It's All in the Name
By Barbara Gengler
Edittech International

In the haste to set up a niche in the Internet economy, it seems that a number of dot-com operations have backed themselves into an all-too-small space.

The question arises as to how a company struggling to do business on the Web can bypass the dot-com name and yet adapt that business standard to jumpstart growth.

Companies like ClubTools, Infospace, Preference Technologies, formerly StockUp.com, Kinzan and Webmergers, have all dropped the dot-coms from their names. Some said the reasons for the decision were to more clearly define their business models while others said they want to be taken more seriously by customers and investors alike. And one company said it "hopes to avoid being pigeonholed on the Web."

Mark Macgillivray, an analyst at H&M Consulting, explained that as dot-coms started falling out of favor with the investment community about eight to ten months ago, companies like Amazon.com began referring to itself as Amazon.

"It's not so much that companies are changing names, but that Internet companies are avoiding being called a dot-com. Amazon was one of the first that did that - used their notoriety to identify themselves as a hot Internet company," Macgillivray said.

He also said this year it has been out of favor to call yourself a dot-com. "In the fast Internet world, this is seen as last year's fad," he said.

Macgillivray pointed out that venture capitalists buying stock started to see there was "no longer bloom on that rose." He said Internet funding for startups is still high but there is a huge difference in the names, especially in generic names like food, travel, and pets which petered out last year and the beginning of this year.

Tim Miller, president of Webmergers, a merger and acquisition (M&A) facilitator, said he knows of one "dot-not." Miller said he is incorporating Webmergers.com as Webmergers, Inc. for two major reasons.

"Dot-com is hackneyed and the dot-com is pretty much taken for granted when you see a business name like Webmergers."

Miller said that much of the failure of purely Internet-reliant companies stems from their initial adoption of the business-to-consumer approach to electronic commerce instead of the apparently more successful business-to-business approach.

Most of the companies that fall into the b-to-c category attempted to target a specific set of consumers only to discover that the demand for products among such as fixed set of individuals just wasn't there.

Lauren Essex, vice president of marketing at Kinzan, agrees that the B-2B approach is apparently more successful.

"Honestly and realistically the dot-com has signaled a business to consumer business model. All the dot-coms you hear about spending money at the SuperBowl and on billboards, are business to consumer oriented," she said. "In reality naïve business people were thinking it was a short cut to get to consumers. But you still have to build brand and give consumers value."

What's happened in the Internet space is that the dot-coms have taken on an aura of business to consumer and that was very misleading, according to Essex.

"We decided it was prudent and went to Inc. from dot-com," she said. "For us, it is similar to someone with the same last name. "The dot-com was so accepted and expected, but it just doesn't add value."

Kinzan helps companies like Avon, Chase, Maytag, and Auto Trader essentially extend their network of channel relationships to the Internet. Kinzan.com was spun off from strategic Internet services company iXL in 1999. Early this year, the company changed its name from Kinzan.com to Kinzan, Inc.

Essex said the company's applications for content management, commerce and communication, enables companies to extend their established business model online with consistent control over how their distribution networks and brand identity are leveraged in the virtual world.

"We take their core business functions in the physical world and put them on line for them," Essex said.

Another reason to avoid the dot-com name, according to Elizabeth Goodgold, chief executive of branding-consulting firm, The Nuancing Group, is because companies need to determine the strength and weakness of what the dot-com name could and couldn't do.

She pointed out that creating brands off the generic name, like Pets.com, often leads to ruin. "Wasn't their brand name just pets," she asked. "If your business exists only as a dot-com, it's already generic."

Goodgold said Proctor and Gamble recently put up for sale more than 150 domain names like nails and detergent, believing that the Tide.com is more powerful than the generic detergent.com.

Goodgold believes it is less a dot-com world and more and more an Internet world, which is thought of as one channel of a company's distribution. She gave the example of Ben and Jerry's web site, which "truly echoes its brand image, but produces less than 1 per cent of their business."

Information such as events, new flavors, where their van is traveling with samples, is available from the site. But Goodgold said, "how many people are buying ice cream over the Net, the purpose is brand building."

"Brand building to me is how the web is changing," she said, "so many are trying to drop the dot-com and trying to change the negative perception." Goodgold pointed to when the stock prices of dot-coms like Amazon and Yahoo took a dive last April as the beginning of the negativity with the dot-com names.

"People were betting on dreams not reality," she said.

According to Goodgold, there is a site, ebates.com, which insures a consumers' purchase. She said customers from sites like Boo.com, Reel.com and toysmart.com have been burnt and are afraid dot-coms wouldn't be around.

Ebates.com is a cash-back shopping portal that will reimburse members for any charges incurred through ebates.com if the product does not ship because of a shutdown of a participating online retailer. Most rebates are credited within 48 hours.

In order to change the negative perspective, dot-coms have to build a brand and change consumer perceptions through some positive actions. "Not just PR efforts but changing the way that they do business and carrying that message so consumers believe it," Goodgold said.

She noted that radio did not supplant television and the Internet won't supplant TV. "It's just another tool in the marketing mix, and each one has evolved to accommodate the new medium."

Lately there has been nothing but bad news in the dot-com world. Online retailer of health products, MotherNature.com, saw its board opt to liquidate, Furniture.com discontinued operations, while Amazon continues to have trouble with margins. In September, there were 4,805 jobs cuts in the sector and forty-four out of 275 dot-com companies, or 16 per cent, failed, according to data from outplacement firm, Challenger, Gray & Christmas.

A report from Challenger, Gray and Christmas also revealed that 129 CEOs left their jobs in October and about one-fifth of them were from Internet companies including WebMD.com, AltaVista and Stamps.com. The total number of chief executive departures more than doubled from the same period last year.

November, 2000