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|If I wanted to stick a nail into a wall, and I didn't have a hammer, I could use a
saucepan. The nail may bend, the wall may crack a bit, but if whatever I want to hang up
isn't too heavy... it could work.
If I were on a desert island, with no tools other than a hammer, maybe I could use it for cooking: by heating the hammer on a fire and cutting things into small pieces I might manage some sort of clumsy sukiyaki. Not a chef's dream, but it would be better than eating raw lizard.
But when we are not marooned it's better to choose our tools according to what we are doing. A hammer, a screwdriver, or pliers, depending on the task; pots, pans or oven depending on what we are cooking.
I wander why, when dealing with the net, so many people use (or offer) tools and approaches that are too generic and simplistic to fit the job at hand. They may, sometimes, work; but they are much less efficient than an organized plan based on a clear objective and executed with an appropriate method and toolbox.
The time has come when there are much more accurate and manageable analyses and approaches than the generally acclaimed routes to fantasyland. They are still isolated voices in the prevailing nonsensical fanfare, but they are there. We should become less tolerant of how-to theories (and practices) that would appear primitive and clumsy to Robinson Crusoe, but are still acclaimed in the media, written in books, presented in seminars and conferences, taught in training courses and in universities (much to the dismay of good students who try to do their homework seriously).
There are many widespread mistakes. Roughly, they fall into six categories:
It's just a simplistic, and only apparently more appropriate, to think of net marketing as just another application of direct marketing. It's something else. Not just because response is much more direct that any traditional direct marketer could dream, but because net communities and relationships are new and different: they need to be understood much better than anyone can by applying literally one of the traditional direct response criteria.
And... errors combine in a treacherous way. The term "exponential" is used too often when discussing the internet, leading to all sorts of unrealistic projections. But in this case it's meaningful. Errors don't add, they multiply.
Conversely, the combination of sound strategies and appropriate tools multiplies efficiency. But there's a problem: this needs much more time, dedication and application than most companies and organizations are prepared to commit.
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|Not only in the remote and backward provinces of the internet, such as my country,
it's still a widespread mistake to think of the net as a "mass medium". Nobody
knows if there really are 50 or 100 million internet "users" worldwide; but
that's irrelevant. Let me quote again Gerry McGovern.
In an article
published online on February 1, The 100 Million Customers Myth, he said:
That's very clear, and brightly written. I'd just like to add that 99.9 percent of the goods or services offered online are not interesting for "all" net users (no matter how many they can be) but to a relatively small part of the network community (the smaller, the better). The objective is not to attract "all", but only those who are interested in what we have to say or to offer; and in a way that is interesting for them. Obvious? Yes. But how many know how to do it, or are even trying?
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|Professor Gabriele Calvi, president of Eurisko (one of the best Italian
organizations for the study of social trends and behaviors) published an interesting
article in the latest issue (December 1997) of his quarterly Social Trends report.
Here is a summary of some key points:
I would like to add that there is a problem of quality as well as quantity. If we had a computer for each pupil in every school, and if they had connections, and if they were really used, and if we had enough teachers capable of providing a minimum of guidance (and that's a lot of ifs) we would only be half way there. Families (as well as politicians and teachers) are bombarded every day with sensationalism and misinformation, that make them uncomfortable and scare them away. The quality of technical training available is often pathetically poor, overtechnical and unfriendly.
Nothing is being done to correct the dominant trend that makes equipment and software unnecessarily expensive and complicated.
Above all, the problem is culture. We need to train the trainers, as well as to pump some humanity and reason into the minds of politicians, administrators, teachers, parents and opinion makers - that are still largely cluttered by a poisonous combination of technomythology and technophobia.
Professor Calvi's article is followed by some interesting charts. Here are two:
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|This is not a "case history". It's a hypothesis, based on general notions
rather than on the real experience of Italian online bookstores (of which there are 70,
but they are quite small).
Could someone set up a general online bookstore for books in Italian, such as Amazon for books in English? Of course it's a much smaller market, but I think it's worth doing.
I shall reveal a little secret. Six months ago I had considered quite seriously the idea of organizing something of this sort. But then I gave up, because I read that someone was well ahead of me in planning such a service. I don't think that, in its early stages, this immature market has room for two or more successful leaders. I don't know what has happened to that project. If they are really going to come on the market, I wish them well; and if they do a good job I shall be one of their first customers.
I hope my readers aren't too bored with my considerations on a "theoretical" case history. I hope it makes sense; and I believe that some of the basic concepts apply to several other categories, non only books.
First of all, is there a market?
Of course companies like Amazon and Barnes & Noble operate on an enormously larger market: not only the United Sates, but the vast worldwide community of people that can read English. And of course there is a high concentration of people who speak, or at least understand, English in the internet. Does it make sense to operate in a much smaller market, such as books in Italian? I think so, for three reasons.
Of course an Italian bookstore could never become as large as the American giants. But being small has its advantages: the territory is too limited to attract the attention of large multinational invaders.
Why a bookstore?
That books are an ideal category for online selling is proven by the success of Amazon and others. But even without that experience it would be pretty obvious. People who buy books are more interested in content than appearance. And (more so than in other fields) it's possible to organize browsing systems that are more efficient than the shelves and stairs of a large "physical" bookstore; and to provide information, such as summaries and reviews, at the touch of a button.
