Seven years ago, in the Fall of 1995, I made a presentation to a group of CEOs about the Internet. I showed them various web sites that I was fascinated with at the time, mostly related to engineering, scientific, government and academic projects. Probably the most exciting site to me at the time was The Visible Human Project. The word e-business had not yet been coined by IBM and there were not many exciting business web sites. One that seemed quite novel though was a site called Amazon.com. I asked for a show of hands from those who had heard of Amazon. Not a single hand went up.
Amazon opened its virtual doors in July 1995 with a mission to "use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible". During the next few years Amazon became very popular and it was hailed as not only the best web site, but also as the new model of how businesses of all kinds would operate. The stock climbed from obscurity to a market capitalization of nearly $50 billion. The peak stock price of nearly $110 occurred in late 1999 when the fall began leading to a price below $10 per share in 2001. The company went from being the prime example of how to do everything right to an example no one used any longer — or in some cases an example of what not to do. It is time to use Amazon as an example again. A good example.
The Census Bureau of the Department of Commerce announced last week that the estimate of U.S. retail e-commerce sales for the third quarter of 2002 was $11.061 billion, an increase of 34.3 percent from the third quarter of 2001. This amounted to 1.3 percent of total retail sales, up from 1.1 percent in the prior year. This is just one more of the many metrics that support my assertion that we are only 2% of the way into what the Internet has in store for our business and personal lives.
What will it take to get e-business to 25% or 50% of total sales? There are a number of obstacles that I have written about in Net Attitude and here in the weblog — and most of them are not related to technology limitations. One inhibitor is spam, which discourages or frustrates an increasing number of people. (more on spam coming up — prior posts in the Public Policy weblog archive). Most of the inhibition comes from web sites that crash, are slow or make it next to impossible to find things or decipher the complexities of their shopping carts. Every major business that I have spoken to has said they have a "major site redesign" in the works. This is probably necessary but there is a lot that can be done to remove the inhibitions with much simpler efforts.
The examples abound — we all experience them every day. I recently signed up with an on-line pharmacy which offers prescriptions that can be filled by mail. An on-line registration form is available to input all of your personal information and contact information for your doctor. The form is quite easy to fill out and there is an update form for changes. The site also offers an e-mail messaging service so you can be notified via email when the company has received and shipped your order. This all sounds good, right? Now comes the catch. To actually order a prescription you have to "print, complete, and mail (or fax)" the "Registration and Order Form". This is the same form you fill out on-line. The form that prints out requires you to fill out all the fields with a pen. The same information that you just entered! Could the form have been printed out already filled in with that information? Of course. Would this require a "major site re-design? No. All that is required is an attitude toward making things simple for the customer. It isn’t the big things that inhibit us; it is lots of little things.
I do trust this particular on-line pharmacy company and was willing to give them a lot of very personal information and I am confident that they will not intrude on my privacy. This is not the case with many other sites — privacy remains an issue very much in front of us, not behind us. At another company I changed the privacy preferences in my profile and then received an email that said, "Thank you for keeping us up-to-date with your personal preferences. These changes will generally be processed within 3 working days but it may take up to 7-10 working days". They can process an on-line charge to my credit card in 7-10 seconds but they need 7-10 days to respect my privacy! In an email from Jeff Bezos, Amazon founder and CEO, it says "if you’d rather not receive future e-mails announcing new store launches, please click the Your Account button in the top right corner of any page on the Amazon.com Web site. In the Personal Information box under the Account Settings heading, click the ‘Update your communication preferences’ link". One click and your privacy is respected.
Amazon continues to be a simple, fast, efficient, pleasant way to shop. One of my first experiences with Amazon was the purchase of a book containing prints of impressionist art. As I recall, the book was nearly $75. A couple of days after placing the order, I received an email informing me that the price of the book had been reduced to roughly $50 by the publisher and Amazon had adjusted the discounted price proportionately. I had already given them authorization to charge my credit card for the higher price. I would never have known that the publisher had reduced the price. How many e-businesses would do this? Probably less than 2%. Their "1-Click" ordering and even their return process are frictionless. I have never heard a person say they had poor service or been disappointed in any way with Amazon.
I am not a stock analyst and I have no better idea than the next person what Amazon stock will do. (My Dad always said this about stock market advice — "don’t give any and don’t take any"). I do believe, however, in what Peter Lynch — former manager of the Fidelity Magellan Fund and author of the best sellers Beating the Street and One Up on Wall Street as well as the more recent Learn to Earn — has said. He has espoused that rather than look at all the financial numbers of companies, a good strategy is to invest in companies that you personally know to have great products and great service. Seems to me that Amazon has their act together and has a bright future.
Disclosure: I have a small (insignificant) investment in Amazon stock. I am also an "Amazon Associate". That means that people can buy things from Amazon through the patrickWeb store and I get a small commission if they do. I donate all commissions to charity.
