A-Clue.Com, Final Five: E-Commerce, WiFi, Journalism, Clued-in, Clueless; newsletter of 11/27/2006- from Dana Blankenhorn at A-Clue.com
  by Dana Blankenhorn
Volume X, No. XLVIII

This Week's Clue: Final Five: E-Commerce

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This Week's Clue: Final Five: E-Commerce
SSP (Shameless Self Promotion)
Best of the Week
ZDNet Open Source
Clued-in, Clueless

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For the Week of November 27, 2006

Let me start this week with an announcement.

A-Clue.Com will cease in its present form at the end of the year. That does not mean it will cease, not at all.

A-Clue will become a regular weekly feature of the DanaBlankenhorn.Com blog. It's actually been that way all this year. Most of this past year's Clue essays are already archived there. The main A-Clue site will stay open with the old archives, and links to the rest of my work.

I'm doing this mainly because e-mail is a dieing e-business model, and I don't ever want to be yesterday. I'm also spending several hours each week coding and loading each week's issue, time that could be spent writing.

To celebrate this change I will have five essays on the main topics this blog has covered in its decade of e-mail existence, looking mainly at their present and future. First will come e-commerce, the original beat here. Then I will have essays on Moore's Law, on Always-On, and on Political Cycles, before finishing up with a big Internet Future essay.


E-commerce has become commerce.

What began as a separate channel has replaced the back end of the catalog business, while stores have adopted most e-commerce innovations.

The biggest problem merchants face is the cost of scaling, especially the technology scaling needed for a competitive user experience. Most have also found that the final profit margins in selling goods online are minimal, and that as they scale their online operations they need a physical presence.

This may or may not remain the case as gas prices rise. I still insist a business can be made with convenience stores accepting deliveries for local residents, delivering them at the consumer's convenience, and adding special orders based on intimate customer interaction. (Since the name Jeeves is taken, how about calling it Godfrey?)

The history of Amazon.Com is instructive here. They were always ambitious, and tried to stay well ahead of the curve in their technology platform, with their associates program, and in scaling their warehouses. But the delicate balance required for that finally ate into margins, and as mainstream merchants like BestBuy and WalMart improved their own technology platforms, they saw their future closing down. Thus they have spent this last year trying to move into the sale of digital goods, even though they have no reputation in that area.

Most small merchants who experimented with e-commerce in the 1990s found that they were best served using it as an adjunct to existing operations. As Mark Twain wrote, "put all your eggs in one basket and watch that basket." Powells in Portland is a good example of this. Over time they have added a blog, and their online selection is better organized than the clutter of their shops, but most of the shops are also less-cluttered now. The point is that if you go to the store, you are likely to use the site, and if you don't you aren't. For Powell's e-commerce proved an essential defensive measure but nothing more.

That is the way it has been for most retailers. The site is an essential channel to buttress the store, and the store is essential to the success of the site.

What I have suggested, this year, is that a new evolution is necessary.

It's time to get production involved.

The largest merchants are already doing this. The success of WalMart this past decade is based almost entirely on the integrated dance of just-in-time supply, not just demand management. The company's efforts lately have been directed toward RFID so that production can be managed, minimizing the need for warehouses. These technology chains have extended overseas, which also gives it a huge leg-up in opening stores in new markets. This goes well beyond the original dream of Sam Walton, which was to bring urban selection to the countryside. What we have now is worldwide supply-and-demand integration, with WalMart's computers the primary intermediaries for goods suppliers worldwide. Now if that's not an e-commerce play, what is it?

When I talk about getting production involved, however, I am talking about bringing local ideas and local production to the Web. Small entrepreneurs with experience in online selling should now be looking to create local products, starting with the goods tourists look for when they travel. By creating an online demand for locally-produced jams, juices, pottery, knicknacks, woodworking, toys, clothing, etc. you can then get these same goods into local stores, bringing back the unique brand of a place. There is no reason why Philadelphia should ever be the same as Detroit, in what's available to visitors, but right now it is, and that is an opportunity.

All this, however, is based on an economics of scarcity, on the merchant being the agent for the supplier of a product, seeking to convince the consumer to part with their money. What the Internet as a whole is bringing about is an economics of abundance, in which the merchant is the agent for the consumer of products, saving them valuable time and monetizing that time with merchants.

