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The Phoenix: Back From The Ashes of The dot.com Crashes
By Michelle Roy
Expiry Corporation Staff Writer
November 2000

Surviving in the Wake of Discontent

In Richard Saul Wurman’s Follow The Yellow Brick Road, Gary Trudeau was quoted as saying: “Whether revered or reviled in their lifetimes, history’s movers framed their questions in ways that were entirely disrespectful of conventional wisdom. Civilization has always advanced in the shimmering wake of its discontents." With the Internet, so the saga continues…

Spring of 2000 yielded long and lengthy news reports and debates regarding the now infamous dot.com crash. Stocks went from year-to-date highs to year-to-date lows in a matter of days. Many fell off the market all together. As consumers, our hesitance about the Internet (is it safe? Is it secure? Is the information accurate?) has grown into downright fear. Is any transaction safe online? Will I receive my products on time? Will I receive them at all? Can any site be trusted?

At last though, the discontents of creating the Internet have been realized and the Internet has now risen from the ashes, and only the best have “advanced in the shimmering wake of [the Internet’s] discontents.”

What Went Wrong?

Speculations abound about what went wrong with so many dot.com companies such as:
Pets.com, petstore.com, urbanfetch.com, beauty.com, reel.com, living.com, furniture.com, auctions.com, bikini.com, eve.com, toystore.com, etoys.com, mortgage.com etc.

What we learned from these companies is that it is not enough to have a good domain name and a lot of money in order to make it big (SURVIVE) online. Many of the now failed (although some have since been reborn) companies fell back on promises, ignored their customers, grew too big too fast, got into too much debt too quickly, didn’t have a sound business plan, weren’t making enough money quick enough to pay the increasing debt loads etc.

Take for example etoys.com. During the Christmas 1999 holiday season many parents ordered presents online with the promise they would be delivered on or before Christmas Eve. Many of the gifts ordered never made it into the stockings. A year and a half later, etoys.com is history (just after Christmas 2000). Etoys could not handle the orders during the busy Christmas season, received a bad reputation with parents and the press and without a sound business plan was not able to survive the meltdown.

More than a couple beauty sites have seen better days. Eve.com and beautyscene.com (for example) were launched with heavy marketing campaigns that never hit their target as they had hoped. Instead, they joined the “crashed” list.

Another reason (and perhaps the most important) for the long list of failed companies in the dot.com graveyard? Poor or inexistent customer service. Many websites didn’t (and still do not) list a telephone number. They skip a crucial step involved in shopping and information gathering: relationships. Consumers want to know that there is a real person sitting at a computer behind the website. They want this person to be able to speak to them if they need. Consumers need the relationships in their online ventures. Many dot.com companies failed to realize that humans need human interaction and do not fully trust the online, automated world of computers. Many of the failed businesses failed to create a customer retention and relationship strategy in their business plans.

According to the Pew Internet + American Life Project 2001 Survey:
• 2/3rds of those surveyed attributed the dot.com crash to risk taking investors looking for fast money
• 56% said poor business plans were to blame
• 39% said youthful and inexperienced management played a major role – with older Americans most likely to cite youth as a factor than those under 30

As we have since realized, it takes more than a good domain name and a hot product to survive on the Internet.

Customers Count: The Changing Face of The New Internet

It takes customer service! Not all Internet companies have ended with a big boom. In fact, not all Internet companies have to end at all. Many companies, such as Expiry Corporation, are actually thriving.

Expiry Corporation’s (www.expiry.com) motto is “Real People, Real Technology”. Our business is based on sound business principles that have withstood the test of time. Our customers come first: we do not launch new products until we know we have the systems in place to proceed; our business plan incorporates a steady growth rate where every day we make money instead of the failed dot.com growth rate of quick debt, quick profit, quick death; we live by a phrase once coined by Fortune Magazine: “if it doesn’t make cents, it doesn’t make sense”. And if it doesn’t make sense, our customers won’t want it!

According to research released in May, business conducted over the Internet is actually booming despite the bad press associated with the “dot.com crash” of 2000. The IDC reports that worldwide users rang up $354 billion in e-commerce transactions last year, a number that is expected to grow to more than $5 trillion by 2005. Over 80% of this growth is coming from online transactions. The IDC expects this number will rise to about 86% in 2005.

The use of “old business practices” in the New Economy is what is needed in the New Internet. Brick and Mortar businesses want to deal with other sound businesses. They ask questions like “how long has your company been in business?” “are you part of more than just an online company?”, “how do I know this transaction will be safe?” If they cannot easily find a phone number on a website, chances are they will not do business with that company.

One of the main things learned from the mistakes of failed dot.com crashes is the need to anticipate and meet the needs of your customers. Who are these customers? What do they want? And how do they want it? Customer service is key. In fact, customers are much more web-ready and less Internet savvy than most online businesses have recognized. All businesses running websites must be aware of this. In other words, keep it simple; your customers will appreciate it in the long run.

After their hard crash, the Internet clothing site, boo.com realized keeping it simple will enable their comeback and future survival. Boo.com crashed hard but has since enjoyed a steady revival. The British online clothing company had once generated a huge amount of online attention before sizzling into bankruptcy in 2000. Boo’s new owner then relied on the site’s still famous fashion brand to compensate for its reputation as a dot.com failure. Boo had once done a great job developing style and fashion but had lacked in developing a sound business model. The new owner changed that. Boo’s new owners believed the site had a future as a place where shoppers could go to find stylish items from obscure sites or stores. Instead of designing and maintaining its own inventory – which probably was a hassle for the old Boo – the new Boo wanted to keep it simple. It now employs its staff to search the Web for fashion items they can feature from their site. Boo, while helping consumers build a stylish wardrobe, gets a cut of the proceeds from each sale, without having to do all the work. They have developed an online retail store based on business practices of many brick and mortar retail outlets.

Surviving The Aftermath

The new economy is more of a new set of rules for businesses that have survived the test of time rather than a new paradigm for brand new companies (as was once thought by dot.comers). Smart companies are still investing in their e-business development strategies. Yet, they also recognize the power of the Internet as a medium to create and build relationships with customers, and to reduce the costs through streamlining business operations.

The aftermath of the crash of 2000 is that the Internet has been brought back to the basics of business. It has been returned to the people with passion. It has been returned to the customers!

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