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Source: eWeek

Posted on January 12, 2002

      We think it was Bill Gates who said you can't turn a dumb or even merely obvious idea into a business plan by adding "on the Internet." But we're also sure that there are ways to become a successful Internet-based business in 2002.

      If 2001 taught us nothing else, it should have proved the folly of "free." Seattle Union Record columnist Paul Andrews has suggested that Microsoft would have done the Net community a service by charging even a nominal fee for Internet Explorer-instead of telling users, in effect, that "nothing on the Internet should cost money" and telling other software developers that "to compete with Microsoft, the price had to start at 'free.' Build it, and get them to come. Worry about charging later." The result has been the wholesale-and e-tail-destruction of value as the core of a business proposition.

First: Respect the intelligence of customers.

      Tell them why what you're selling is worth what it costs. In the long run, the intelligent customers are the only ones that you won't have to chase over the cliff of your own undeliverable promises.

Second: Create, nurture and maintain a brand.

      Define what you do, communicate what you do and do it. Don't get greedy and dilute the value of a brand by trying to stretch it across too many different businesses. Amazon.com was once clearly labeled "the world's largest bookstore," but then it tried to become the Wal-Mart of the Net-and it was much easier for Wal-Mart to do that itself.

Third: Define your business in terms of customer experience, and develop affiliations that make that experience convenient and fun for B2C; efficient and productive for B2B.

      Use online reservation services, such as OpenTable, to see which hotel concierges are sending customers to your restaurant. Enhance Web security services and products with discount arrangements at insurance companies selling business interruption coverage, as in the exclusive partnership between Counterpane Internet Security and Lloyd's of London. Make the Web's connections your strength by using them to add value to what you do, like General Electric with its eProcurement networks (No. 1 on eWeek's 2001 Fast Track 500)-instead of struggling against the Web's ease of comparison shopping and brand switching.

Fourth: Understand that e-business doesn't stop at the front end, with product presentation and order-taking on the Web.

      To deliver the reliable, fast, economical experience that keeps customers coming back for more, the electronic integration has to extend all the way into the warehouse or other back-office functions-and all the way out into the last phase of the transaction.

      In 2002, e-business success is possible-even likely-for those who adhere to these principles.

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