E-Commerce for All Seasons

Like spoiled children who get every toy they could possibly want for years, only to have Santa Claus skip their house one Christmas, e-commerce is in for a rude awakening.

Don’t get me wrong, e-commerce sales might well post strong growth for the rest of 2001. But one thing seems certain: The days of rocket-ship, triple-digit growth are a thing of the past. As a result, it’s time to play the lowered expectations game.

And it’s a great game. However, the only Web player who has stepped up to the plate is the online advertising industry, which has started to say that a real turnaround in that sector won’t occur for a while.

But everyone else has blinders on. Has anyone heard a warning from Amazon.com? Or are computer sales going to save the day in Seattle when PC sales around the world are in the trash can?

That’s doubtful. Yet Amazon and a lot of other e-commerce businesses continue to give each bit of news on their screen the most positive of all possible spins.

Sick Day

When it was new, e-commerce could grow through any barrier, including seasonal lulls and economic hiccups.

Now, however, the economy has a hacking cough. And because the e-commerce express is picking up fewer and fewer new passengers at each stop along the way — compared to its earlier hypergrowth — it’s catching a bad cold as well.

The recently released second quarter numbers from the U.S. Department of Commerce are a hint of what could be coming soon to a headline near you: Not only slowing growth — no growth at all.

‘Tis the Season

Add it all up and you have a recipe for a disappointing fourth quarter. The holiday season is, after all, what e-commerce lives for every year. And if it falls flat, the hangover could last well into 2002 and beyond.

Now credit must be given. It would be easy for key e-commerce players to start chatting things down. The economy has all but stopped growing. Thousands are out of work. For any industry to post even double-digit growth in that kind of environment is a remarkable feat.

But e-commerce is operating under a very big shadow: its own. Like a nasty bacteria, it doubled every so often for years, making it appear — both up close and from a distance — invincible.

That had to end sometime. With dot-com retailers folding up their tents like mad over the past two years, the opportunities to spend online have dwindled.

To Your Health

Even so, no one is saying e-commerce is in a death spiral. It continues to grow, both in actual sales and in its importance to the larger economy. As several recent studies have found, e-commerce efforts pay dividends that aren’t immediately measured in sales and dollars.

In a non-monetary sense, e-commerce continues to flourish. Witness the corporations, which previously only dipped their toes, now jump into the e-commerce pool with abandon. Online branding efforts and customer service have been good for business, and online product research is driving offline sales.

Can’t Buy Love?

But e-commerce has always been about the money. And it’s always been about growth. Look at the reaction that Amazon got when it started its new drive for profits. As soon as Jeff Bezos pointed to Q4 as a goal for profits, the question became, “What about growth?”

At the same time, Amazon stock has fallen below the US$10 level, despite a slew of efforts to tout its computer sales and new deal with Circuit City.

A Hallmark Moment

The transition from expansion and growth to trimming costs and reaching profits was demanded, but now it’s being lamented. The fact is that it’s going to take time for true believers in the industry to give up growth rates over 100 percent. Those targets became the hallmark of the industry, but they are gone forever.

E-commerce has to find a new identity. An identity for all seasons and all generations. And if we’re going to avoid a very unhappy holiday season, we should start very soon.

What do you think? Let’s talk about it.