CEO at Econsultancy
17 November 2000 13:46pm
What a day... as if Boo, Clickmango, Foodoo, Boxman, TheStreet etc. weren't enought, Garden.com "has had to announce a phased shut-down of the company’s retail operations to occur over the next couple of weeks".
Despite "the continued, overwhelming loyalty and support of our 1.5 million+ members and customers" Cliff Sharples, President & CEO, has had to sent an email to all customers saying "the company has been unable to raise the additional funding necessary to finance the company’s growth moving forward, and our Board of Directors’ was forced to make the difficult decision to begin an orderly, staged shut-down of Garden.com’s consumer business".
What's particularly intriguing about most of these examples is that they were / are all examples of *good* sites. Garden.com has long been heralded as a great example of best practice in online community building and contextual commerce. Do we all now quitely erase these companies and examples from our presentations just as political figures are sometimes erased from history? Or do we continue to use them but point out that they got the proposition right, 'just' the business model was never going to work?
There seems to be a disturbing possibility emerging that in order to meet users' extremely demanding expectations on the web you have to spend more money than you will ever make back out of them. It seems likely that the big question on everyones' minds going forwards is less 'how can we raise huge amounts of money in to order to spend it as quickly as possible in the interests of first mover advantage, 'land grab' and brand building?' and more 'how can we meet users' expectations but still make money?'.
One answer might be to confine yourself to a more narrowly focused proposition. Fragmentation, niche marketing, global interest segments is the way things are going anyway so perhaps you are better to pick a tightly defined area and conquer that. Control your spend by doing a few things really well and being very focused about who you target and how.
Another answer might be the continuing emergence of ASPs. Increasingly it is possible to buy in, or even hire, applications and content. Plug-in search or discussion forum functionality is already fairly common. XML standards and increasing content sharing and syndication mean that it is increasingly easy to 'plug and play' content. As long as you can get the proposition right, know your customers and market to them effectively then you might be able to quickly (and, most importantly, less expensively) piece together a high quality web proposition from various application and content providers. Costs can be controlled by hiring these things rather than having to buy or build them.
What do people think? Will it be only the big guys who will win out in the end because they can afford for the internet to be an extension of their existing business without it necessarily being directly profitable as a channel in its own right?
Free market research on digital marketing
Daily Pulse: award winning newsletter
It takes 30 seconds to register