E-Commerce Goes Local

As the Internet continues its global expansion, many companies are finding that localized e-services are making the most inroads with consumers.

While mega-sites such as Amazon.com offer attractive discounted prices and huge selections of goods, local Internet sites are betting that customers are also looking for convenience and rapid delivery. In fact, the local model has been so successful that larger online merchants are observing the local sites with a keen eye toward increasing the efficiency of their own delivery systems.

“So much of the Internet today is about getting things to the customer fast, and this is a perfect example of it happening,” said Jupiter Communications analyst Ken Casser.

On the local level, the greatest potential for Internet success would appear to be grocery sales. Last year, online grocery sales totaled only about $150 million (US$), but Jupiter expects that figure to reach about $3.5 billion by 2002.

High-Tech Hometown

So far, local e-tailers are not able to offer the seductive low prices that the big sites feature, but they can sometimes get orders filled within the hour. Such speed is a major selling point in a culture that is accustomed to instant gratification, and to shoppers pressed for time.

Streamline.com, a Massachusetts-based company, offers users in Boston and Washington, D.C. a one-stop shopping experience. The site offers groceries, shoe repair, dry-cleaning pickup and delivery, postage stamps, film developing and even UPS package pickup.

For a $30 per month membership fee, users enjoy the convenience of shopping from their computers, using services in their hometown.

Streamline.com even installs a shelving unit with a full-size refrigerator freezer in the user’s home. The unit is placed in the customer’s garage, and has a keypad entry system that allows delivery when the customer is not home. Products and services are priced individually, and charges are assigned to the customer’s credit card.

Major E-Players Look Locally

Just this week, eBay, Inc. launched a new area on its site called “GoLocal.” The new channel places auctions in 20 metropolitan areas around the country.

The advantages of this service include the customer’s ability to browse items of local interest and to trade items that are difficult to ship long distances.

The move by eBay is strategic because it allows the company to capture a portion of the holiday shopping business that would otherwise have been consumed by local offline shopping destinations. Reed Maltzman, director of eBay regional, said that the new channel affords users a “distinctive regional flavor” in their shopping experience.

Even though eBay has experienced some technical problems in its local auction efforts, the company currently dominates the market with 70 percent of online auction listings.

By the end of this year, eBay will have launched 53 regional auction sites.

AOL-TV

Meanwhile, the largest Internet Service Providers are now planning to carry local television station signals over their networks.

The Satellite Television Act of 1999 was originally intended to allow satellite TV companies to carry local channels so that they could more effectively compete with the burgeoning cable TV industry. However, the bill included wording that seems to have opened the door to ISPs to carry local programming as well. Specifically, the bill said that “other communications channels” could apply for licenses to carry local TV signals.

How this development affects consumers remains to be seen. On one hand, it could level the playing field between cable and satellite companies. However, opponents claim that it would encourage local stations to demand high prices, which could cause satellite companies to increase their subscription rates.