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Dotcoms heading for second slump
rcjordan

WebmasterWorld Senior Member rcjordan us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 430 posted 3:54 pm on Oct 7, 2001 (gmt 0)

A report by influential internet analyst Forrester Research, published last summer, revealed that a plunge in consumer confidence was by far the number one fear among online retailers, which have seen sales triple over the last 12 months.

Sustaining such growth was vital for the dotcom firms' funding plans. After interviewing 50 online firms for its report, Forrester concluded the average dotcom firm would need to increase its order book by a terrifying 54 per cent per week if they are to show a profit by next year.

But, one by one, online firms have lined up to admit they have been affected by the terrorist attacks and that as a result they are axing staff. Cynics suggest some firms are using the atrocities as an excuse for what was inevitable. While this may have some truth, it is clear that the attacks have had repercussions.

excellent article, a must read [observer.co.uk]

 

Drastic

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 430 posted 2:45 pm on Oct 8, 2001 (gmt 0)

Wow, a *must read* indeed.

Pardon the requote, but don't miss this line:

...Forrester concluded the average dotcom firm would need to increase its order book by a terrifying 54 per cent per week if they are to show a profit by next year.

Wow, increase orders by 54% every week to reach profitability next year. That is quite a task, but we all know profitability is where it's at.

Admittedly, I am one of the quickest to stick my head in the sand when I hear the "doom and gloom" financials, failures, and predictions. But Brett made a comment somewhere, and I am starting to wake up: The article points out Exodus and @home failures. Think about it, these are infrastructure companies, not just some overblown business models that would never work - these people transmit our packets, connect consumers, and host our pages.

NFFC

WebmasterWorld Senior Member nffc us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 430 posted 2:56 pm on Oct 8, 2001 (gmt 0)

>Exodus and @home failures..not just some overblown business models that would never work

I think they are perfect examples of overblown business models that would never work.

>online retailers, sales triple over the last 12 months

Thats what stood out to me, with an efficient low overhead set-up there are great rewards to be had.

Drastic

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 430 posted 3:25 pm on Oct 8, 2001 (gmt 0)

>perfect examples of overblown business models

That may be true, but my point was they offer real services via hardware, and could have had a sustainable business model. In other words, they didn't mainly rely on ad revenue, going IPO, or simply getting huge numbers of visitors/members like so many dot bombs did.

>with an efficient low overhead set-up there are great rewards to be had

True, for smart, efficient companies - the problem is they seem to be the exception rather than the rule. Tripling sales yearly means nothing, if the company doesn't reach profitability, at least within a reasonable amount of time.

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