John Audette Makes Predictions for Internet Commerce Development in 1998

Posted on December 9, 1997

John Audette has decided to go out on a limb and make some predictions for Internet commerce developments in 1998. Audette moderates the popular Internet-Sales Discussion List, with 8,500+ subscribers in 65 countries. "I-Sales" discusses online sales and marketing, with posts compiled into a daily digest.

He is also the founder of Multimedia Marketing Group, the oldest agency specializing exclusively in Internet advertising, promotions and public relations.

Internet Commerce Developments in 1998: Pithy Predictions from John Audette (first published in the I-Sales Digest, 12/3/97)

Tilting Playing Field: Advantage Big Dogs
The level playing field that was present in the early days of the Internet will continue to tilt. Barriers to entry are rising and it's going to be tougher for the little dogs to compete with the Big Dogs. Some of the issues that make it tougher for the little dog to compete include:
(a) Bigger pipes.
As bandwidth increases, so does the ability to deliver glitzier content, including audio, graphics and even video. The Web will become more of a true multimedia environment. Home built or low budget Web sites will look as crude as local community cable access television productions.
(b) NetStratification.
This is a pet theory of mine. The Internet will start to stratify and the "PremiumNet" will screen out pornography and spam. It will cost more to access and it will cost more to provide content. The Internet as we know it now will become the low rent district and will dominated by the pornographers, get-rich-quickers, spammers and, alas, small businesses that cannot afford the PremiumNet.
(c) Location.
As exemplified by the channels on IE40, what will determine good location for a Web site will be how close it is located to the browser, or better yet, how close it is located to the operating system. Only Big Dogs will be able to afford this kind of real estate.

Small Businesses Will Thrive in Niches
The Big Dogs may be virtually impossible to compete with in broad market areas, but the small dogs will thrive in niches that are too small to be viable to the Big Dogs, niches that require high touch, and niches that are created through sheer innovation.

Targeted, Opt-in E-Mailing Will Grow
Opt-in e-mail lists will continue to grow as folks get more clever at collecting addresses, and as stricter measures are put into place to block spam.

E-Pub Advertising Will Explode
Advertising on e-mail publications (e-pubs), such as e-mail newsletters and e-mail discussion lists will grow greatly. Our studies are showing that response quantity is low, but that response quality is very high, making e-pub advertising perfect for those with high-price or high-margin products or services.

Increasing Commodization: Razor-Thin Margins
For years now there has been a strong trend of commodization in retail, as witnessed by the Big Boxes, such as Price/Costco, Walmart, et al. Buyers seem to be interested only in price and availability and smaller retailers are finding it increasingly difficult to add enough value in order to justify higher prices. The Internet will accelerate this trend, as it is becoming increasingly easy to comparison shop online. Retailers positioned at the convergence of these two trends, such as Amazon.com and Cyberian Outpost, will find it increasingly easy to do large volume -- and increasingly difficult to produce a profit on the resulting razor thin margins. Efficient distribution will continue to be more important than effective marketing.

Online Malls Will Die
Online malls are a classic illustration of a failed metaphor. It's an effort to adapt something from one world to another and it just doesn't translate. There's no shortage of parking on the Internet; there's no strolling down the hallways to see other people; there's no need to aggregate storefronts -- in the non-linear space of the Internet everything is already located right next to everything else. Internet malls are sold, not bought, and only the mall operators are making any money.