Although we’re only three years into web commerce, the price of entry into the market – to develop a service and establish a brand – is already beyond the reach of most wallets, making a trip to the venture capitalists a necessity. Nevertheless, the consensus from CEOs with some of the biggest web brand equity – Excite, HotMail, Intuit and Preview Travel – say that if you want to get in, do it now.
By William Fellows
Buy customers, buy distribution, buy content now – because online real estate in any shape or form is only going to get more expensive. It’s cheaper now than it will ever be. And do it quickly, they say, because much of the available shelf or newsstand space is already full, even where there are only three or four brands in each sector, and those that own it will create flanker brands to keep others out, just like in the retail industry. All of the above may nor apply, however, if you can invent a new category. After all in most industries the great and major innovations that have made them what they are came about more than three years down the road. Ironically, all of the companies agree that the best method of distribution and advertising for their sites and services has been word of mouth.
HotMail offers real-time messaging
HotMail Corp will later this month or early April begin selling a new service which enables participants to communicate in real- time. The Microsoft-owned company which virtually owns the brand for free email calls it an instant messaging platform – email, messaging and chat all rolled together; similar, we guess, to America Online’s Instant Messenger and its buddy-list mechanism, where messages pop up for access while you are online. CEO Sabeer Bhatia says the company is up to 13 million customers since its debut on July 4 1996 and is adding accounts at the rate of 80,000 per day. It plans to charge for a slew of value-add services on top of the free-email, but says they will be the cheapest of their class in the industry.
i Village lobbies top women
i Village is now devoted exclusively to women, who are said to be turning to the web faster than men – and there’s still a much larger untapped market. The portal has hired itself a political organizer who is touring US cities making sure the service is known by the most important and influential women in local politics and industry before moving on.
Intuit targets mother of all markets
Intuit Inc CEO Scott Cook says his company is currently testing its entry into the auto, life and health insurance financing markets. A person can spend half a day – or more – making dozens of calls to get the cheapest auto insurance, and can save fantastic amounts in the effort. The problem is that most people can’t be bothered to or don’t have the time or want to go through the pain of it. Intuit is building sites that will display a range of available insurance services, allow a customer to enter their requirements, find the cheapest price and log out with insurance in place. Scott knows the insurers will flock because it’s a way to attract new customers who are so difficult to capture in that business. Why not sell books, an $85bn worldwide market, or PCs and components, a market worth several times that? Because in the US alone the financing market is worth a cool $1 trillion; The mother of all large markets, argues Cook.
Crossing over from distribution to content
Excite Inc CEO George Bell believes the web commerce market is beginning a transition from a model in which distribution has been king to that in which content is king. Take the net portals as Yahoo, Excite, Lycos and other search engines like to call themselves now, for example. They’ve locked up most of the distribution strategies available and must now differentiate themselves. Each gets the same raw Reuters news feed but packages and personalizes it in a slightly different way. But how will they add value so that users go back to the site in future? It’s got to be content, argues Bell. For example he’ll be able to sell chat-room time if say Mick Jagger makes a live appearance on Excite’s chat service, but not on other sites.
Microsoft said to stymie online travel wannabes
Online travel outfit Preview Travel CEO Ken Orton thinks his company’s in a privileged position compared to other industries on the web. Unusually, there are only three players in the space, and Preview is the only pure play. Why? Because Microsoft Corp has bid up the price of entry to the point where it’s impossible to make a start. It asks a lot of dollars for real estate space on its web services. Apart from Microsoft and Preview Travel, the other major online travel company is American Airlines derivative.
