had established contacts among local hotel concierges, wedding planners, and others who could and did help me find customers. I owned an old (but impeccably maintained) six-passenger Lincoln stretch limousine, and had the insurance and licenses I needed to operate as a commercial transporter in Maryland. Between 1993 and 1996, at least 1000 entrepreneurs tried to start online limo booking or marketing systems of one sort or another, either local, national, or international. They all wanted to charge limo operators either monthly fees or commissions in return for getting bookings for them. One of the old jokes in the limousine industry is that it would be a perfect business if you could just eliminate its three main headaches: vehicles, drivers, and customers. That's essentially what all the online limo booking entrepreneurs tried to do, but almost all of them are gone now. New ones keep springing up and disappearing, too.
The only limo Web sites that seem to stick around, and the only ones that seem to make any money, are those run by limo operators who actually own (and carefully maintain) limousines, deal directly with customers, and have real, live drivers working for them.