In this section we explore electronic commerce on the Worldwide Web (WWW) by a brief discussion of The Future Fantasy Bookstore and other online retailers. We then explore publishing activities on the Web, and other electronic services including electronic malls. The section concludes with a discussion of the opportunities and challenges to be faced as firms seek to reengineer commerce with the Worldwide Web.
The Future Fantasy Bookstore was an early commercial enterprise on the Web. Future Fantasy carries science fiction and fantasy books as well as posters, statuary, and related side lines. Future Fantasy's, walk-in store, located near Stanford University in Palo Alto, had long served mail order customers, but mail order business increased dramatically when the store went up on the WWW. This was done with the assistance of Digital Equipment Corporation's Palo Alto-based Network Systems Laboratory. The owner, Jean Schroeter, or members of her staff, now spent several hours a day packing up orders for non-U.S. customers. Previously these new customers had to wait months and pay large premiums to get these books in their own country - if they were able to get them at all.
Increases in the mail order business tended to track the increased use of the Internet. Incidental mentions of the store on the various news groups and bulletin boards that shared the Internet with the WWW also provoked a flurry of new sales. For instance, web surfers are occasionally reminded that the bookstore carries the Darwin Fish, a popular adornment for car bumpers. Another stimulus to sales has been the mutual electronic links Schroeter has established with other web businesses such as The Lysator Science Fiction & Fantasy Archive in Linkšping, Sweden.
Other book stores have now begun to appear on the Web for, among others, technical subjects , college text books, and general interest books. Book sellers are also beginning to appear for books in languages such as German. Some book sellers provide electronic catalogs while others are little more than online advertisements. Lists of bookstores on the WWW make it easy to browse in many stores. Entrepreneurs are also beginning to establish electronic markets for used text books.
Stores were also springing up on the web to sell other products. Nordic Track, for instance has an advertisement on the Web while Earrings by Lisa provides color pictures of their merchandise. In an August of 1994 press release, Pizza Hut and Santa Cruz Operation Inc. announced a pizza store on the Web, but one that would only serve computer literate customers in Santa Cruz, California. This had prompted one wag to worry that, ''I'll order pizza Saturday night but not get it until Sunday morning.
The risk to book publishers on the web comes from more than just a new distribution channel for used textbooks. The Gutenberg Project, for instance, is building an electronic library with titles such as Alice's Adventures In Wonderland, that are no longer covered by copyright protection. Selections of cartoonist Gary Trudeau's Doonesbury is on line. Steven King, the popular suspense writer, has been selling a short story directly to consumers on the Web and electronic books are also being written specifically for distribution over the WWW. Among the publishers on the WWW are The Palo Alto Weekly, Wired Magazine, and The Internet Poetry Archive. Most of these ventures are free of charge, with expenses usually paid for by subsidies from other ventures or advertisers. Wired magazine, for instance, waits until the next issue hits the bookstands and then releases the previous months issue, without ads, to the Internet. But organizations such as Softlock Services are offering software tools and services to support the online sale of published merchandise. Softlock clients provide prospective customers with teasers from their works and then, if they wish the entire document, they obtain an encryption key from Softlock in exchange for a credit card number. The Encylcopedia Britannica has taken another approach to selling access to its online encyclopedia. University campuses subscribe for $1 per student per year, where access is limited by the addresses of the requestors. If your university is a subscriber, your workstation will be provided access by the server computers.
Many electronic publishers have yet to free themselves from 'the tyranny of the printed page', that is the inability to view hypertext from a perspective that was different than print. Hypertext documents are more easily digested when broken into short , relatively self-contained segments that fit on one or two workstation screens. Hypertext linkages can then take you from a general, high level view of the topic to the more detailed and specific, but only if you want to. For instance, the press release accompanying a new product introduction can be made available on the Web. It might include a link to further information on the product, technical details, user manual, etcetera. The individual modules of a document, if carefully written, can also then be easily linked to from another document or even documents written at some later point by another author, acting without permission of the original writer. The modular style of hypertext documents, coupled with the ease of linking to others written by different authors, without their permission or knowledge, presents a variety of copyright issues.
WWW-based publishing faces electronic competition of its own. CDROM has become, a common means of publication. Although the Web offers advantages for keeping information current, bandwidth limitations makes it a poor second choice for the display of graphics as well as the use of audio. The Web also shares the Internet with a variety of electronic publishing alternatives. Newsletters are commonly circulated by electronic mail and Gopher files, provide a less sophisticated, but simpler, means to retrieve documents in a relatively nonformatted manner.
