Amazon is in serious trouble despite a $1.2 billion annual revenue
stream, because the big box booksellers such as Borders, Barnes
& Noble and Wal-Mart developed Online strategies and went into
Amazon's world and destroyed Amazon's ability to generate profitability.
Internet is changing the way people shop for vehicles. Today, 30%
to 40% of people planning to buy new cars are researching their
purchases on the Internet prior to going to the showroom. In doing
so, consumers are going to the dealerships armed with more information
on dealer mark ups and alternative buying options helping them challenge
the margins of the dealerships.
same trend is developing in furniture as manufacturers all rush
to develop a presence Online. Eventually consumers will be able
to use information to put pressure on furniture retailers, much
the same way consumers are now using information to put pressure
on auto dealers.
1996 no one bought cars Online. In 2002, it is estimated that 2%
of all cars sold, were bought over the Internet. By the end of 2003
it is estimated that 4% of all cars sold will be bought over the
Internet. Car manufacturers are moving slowly on to the web and
the process is creating havoc within the dealership channel.
spite of the recent problems faced by the dot.com companies, the
Internet has already changed the way companies do business and it
is not going to go away.
the past two years we watched as a number of furniture e-tailers
came and went. The first wave learned many things, the second wave
will take into account and do it better the next time around. Even
now there are new furniture e-tail companies forming that are benefiting
from the mistakes made and lessons learned about the way people
next wave of furniture e-tailers is going to do a better job selling
over the net than the first wave did. That is going to put additional
pressure on the margins. The question is: "Will you be part
of the next wave?" or "Will you be knocked off your feet
by it and drown?"
now furniture manufacturers are using the web to provide information
to help consumers make decisions. Eventually they will begin direct
sales efforts. To soften the blow and attempt to deflect dealer
complaints they will offer to "compensate" the dealer
in the territory a sale is made.
all the furniture manufacturers trying to figure out a way to make
money on the net, it is only a matter of time before they figure
out a way to play the Internet game much the same way they figured
out ways to play the 1-800 game.
fact, now that the dot.coms have opened the eyes of the executives
of traditional companies, the Internet will become just another
tool used by businesses to make money.
Welch, Chairman/CEO of General Electric: "Now that the old
line companies figured out how to make money on the Internet, all
we have to do is digitize and let scale of economies kick in and
we will make money hand over fist."
large companies looking for ways to use the Internet in their businesses,
the technology is going to transform the way they look at business
opportunities. That is going to open up a whole new category of
competitors that will have to compete against traditional furniture
stores for consumers.
traffic falls, the big box retailers are going to look for new markets
to build traffic; the impact is going to be felt on the traffic
of the independent retailer.
who are feeling a lot of pressure right now are going to look for
ways to drive revenue, and the impact is going to be on the revenue
of the independent retailer.
recent events in the economy have shown, growth in revenue alone
is not a good indicator of the health of a business. With so many
people focusing on revenue; focusing on profitability is going to
be the best weapon to ensure the survival of the independent furniture
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