Les Jones

E-commerce > Tuesday E-commerce Report #4

Google is experimenting with new geographically-targeted Google searches using zip codes. It promises to be a boon for users (who will find local resources) and for advertisers (who will be able to target ads to local customers).

Apple's iTunes has sold 50 million songs in 11 months. There's a business model. Take an activity (file sharing) that was largely illegal and do the legwork to make it a legitimate business.

Numarkets takes over the work of selling on eBay. They photograph the item, write the description, upload the listing, and process the sale and shipping. The company - based in Etowah, TN just down the road from where I live - is using a franchise model to bring their service to cities around the country, and recently got another round of funding.

Extortionists Targeting Web Companies

A man tried to extort Google by threatening to release a software program. The program would have simulated click-throughs on Google ads, which, ironically, would have generated revenue for Google, but would have defrauded advertising customers and generated distrust. Google reported the extortion to Federal authorities, who arrested the man.

A group of hackers demanding $10,000 protection payments targeted online bookies in the UK. The bad guys used DOS attacks designed to keep the sites from accepting wagers.

Delaying a wager by a few minutes is disruptive to online gambling, but other industries are vulnerable. Another potential target would be online brokerage houses. eTrade, for instance, offers a nine second guarantee - any trade not completed in nine seconds is free. A DOS attack that delayed trades by even a few seconds could cost eTrade a fortune in brokerage fees, and undermine customer confidence in the service.

Sweet Spots

Thought-provoking discussion of software pricing at Fog Creek:

With software sold in corporations, as soon as your price gets up in the $3000 level, the amount of approval it needs is so absurd that you are not going to sell products without a salesperson making a few visits. Hiring the salesperson, sending them out to make presentations, hotels, airfare -- now it costs $50,000 to get the sale done just in sales closing costs. That's why you see a lot of software products at $100,000 and a lot under $3000, but anywhere in-between and it's impossible to make sales.

I work for a company that resells products (costing anywhere from $300 to $100,000 per), but which also sells its own consulting services. We're seeing a divergence similar to this in the consulting arena. Lots of work being driven to the low end (which we don't want) and to the high end (which we do want), with a no-man's land in between.

The 2004 Presidential Race and the Internet

Presidential campaigns are trying to stretch their campaign dollars by getting their message out using Internet video.

FundRace lets you enter your zip code to see which candidates your neighbors are contributing to, and how much they're contributing. (There's a $2,000 limit per individual.) Like home property values and prison records, this information is a matter of public record and has always been available, but the Internet has made it much more accessible.

One Possible Approach to Boutique E-commerce

There are an endless number of niches in e-commerce. Some of them only work for big companies, but there are niches open to individuals and mom-and-pop operations. One angle for a small outfit is to combine reviews with e-commerce. This approach would be perfect for an acknowledged authority in a particular field, but it could also be used by a self-appointed expert who does his homework.

Here's a potential example using two Web sites I like: Glowbug and Flashlight Review. Glowbug has been around for a long time. It's a boutique e-commerce site that has a narrow specialization: LED flashlights and keychain lights. Flashlight Review is a site of - you guessed it - reviews of flashlights, keychain lights, and headlamps, but doesn't do any sales.

Imagine taking the well-designed layout and shopping cart of Glowbug, and mixing it up with the extensive reviews of Flashlight Reviews. It could make for an unbeatable combination for anyone shopping for a new light. Also note that those tiny flashlights and LED lights take very little space to warehouse (meaning they'll fit in your spare bedroom or garage), cost very little to ship, and have a high niftiness quotient that make for great gifts and repeat business from gadget hounds.

Amazon of course, performs a similar function with its customer-written reviews. Amazon's customer reviews have been called into question, and unfortunately the same thing could happen with reviews performed in the model I'm suggesting. For instance, the site owner might steer customers towards items that have a higher markup. As with all reviews, the reviewer's impartiality and credibility are factors.

Les Jones is an e-commerce manager living in Knoxville, Tennessee. He offers consulting in Web design and site promotion, and programming in JavaScript, Web+ Markup Language, and the Web+Shop shopping cart system.

Posted by lesjones