"Webonomics" by Evan I. Schwartz, a book review.
"Webonomics" by Evan I. Schwartz, a book review.
Thaistocks.com could not exist without the internet. In the 3 years since our inception we have grown fast in the "new" economy and this despite the Asian crisis. Here is a review of a much praised book on this subject. This is an original subscribers article of May 1 00, now made available for all to view.
Webonomics, a book review by thaistocks.com
Since it's advent the World Wide Web has and still is changing the way the world is working. Still many people do not yet fully appreciate the benefits the Internet provides. Not only does it provide for faster, more efficient business operations but also helps to slow environmental destruction. On-line habits for example are reducing paper consumption by millions of tons. Competition on the web is immense yet many web sites are still not up to scratch. Here we review Webonomics a timely book detailing what makes for success on the web.
The World Wide Web is an infrastructure for commerce, a universal network of ideas where people are exchanging information on an unprecedented scale. The web's main limiting factor is the attention of the people using it. Unlike other media tools the web experience is an interactive process where the user has ultimate control over what they wish to view. The constant battle is commanding and sustaining the attention of users who are becoming ever more selective about what they view. Anyone can establish a business on the Internet but ultimately only the most innovative and hardworking web entrepreneurs will reap the rewards. On the web an environment of lower business costs, higher volume and greater competition is taking shape.
Webonomics, "the study of the production, distribution and consumption of goods, services and ideas over the World Wide Web", is essential reading for anyone with or wishing to set up a business on the Internet. Webonomics represents a new economy with different rules, new forms of currency and new consumer behavior. The author, Schwartz identifies nine principals essential for web success backed up by numerous examples of failed failing and successful web ventures. Success on the web is ultimately a combination of the word of mouth, direct marketing, advertising and public relations. We provide a synopsis of Schwartz's nine essential principals.
Maintaining a successful content based web business requires far more than momentarily grabbing user attention. Their attention needs to be sustained by offering them something of unique value inducing them to keep returning. In a nutshell it's the quality of experience obtained at your site that is important not the number of visitors. To ensure user loyalty a lasting bond has to be forged. Some of the better and more frequently visited sites build up a community. Here people sharing the same tastes and views can congregate and interact. The way to success for any content creator on the web is to find a unique niche and use the interactive features of the web to cater for a very specific and loyal group of individuals.
News is a perfect example of a magnet that attracts users onto the web every day. As such there are hundreds of companies vying for user attention. To attract attention value added news needs be offered. Newspapers have typically offered local content as their value added news but intensively covering a specific topic and delivering it to a previously unreachable audience can also add value. One step further would be to customize news for each individual, filtering news and selecting the stories that most fit the criteria entered on a simple form. Customized information needs to be delivered to consumers throughout the day thus enticing consumers to spend more time interacting with a trusted brand name. As such rather than boost market shares these interactive products boost mind share among a group of important customers.
In the days where the Internet is packed full of companies offering cut priced goods and freebies it may seem suicidal to charge a subscription to view a content website. Walter Isaacson, the 1993-1995 new Media division editor for Times magazine argues that paid information is inherently more credible. Often charging a subscription is viewed as tangible proof that you are providing people with quality information. Certainly it is an honor that users to pay to view your site simply because it doesn't happen all that often.
Companies have to be on the web for results not exposure. The web site is not a mass media tool, two users of the similar demographies can be visiting completely different sites, the web is a niche medium and ultimately a personal medium. Often there exists a big difference between companies grown on the web and those transplanted onto it. Frequently the latter are established brand names there to promote off line products and ventures. Often they offer little more than glorified electronic brochures. Tolerance for these is fading fast as users become increasingly selective.
People will tend to shop online only for information rich products. Increasingly cutting costs by traditional bricks and mortar shopping ventures has lead to a decrease in the information available on any one product. Web sites can fill this gap because information is what sells products on the Internet. Online retailers and marketers need to stock their web site with facts, news, knowledge and advice about their products. Allowing customer-customer interaction and customer-author interaction can increase the benefits received from online shopping. At the end of the day it's the promotional sites for information poor products that will fare the worst simply because people won't spend time comparison shopping for information poor goods.
The web represents a fundamentally new way of approaching marketing. Whilst mass media ads tell you that a product exists and sells you its benefits a web ad must link you to in depth product information and prompt into thinking about making the purchase. The top-rated web sites namely the search engines have been receiving the lion share of advertising money. But similar to billboards, although lots of people will pass them very few will take time to notice them. Ad banners at these sites typically get click-thru" rates of less than 1 percent. Faring better are ads on content sites, "click-thru" rates here are between 2 and 5 percent. Again it is the quality of experience that is more important than the quantity of visitors. A faithful visitor of a web site is more amenable to the advertising placed there and so more likely to "click-thru". Advertisers should work at attracting smaller numbers of well qualified and interested consumers.