Are margins good? Yes. Half the price of a book goes to distributors and retailers.
Delivery time? That's a problem. Our postal service is notoriously slow and inefficient. But with good organization, and intelligent use of couriers, solutions can be found.
I think there are two keys to success in this business:
Logistics. 40,000 books are published in Italy each year. If editions had an average lifespan of three years, that would be a catalog of over 100,000 titles (not including the recovering of out-of-print books, which a really good online bookstore should be able to manage). Too many, of course, to be stored in a warehouse. The online bookseller must have a very efficient and fast system to receive the books from publishers or distributors and ship them to customers. There are over two thousand publishers in Italy and working efficiently with all may be quite a task (but only 160 publish more that 50 books a year, and that makes the picture a bit less complicated). It's not easy to organize all that efficiently and smoothly. But if Amazon can manage two million books, and even find second-hand copies of old ones... it can be done.
Service. Not just quick response and delivery. A well organized catalog, a well planned offering of reviews, information, news, etcetera. A site that people will want to visit even when they are not planning to buy.
Would traditional bookstores close? Of course not. Nobody would want to order online what is easily found in a nearby bookstore or newsstand. And nothing can replace the pleasure of walking around a good bookstore and talking to an intelligent bookseller.
There could be cooperation. Why can't the bookseller have a terminal, to order instantly for his customers those books that are not available at that time in his store?
Is it only for Italian books? Maybe not. One of the strategies for this business could well be networking with online bookstores all over the world, to offer books in English and many other languages. That could be a traffic builder. If someone wants a book in Greek or Dutch, and knows that the Italian bookstore can find it, he or she would visit the site and probably buy something else as well.
Does it need an investment? Yes. Organization, structure, technology - and people. Service cannot be totally automatic. Customers will be very disappointed if they can't get a personal answer to a question or suggestion in less than 24 hours.
Would return on investment be fast? No. The key secret in such an operation is to keep initial investment relatively low and build gradually. Even so, it needs money to get started and the breakeven point is not round the corner.
Would it need a big advertising investment? I don't think so. Media (and all the culture institutions) should be very interested in the opening of such a service. In any case the news would spread, maybe not instantly, but steadily, all over the net. And the key to success is word-of-mouth. It may be slow, but it's very effective. The key marketing tool is to make sure that the first customers are happy, and then keep up the "virtuous circle".
Is it only books? No. I believe that books should be the backbone, especially in the beginning; but when the operation is established it becomes relatively easy to add music; and electronic publishing... if and when there will be enough really good production.
Would the success of such a business please only it owners? No. It would make the entire online community very happy; and it would be to the advantage of anyone planning to sell online. Books could be the icebreaker for "electronic commerce" and other online activities.
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|Can we learn from an example so tiny that it can seem irrelevant even in the eyes of
"small and medium companies"? I think we can.
There is a business online called Grifos that sells "writing instruments". That is, rather special pens and writing sets, with prices ranging from 100 to 1000 dollars. The sort of thing that is generally bought as a gift for a special occasion.
Income: 25,000 dollars. Personnel: one. Grifos sales are practically all abroad; 90 percent in the United States.
Grifos has been online for a year and a half. It built, gradually and patiently, a network of relations. It never spent a penny on banners or any other forms of "advertising". Its tool is word-of-mouth: one satisfied customer brings another. It builds customer relations carefully: generally three personal messages are exchanged before an order is received.
After eighteen months of gradual development, Grifos has reached the magic point of breakeven. Investments are covered, from here on it's profits.
Is $ 25,000 a year (and growing) a small amount of money? Not for a single person, on top of a regular income.
How is all this possible?
The answer, as often happens, is in the personal life and experience of the founder of the business; who is also, so far, its entire workforce.
Maurizio Stura is an employee of a company that for forty years has been making, and selling to wholesalers, the pens that now he offers online. In agreement with his employer, he has been exploring alternative distribution channels. He made some experiments (such as mail-order advertising in German magazines) that were unsuccessful. But now, with the internet... He has personal experience of the net and works on it in the evening (of course one of the advantages of e-mail is that the time of day doesn't matter). Yes, it's time-consuming; but, he says, "it's more fun than watching television".
He experimented with asking other people to set up and manage his website, but then found that it was more effective (and less expensive) to do it on his own. So he invested in equipment (including a scanner) and developed his expertise by trial-and-error.
His business is expanding. His strategy is to sell directly to customers, but he stays flexible. Now he is negotiating with a wholesaler in Hong Kong.
Yes: it's a tiny business. But that has its advantages. You can stay close to customers and your territory is too small to be invaded by large competitors.
In Italy? He has two or three customers. If he had started from the home market, he would not have reached the minimum speed for take-off. But now that the system is in place, he is ready to look for opportunities in Italy as well. Three happy customers can bring nine, and so on... In his business, small numbers count.
He was very pleased when I told him I would publish this article. Not just because it may bring him a few customers. "The more these things are discussed, the happier I am. - he said - The more people understand how to be successful online, the better it will be for all of us." I wish many more people, including much larger operations, had the same understanding of the value of shared knowledge.
Is this case so unique and different from any other that we can't learn from it? I don't think so. There are criteria that can apply to almost any business, of any size. Here is a simple list of success factors:
It has been said, over and over, that in the internet small, lively, entrepreneurial initiatives can lead the way. Well... it's beginning to happen, and not only in the most advanced countries.