The Early Days of E-Commerce [Fribble] June 23, 2000

Fribble The Early Days of E-Commerce

By (Scott Wachsler)
June 23, 2000

Your recent Fool on the Hill, "How to Invest in Emerging Industries," certainly brought back memories! In a lifetime far, far away, I owned a few shares of a company called Cyber Shop. It was my opinion that this "e-commerce thing" was THE future. I remember thinking I was going to be rich because Cyber Shop sold high-end merchandise and was about to ink a deal with Microsoft. So there I was, shares in hand, smiling at just how truly brilliant I was for having the vision needed to get on the e-commerce bandwagon early.

After smiling and patting myself on the back for a short time, I began to realize something was amiss in e-commerceville. The share price of Cyber Shop was actually declining. This could not be! No, no, no! E-commerce was THE ticket and mine was already punched. I was on board, ready go. Now the share price was declining? Quick action to reverse this turnabout is what I needed, and I needed it now!

I had been pondering this unbelievable turn of events for a day or so when a friend of mine called and gave me some "inside" information about a new e-commerce company. He told me this new outfit was going to be the next Wal-Mart, "bigger than Sears, maybe." Undaunted by my now flailing e-commerce empire, I decided I needed to own some of this new company. So with no reservations whatsoever, I bought into a company called Value America. I remember reminding myself that Warren Buffet had started this way, and had not done too badly. Sure, there may be a bump or two along the way, but long-term I was going to be sitting pretty! My, how time changes things.

Today, I no longer own shares of those two stellar performers. It took me a while to grasp that folks want to put their hands on what they buy. They want to feel it, taste it, and smell it, before they decide if the item is really what they want. Consumers also want to be able to easily return things they purchase. Returns, I discovered, can be a big turnoff to online retailing. What may be impressive to parents who visit a toy website may not be impressive to little Johnny or Janey. So an aggressive return policy is a must.

E-commerce, of course, does have its place. In due course, workable business plans will be refined and implemented. During those "early" e-commerce days, though, I was caught up in the hype surrounding buying online. It never really occurred to me that the art and science of online retailing had not yet been invented.

- Wax

What Do You Think?
Do you need to put your hands on something you buy or are you addicted to online shopping? Are you avoiding e-commerce investment opportunities or are you in whole-hog? Post your thoughts on the Fribble discussion board.