Note: Over the next 3 weeks, we'll be looking at the realities of doing business over the Net. This week, we'll be looking at the big picture of e-commerce and e-business, trying to draw some perspective from between the frenzied hype of one year ago and the unwarranted doom and gloom that pervades the sector today. Next week, we'll focus in more specifically on your options for marketing on the web. Finally, in the third week, we'll zoom in even more and look at your effective strategies on how to use search engines in your e-marketing.

In November 1999, if you were to listen to the hyperbole streaming from Wall Street, the world was on the eve of an unprecedented revolution. We were all prepared to lock ourselves away in our homes and live vicariously through the click of a mouse. We were going to buy everything from dog food to boxer shorts online, summarily tossing away hundreds of years of ingrained consumer behavior and embrace the new god of e-commerce, no questions asked.

Today, one year later, the digital landscape is littered with the mangled remains of dot-gones. The once mighty dreams of investors who threw millions at questionable enterprises, hoping to stake a claim in the new online Eldorado, have come crashing back to earth. Now, the Wall Street wisdom takes on a different tone. Steer away from the technology sector, avoid dot coms at all costs, move to traditional value stocks. B2C (business to consumer e-commerce for the un-digitized) is dead! Long live bricks and mortar!

What's the reality? Where, between these two extremes, does the real promise of e-business lie? In my opinion, it wasn't the vision of the early site owners that was off base. It was the timing. E-commerce was ready for us. We just weren't ready for it.

Suppose They Built a Store and Nobody Came?

Let's imagine that someone built a new store. This store was designed to revolutionize the way people shopped. It had an unlimited inventory. It carried absolutely everything! Secondly, with the revolutionary design of the store, every single item was just two steps away. You didn't have to search for items, you just said what you were looking for and the items would magically appear right in front of you. The store would even remember what you shopped for last time and ask you if you wanted the same thing when you entered the store. Want more information about an item? No problem. Just ask and you'll be given a binder full of information, including specs, reviews and consumer reports. And the whole store was totally automated. It didn't require any staff on the floor or behind the check out counter. Best of all, anyone in the world could shop in this store. All it required was a little $2000 transporter pod in your home and you could be in the store in seconds.

There were a few drawbacks in this store, however. First, you couldn't actually touch or see the product. All you could do is see a little picture and read about it. Secondly, the people who owned the store had most of the stock priced the same or higher than it was at the little store you've always shopped at. And finally, you couldn't take what you bought home with you. It would be delivered to your home in anywhere from a day or two to 3 months.

Would you suddenly stop shopping the way you have all your life and go only to the new store? Probably not. Does that mean the new store is a bad idea? No. It really does revolutionize shopping and offer an incredible business model. It needs a few adjustments, and, more importantly, we have to get used to it. That's all. It's not the vision behind the store that's faulty. It's the fact that we haven't taken into account human nature. Like the Titanic, our society can't be steered onto a new course quickly. But once we are on that new course, there's no turning back.

Why Haven't We Shopped Online?

So, what is the number one reason why we don't shop more online? Is it because we don't trust the technology? Are we concerned about security? Is the lack of instant gratification the answer? Or is it that we're not prepared to buy something we can't touch and feel? No to all of the above. The number one barrier to shopping online in North America is price. Over 65% of all consumers feel they're not getting the best price online.

Rather than take advantage of the most efficient business to consumer model ever devised to pass along significant savings to the consumer, many sites offer items for the same price or even higher than traditional retail locations. There's a number of reasons why, but the fact is, people will shop online if they can save money. Will they fire up the modem to pay more? Not likely.

Take the airlines, for example. Early on, airlines realized the Net offered them a perfect way to liquidate unused inventory. Each week, most airlines offer deeply discounted last minute web specials on under booked flights. The program has been a tremendous success. Airline tickets are now one of the most purchased consumer items on the Internet. Occupancy on flights has risen dramatically. Remember the last time you took a half empty flight somewhere? Me neither.

At some point, more e-tailers are going to have to take advantage of central warehousing, bulk buying and more efficient business models to pass along real savings to the consumer. When that happens, we'll buy.

The B2B Revolution

Unlike business to consumer e-commerce, which hasn't lived up to expectations, business to business e-commerce is undergoing dramatic and consistent growth. US business trade over the net was $109 billion in 1999, according to Forrester Research. They project it to reach $250 billion in 2000. More and more large organizations are moving to exclusive net based purchasing program, taking advantage of the inherent administrative and cost saving benefits.

So, why the difference? Three reasons. First of all, on large scales, shopping on the Internet is much more convenient and efficient. Secondly, for business purchases, the emotional component is removed. The purchase isn't for us, it's for the company. The need to look, touch and assess the purchase isn't there to the same extent. And finally, in business to business, there's not the same retail distribution chain to deal with. Often, the purchase is between the manufacturer and the end consumer. The manufacturer can pass along the savings that result from a more efficient delivery model without worrying about upsetting distributors and wholesalers.

What's the Future Hold?

Make no mistake about it. The internet is going to change the way we do everything. And that includes shopping. The IDC estimates the world internet economy will hit $1 trillion by 2001.

The technology market sector has had a very difficult past 8 months, but to ignore it would be the same as ignoring the industrial or manufacturing revolutions. What if you had the chance to invest in the ground floor of Ford? Everybody laughed and told you the horseless carriage won't amount to anything. You, however, saw the promise in the noisy, smoke belching, unreliable contraptions. Who would be laughing today? The trick is picking the right horseless carriage to put your money on.

The healthiest thing to do is ignore the past year. Forget the hype and the ridiculous investing frenzy that occurred, where companies with nothing more than a half baked idea suddenly became worth billions overnight. That bubble had to burst, and burst it did. More blood shed will occur and more dot coms will disappear from sight, but it's not because the sector is dead, it's because the dot com's business model and it's forecast of the available market was faulty to begin with. The pendulum has swung back and it's my belief that the correction is over. Now, in a more realistic, healthier climate comes the real opportunity to take part in a true revolution. It won't happen overnight, but the effects will be more profound than anything we've ever experienced before.