This has become apparent first with the success of sites like YouTube, MySpace and Google, and it's hard for most of us to get our heads around, because it turns all economic relationships on their head. That's why these first consumer intermediaries are so large and, right now, so valuable. It's a completely different type of economics.

But this area is not going to always be dominated solely by a few big players. Don't let the mass media hype get you down. There are going to be plenty of ways to build small companies based on the economics of abundance. Some will initially look like the old economics, agenting for producers who have little access to this new market. But this, in fact, is where the media business should be heading, toward acting as an intermediary of abundance, on a level closer to the customer.

The idea of replacing the local newspaper, something I talked about when I first got into this business nearly 30 years ago now, is still on. We just need to find the hook for it.


Shameless Self-Promotion

You can have every entry from DanaBlankenhorn.Com, including our lead Clues, e-mailed to you from the main blog page. (It's the Feedblitz button in the corner asking for your e-mail address.) What you will receive is a daily e-mail with all of the previous day's entries, plus links.

You can also get the www.DanaBlankenhorn.Com copy in your newsreader by using its subscribe feature

I'm continuing to produce a special blog on Open Source for ZDNet. I am pleased to say it has grown into a real money-maker. This blog too has an RSS feed and e-mail subscription.

I am also the editor Voic.Us, which aims to become a political "super-site" and offer mobile marketing services. So far we have over 2,800 subscribers to its RSS feed. Please visit that blog as well.

Finally I have begun working with Connexxions at Rice University to turn my work on the Internet Political Thesis into a book and college level course.

Remember: it's journalism that keeps the Clues coming...


Best of the Week

Everything Old is New Again

, who was assumed (by those who don't know him) to be fairly conservative (since he served in the Reagan Administration) has written something Republicans will automatically deride as "class warfare" but which echoes with many, many people:

What Makes an Interest Special?

The public is on to groups like the RIAA, groups that seek to create artificial scarcity and profit from it.

Life Lessons from Winter Avenue

One of my neighbors recently made the hard decision to let Alzheimer's take him. He's now in a hospice.

The Southern Democracy Problem

In most of the South, there is no Democratic Party.

Arsenic and Old Rust

The solution Rice has come up with is to create nanoscale sized iron oxide -- nanorust. This rust can be pulled out of solution with a handheld magnet, while other, larger forms of rust require high-power magnets to come out of solution.

Myth, Power and Value

The general equation is M x V = P, or Myth times value equals power. This also lets you solve for M and V.

Tom Tomorrow is Wrong

It's because journalism is a market process that the media seems so skewed against Democrats.

Death of the Desktop

At best a desktop should basically be a docking module.

Moore's New Direction

Moore's Law means exponential growth. Moore's Law continues onward.

Death of MSNBC

Within a few months, I predict, the name will be changed to simply NBC. You'll have a small studio somewhere deep in 30 Rock trying to do broadcasts, and "shows" taking corners of other studios on a rotating basis. If even a fraction of the viewers now watching MSNBC tune in, the tiny rating will still mean a profit to General Electric.

What the Netroots are Ignoring

In the case of today's world these are not random events, but real fundamental changes that call into question whether your grandchildren, and mine, will even survive into adulthood.

What Did Not Happen

The most important thing that did not happen was that the issues which define our future – global warming, energy – were barely discussed, and were not decisive anywhere.



Georgia: Agendas and Reciminations

South: The Task of Governing

2006: Virginia Post Mortem

2006: Tennessee Post Mortem

2006: South Carolina Post Mortem

2006: North Carolina Post Mortem

2006: Mississippi Post Mortem

ZDNet Open Source

Can Bill Hilf Change the Microsoft Culture?

Control is the Real Open Source Advantage

Value of Microsoft's Patent Pledge is Questioned

What About IBM, Then?

Forking Wikipedia


Clued-in, Clueless

Clued-in is Bill Hilf, now general manager for platforms at Microsoft. Whether he'll be listened to or not is another question.

Clueless is anyone who now says President Bush is not a conservative in order to sell "real" conservatism. This was as real as it gets, kids. At least for a generation.

A-Clue.Com is a free email publication, registered with the U.S. Copyright Office as number TXu 888-819. We're on the Web at http://www.a-clue.com.

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