Brand names establishing websites that live up to or exceed their reputation will become more valuable whilst those that do not are likely to lose their eminence. Many well established companies have made the mistake of establishing second rate non interactive web sites that merely act to promote their offline products. Trusted brand names matter even more on the web. Brand names save the time and aggravation of sorting through the cluttered marketplace. Establishing a new brand name on the web is difficult. The best chance of success occurs if you are the first to offer a product or service. Companies that can then maintain customer loyalty and create online communities are on the road to success.
Demographic and psychological information on your site's visitors is increasingly important. This knowledge enables the promotion of products to targeted groups and provides an insight into user preferences and future demands. However, consumers need to be compensated for the personal information they disclose. Consumers are concerned about data privacy but many are willing to trade this in if the rewards reaped are big enough. Registration requires something more for the members, for example personalized news, entertainment and advice, or membership in a compelling online community. Personal data should be used so that the consumers benefit. Quickly sites are learning they will benefit more by ensuring customer privacy rather than by selling their information on.
It is becoming more and more mandatory for many industries to offer self-service options. The first web site offering such a function was Federal Express where customers could check the delivery status of their urgent package. Self-service provides for the highest level of customer comfort. Customer's demand increased comfort control and convenience. A spokesman for Massachusetts Registry of Motor Vehicles, the first online motor vehicles department has said, " We believe the public would rather be online than inline." Similarly industries such as the airlines are aggressively promoting direct customer booking as a way to reduce costs, increase efficiency and boost customer loyalty.
Value based currencies enable you to create your own monetary system. Value based currencies are monetary systems in which corporations reward loyal customers with points that can be redeemed later for real goods and services. As consumers go online to check balances and spend their points marketers win over their attention and form closer relationships with them gaining their loyalty.
Possibly the greatest advantage of doing business on the Internet is that even the smallest businesses can compete in the web's global marketspace. National borders are effectively erased providing even the smallest of companies a global reach at unprecedented low costs. Many companies ignore the international opportunities of doing business on the web. However, a third of US web based retail companies are exporting in comparison to a tenth of businesses operating traditional distribution methods. Although English remains the most dominant language on the web, to maximize user potential German, French, Spanish, Japanese, Russian and Chinese are also viewed as ultraimportant languages. While 5 % of sites reporting revenue were from the Asian Pacific region, companies in this region are developing Web sites at a much faster pace than any other region. Strongest growth is occurring in Japan whilst China remains the country with the biggest potential growth.
On the Web competitive advantages may last a matter of weeks, therefore Web sites must continually adapt to the market. It is essential to adopt a proactive stance towards deploying new technologies before competitors do. E-mail feedback and suggestions should be taken seriously to keep abreast of changes in demands and desires. The web economy is such that it is difficult to maintain a competitive edge, customers are so empowered they expect abundant choice and instantaneous service but also don't expect to pay much for it.
In long run net margins will be lower on the online world because it facilitates effortless comparison shopping between a vast number of on-line competitors. This competition will only increase as more and more companies go online. Since 1997 when this book was published the number of websites is still increasing. As too is the number of sites offering cut price goods and freebies to entice viewer attention. The ever increasingly competitive market ensures that running a profit earning web site becomes more and more difficult. Competition also acts to weed out non interactive and stagnant web pages. Stagnation on the web is as good as death.
Webonomics is an easy and informative read. Schwartz illustrates his nine essential principals with numerous relevant and detailed examples. Despite the fast rate of change on the world wide web this enlightening read can still be highly recommended for all doing business over the Internet.
Schwartz, E. I., (1997) Webonomics. Nine essential principals for growing your business on the world wide web. Broadway Books, New York.
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The Internet revolution is having a profound impact on the way industry affects our environment
In this day and age it seems that the benefits of the Internet never stop. Studies have now demonstrated that the Internet revolution is having a profound impact on the way industry affects our environment. Within the past two years more people are working from home; companies are using business-to-business (B2B) websites to coordinate their supply chain more efficiently, inventories are lower, warehouses are emptier and online habits are reducing paper needs by millions of tons.
Joseph Romm of Washington's Center for Energy and Climate solutions says, "The Internet is allowing a type of growth that uses energy and resources better." For example a book purchased online costs approximately one sixteenth the energy of one bought in the store. However, if you demand overnight shipping it'll take six times the amount of fuel as normal delivery thanks to jet-fuel costs.
In general one minute spent driving uses the same amount of energy as 20 minutes of using your computer. According to the Organization for Economic Cooperation and Development, the Internet could make 12.5 % of retail space superfluous thus saving around $5 billion worth of energy per annum. Furthermore a study by Boston Consulting Group claims the Internet will reduce worldwide demand for paper by about 2.7 million tons a year by 2003.
So not only does doing business over the Internet increase comfort, efficiency and convenience it also goes someway to slow the destruction of the environment.
Best Regards,
Paul A. Renaud
