June 1996

Root Page of Article: Viewing the Web as a Marketplace, by Gina O'Connor and Bob O'Keefe


[] Lapham observes that companies often overlook the savings model when they consider Web revenue sources.

Large and growing market. Viewed as a marketplace, the Internet offers more than 30 million global consumers. Companies want a piece of what is predicted to be a very large growth area. Many companies feel that they have to start working out how to gain some of this market now, although sales volumes may not be appreciable for a few years. Further, users of the Web are a highly educated, computer-literate group, which is an attractive market for vendors of specialty, high-tech products: a typical offering of many a small firm.

Global presence. Companies that serve small niche markets with highly specialized products now have access to potential consumers around the globe, for very low cost. Without the Web, the costs of locating and selling to enough customers to make business profitable would hamper the probability of these niche companies' long-run survival.

Supporting Logistics for Physical Delivery. The lure of the Web should not be considered in isolation from other advances in direct retailing. While many services can be delivered on the Web, most products must still be shipped. There has been a quiet revolution in distribution and logistics where companies like Federal Express and UPS can efficiently ship small quantities. Airborne Express will even manage a companies' inventory, so that shipping a product may be as simple as informing your logistics company (electronically, of course) where to send a particular item.

Regulatory Issues. Many companies need to avoid the regulation of their product and service that occurs in physical retailing. The most obvious example here is pornography, where local laws can ban distribution of material that is federally legal, or limit the way in which it is made available. There are also some perfectly legal products that are difficult to distribute because of attitudes and the association they have with morality. A good example is condoms. While sales of condoms have boomed due to the AIDS epidemic, selling condoms is still not viewed as correct by many retail outlets. ^

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