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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 naÔve 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
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