11 Ways the Internet is Playing Havoc with Every Business

Referring to Wal-Mart's upcoming redesign of its Web site, one analyst said it will give retailing a "jolt" and another said it will "change Internet retailing." Evie Black Dykem, of Forrester Research, Inc., said, "It will be the shot heard round the retail world." When the world's largest retailer stakes its claim on the Internet, many predict that life will never again be the same. "The power to navigate the world at the click of a mouse is a force that is transforming our lives like none before," wrote the editors of Business Week. A few paragraphs later, they added, "Anyone with a computer is a citizen of the world-and a richer world at that."

The extent of the Internet's impact on life and business can be measured by Merrill Lynch's willingness to place at risk its sales force of 14,800 stockbrokers as the company heads straight into the E-economy. When all of Merrill Lynch's explanations and assurances of protecting its brokers are stripped away, it's clear that the company sees its future on the Net.

Auto manufacturers are right there, too. The move to cut costs by cutting out dealers is clear, and it's driven by the possibilities created by the Internet. Whether it's real estate sales or travel agencies, these functions will soon be Net-based. Beyond the obvious impact, such as displacing stockbrokers or bookstore clerks, the Internet is disrupting every aspect of American business. One can surmise that full employment without inflation is possible only in an Internet world, where prices are actually dropping for many products and services. If the individual changes brought about by the Internet are dramatic and far-reaching, they are overwhelming when taken together. No business will escape the disruptions cause by an E-economy.

Here are 11 ways the Internet is playing havoc with every business:

• Lowering prices. A quick look around a CompUSA store tells the story. "Where are the computers?" someone asks. They're hidden away in the back, and software takes center stage, along with such electronic devices as PDAs. Computer consulting firms were the first to drop hardware because of paper-thin margins. Next it will be the stores. Whether it's for computers or airline tickets, the ability for customers to use the Web to shop is unequalled. Inflationary pressures are weak, even with full employment and high consumer demand, thus challenging a near-sacred economic dictum. Is the Internet playing a role in keeping prices down?
• Reducing costs. Whether because of the ability to handle more business with fewer people or the ability to do it faster, the costs associated with doing business are coming down. For example, graphic design firms have long relied on stock photos for brochures and ads. These are high-quality photographs that are purchased on a one-time basis for specific projects. The Internet has changed the picture. Not only can stock photos now be downloaded, they can be purchased for a fraction of the former rental fee. Graphic designers now have a broader selection available at a lower cost. Even the use of basic E-mail eliminates the need to send materials by express mail or delivery service.
• Extending reach. In one 12-hour period, my firm received two inquiries from magnet manufacturers in China asking us to consider selling their products. Obviously, they had entered "magnet" as a keyword and turned up our "magnet marketing" concept.
  
  Perhaps as much as any single Internet site, ebay.com has changed the way consumers and businesspeople look at the issue of location. A successful antique dealer closed his doors and transferred his business to ebay.com, freeing himself from the price and taste constraints of a particular locale.
• Giving customers control. Perhaps the most stressful change for many businesses is the fact that customers no longer look to them for product information. Because of the ability to do extensive research quickly via the Web, customers are informed before they access a dealer. Auto sales is a good example. Customers now arrive in the showroom having made their buying decisions in advance. They know what they're willing to pay for their vehicle of choice and resent having to encounter inept and overbearing salespeople. This has changed the role of the salesperson. No longer persuaders, salespeople are now facilitators. The most successful identify what customers want to accomplish and help them to achieve it.
• Eliminating middlemen. Distribution channels are changing rapidly. It's known today as disintermediation, but let's call it what it is: cutting out the middleman. Why shouldn't you get your next car loan via the Internet if you can save money and time? Although a primary goal is to lower costs, an equally important objective is to get closer to the customer (but not necessarily near by). A business owner reported that he has two mortgages and a car loan at a bank that has never once approached him for more business. More precisely, the bank hasn't taken the time to recognize opportunities to build a closer relationship with him. The Internet is quite different because the focus is on the information provided by the customer. The person getting a car loan from an Internet lender will be afforded other opportunities to do business based on the data supplied. In effect, the Internet bank may understand the customer better than the one with bricks and mortar.
• Broadening choices. Someone looking for a digital camera would never expect to find all available models in one store, let alone evaluation reports on each one. Even if it were possible to have them all on display, the selection process would be long, arduous, and probably less than satisfying. In the final analysis, the salesperson might well cast the deciding vote, just to end the frustration. The same is true for cars, colleges, computers, and just about anything else. But because of the Internet, we've come to expect a broad range of choices. In fact, we demand it and feel shortchanged by a store with a narrow range of choices.
• Demystifying sales. It might not be popular to say so, but selling has been based on guiding, directing, and influencing the customer to make a particular buying decision. Salespeople were happiest when they held the reins, sensing that prospects depended on them and waiting for customers to say the magic words, "What do you think I should do?" Today customers are loaded with data and information, having visited a variety of Web sites, and the mystery is drained from the sales process. The fallout from this is earth-shaking. Face-to-face selling is in jeopardy. Customers have discovered that they can negotiate easily and successfully for almost everything-from hotel rooms to homes-on the Internet. As a result, watch for a backlash. Instead of wanting to deal with a live human being, the trend will be to choose technology-rich venues where a person doesn't intrude in the process.
• Making information essential. One of the most far-reaching changes brought about by the Internet is that the customer expects to receive worthwhile information, not glitzy ad copy. On every page of a large insurance organization's Web site is a "Buy Now" button. In fact, it's the first item the visitor encounters. What's painfully obvious is the company's inability to understand the customer, even though the site is dripping with such words as "customer commitment." Web site visitors are not there to be sold; they're there to be better informed so they can make the best possible buying decisions. Most Web sites make the fatal mistake of attempting to replicate the face-to-face selling situation where they feel personal presence, selling techniques, and persuasion make a difference. In effect, they send the customer the message that their only purpose is to sell something, not to serve the customer's interest.
• Redefining service. The concept of service has changed. Just saying "we're here to serve you" doesn't connect with customers. The issue is now serving customers when, where, and how they want. There was a time when we would wait somewhat patiently in a line at the bank or McDonald's. Not any more. If we go into McDonald's or Dunkin' Donuts, we're upset to find someone in line ahead of us. If we buy something on the Internet, we expect instant confirmation of the transaction. Anything less is viewed as second rate or unacceptable. Next-day delivery has become the standard.
• Altering communication. Several years ago, it might have taken several hours for someone to get an E-mail; faxing was quicker. Now, at most times of the day, the Internet is so fast that we can conduct actual E-mail conversations. Rather than a send-and-wait-to-receive process, communication has been elevated to instant send-and-receive, a seamless updating that doesn't require pauses. This may well be one source of the stress that plagues so many workers. It may also be driving the desire for new ways to be wired in a wireless world. There's no time for interruptions in the communication process. The customer-internal or external-who doesn't get an instant response feels abused.
• Upending the buying process. Customers perform their due diligence before they let it be known they're in the market. It might even be called guerilla buying, since customers don't surface until the moment they're ready to make the purchase. This is why information-rich Web sites have emerged as an essential marketing tool. The goal is to connect with the customer in a manner that fits. In effect, marketing is the most important element in the process. Its job is to send signals-keywords or images that serve as hooks to attract customers-so they can be brought into a company's orbit willingly. The primary job is no longer to be "out there" trying to make sales. Today's prospects remain mostly invisible, surfacing only when they're ready to reveal themselves.