The Internet competes to some extent with organizations such as Prodigy, America Online, and CompuServe. Such organizations have a management structure and bureaucracy in place that makes them appear considerably better organized internally then the Internet. Anyone with the relatively low price of admission can join the Internet, but without the initial advantage of a hierarchical menu structure that would immediately lead customers to your door. Instead a number of directories such as Commercial Sites on the Internet have sprung up to help make order out of the Internet chaos. Some of these, called electronic malls, often provide additional services to help retailers set up storefronts on the web. Among these are such unfamiliar names as The Internet Mall, Downtown Anywhere, and Branch Information Services.. Some such as The Global Network Navigator are beginning to carry advertising from firms such as Digital Equipment.
Many other services are now becoming available over the world wide web, with new additions listed almost daily on the web pages of the popular What's New in Commercial Sites on the Web?. During the first two weeks of July 1994, for instance, 40 new commercial ventures were listed. Among the larger were Intel, Dell Computer,and Microsoft. Already on the Web were such computer companies as Apple Computer, Digital Equipment, Hewlett Packard, IBM, Silicon Graphics, and Sun Microsystems, as well as communication suppliers such as AT&T (Bell Labs), Novell, and Nippon Telegraph and Telecphone Corporation. Conspicuous by their absence in the summer of 1994 were such big systems integration consulting firms as Andersen Consulting, Computer Science Corporation, and EDS.
But the bulk of the organizations with listings on the WWW are small and entrepreneurial. For instance, in the first two weeks of July both the city of Staunton, Virginia and Scottso the Clown came on board. Other services increasingly available on the WWW include software developers, real estate, lawyers, , home mortgages, and even a company offering incorporation services.
Although many new firms are joining the web, their presence varies considerably in sophistication. Even among some of the larger firms, the activities seem to be grass roots activities rather than major marketing presences. Several firms have begun small initial experiments with online ordering, although usually not with their own primary product line. One supplier of computer equipment, for instance, established a gift shop carrying items such as shirts and hats. This provided a relatively easy way to gain an introductory understanding of electronic commerce.
One participant in some of these early tests observed:
Barriers to entry on the internet are very low. As the cartoonist said, 'nobody knows you're a dog on the Internet'. But if you are going to displace paper catalogs with electronic ones they better provide things paper can't. Customization has to be a big piece of this. Retailers will bring your attention to things you want - items like those you have bought before, rather than things they want to sell you. Retailers will be better able to manage their inventory. If it doesn't sell the first day, it probably isn't going to. Or, if you are about to sell out, take it off the electronic shelf immediately. Imagine the power of Consumer Reports if there was a hypertext link directly from their best product designation and that firm's electronic catalog.
Free samples, demonstration software, or trial subscriptions are increasingly being used to attract customers. In July of 1994, Silicon Graphics announced the availability of a 30 day trial subscription to its conferencing software. Similarly, Digital Equipment Corporation let customers demo Alpha server computers from their own desktops. Free recipes from Le Cordon Bleu, similarly might attract new students or full screen color images of paintings might lure buyers to the works of Haitian artists displayed in the Electric Gallery.
Advertising on the Internet would also follow a different set of rules than most businesses were used to. Historically, advertising has been 'active', with advertisers filling subscribers mailboxes, newpapers, and televisions with unsolicited materials. Unsolicited materials delivered via electronic mail could, however, quickly cripple the Internet. Internet advertising was more passive, with customers seeking out information they required at the moment. Mart Nisenholtz, of Ogilvy and Mather Direct offered New York Times readers (August 3rd, page D16) several suggestions for advertising on the Internet. Among them were:
Electronic commerce requires changes to internal processes as well as the invention of some new ones. For instance, the exchange of merchandise for money is difficult when the identity of neither the supplier or the customer can be confirmed by the other. Bad press attached to early failings in Internet security as well as misconceptions about advertising on the Internet have made many managers wary of establishing a web presence. Another concern is the perception (and the reality) of the Internet's unreliability. The lack of a central management structure coupled with the Internet's rapid growth provides little reassurance. Furthermore, most internal information system managers still know little about the Internet and, because of security concerns, generally have isolated themselves from it. Among their real or imagined concerns are the vulnerability of electronic mail transactions to hackers, the possibility of computer viruses coming in over the network, unprofessional behavior on the part of their own employees, as well as the fear that external access could expose vulnerabilities in their own internal networks and systems.
The unique problems of electronic commerce are beginning to be explored by such organizations as Commerce Net, a group of Silicon Valley firms that were working together to promote and develop electronic commerce. Commerce Net's committees are exploring these and related issues and the minutes of various deliberations, such as that for network services are distributed over the world wide web.