What drives your success? That’s obviously a loaded question, and there are no simple answers – especially in a world as complex and rapidly changing as ecommerce. Geoffrey Moore (of Crossing the Chasm fame) suggests that all the activities of a company can be divided into two categories – core and context. Core are those activities which differentiate and drive the business. Context are all those activities that you have to do just to survive.

Over time tasks and efforts that were once core become context. Doing business online was a core activity five or six years ago – it could differentiate your company and provide a strategic advantage. Today, if you have a modern ecommerce platform, sophisticated guided navigation/site search, personalized cross-selling, real-time inventory status for your physical stores with online ordering and local pickup or returns, and high-end website analytics to track your site traffic, campaigns, and visitor behavior you’re doing well but have no advantage what-so-ever over dozens of other retailers. As Moore predicted, core becomes context and the cycle repeats endlessly.

The challenge is that as time passes and your business grows, the percentage of your time and money available to spend on core activities – new initiatives that can drive growth and success – shrinks simply because you still have to keep doing all the existing activities too. For an online retailer or business, it’s easy to be consumed with the ‘day to day’ effort of managing website infrastructure, organic and paid search campaigns, site merchandising and promotions, basic reporting and occasional analysis. But all of these activities and more are simply the baseline these days – the minimum you must do to be competitive and marginally successful.

So what are the core activities in online commerce today? What should you be doing and thinking about to drive differentiation and advantage? What skills and initiatives need to be cultivated now in order to survive in the not-too-distant future?

A few days at the Shop.org conference in Las Vegas have confirmed at least two of them for me. Details in the next post.

Posted by Craig Danuloff at 2:41 PM | Permalink

Right after convenience the thing most of us like about shopping online is that we can almost certainly find better prices than those at the local retailer. Say goodbye to that. The Supreme Court just overturned a 96-year-old rule that made it nearly impossible for manufacturers to require certain minimum pricing for their products in the retail channel.

In other words, Motorola can now mandate that their bluetooth headsets sell for $79.95 rather than the $24 at which I've been able to find them online. Palm can now dictate the the Treo 755 never be sold for less than $499. In other words, the rest of the world now gets to enjoy the pricing control previously reserved for Steve Jobs and iPods :-)

As with all other heinous reversions of rights and practices, this one is cloaked in twisted logic that claims it's for the good of society: By allowing companies to dictate not only the price at which they sell good at wholesale, but also the price at which resellers must sell at retail, we all benefit because it "makes it easier for a new producer by assuring retailers that they will be able to recoup their investments in helping to market the product."

In other words, no companies have been able to successfully create, launch, or retail products for the last 100 years because this horrible tradition of discounting has made business just plain unprofitable. Finally this ruling will allow business to return to America. (Never mind that all known facts are to the contrary - this is a justification for policy change, it need not be reasonable, rational, or factual.)

So stock up on whatever you crave. Prices are about to go up.

Posted by Craig Danuloff at 10:23 AM | Permalink

My six year old has become fascinated with checkers lately, and I've noticed that there is this moment in each game where it goes from being fun and interesting to the sudden realization that there aren't any real moves left and someone is going to get decimated.

I'm guessing they feel like that at Microsoft and Yahoo today. Google probably feels pretty good.

Posted by Craig Danuloff at 7:09 PM | Permalink

This list of entrepreneur songs came up in my RSS reader today, and I had to add what has long been the only song that I ever associated with this designation: Joe Jackson's Wild West. (from the out-of-print Big World CD)

"You keep pushing on when your friends keep turning back.
You keep building towns and laying railroad track
And things get crazy and you have to use that gun
And you wonder if this is the way the west is won"

Not only are the lyrics unintentionally dead-on, but the music captures both the solitude and frenzy that are part-and-parcel of making a business happen. Twenty five years ago I remember playing this song a few dozen times in a row very late on a number of nights sitting alone in my first real office, in a desktop publishing shop I opened in in 1984 in Boulder CO. It sounds just as great now.

Posted by Craig Danuloff at 5:24 PM | Permalink

The list linked to in the last post, (and Hugh's entire manifesto series) has encouraged me to offer up something which I was coincidentally reading last night. It's take from a 1978 RollingStone interview with Bob Dylan.

In it Jonathan Cott says to Dylan:

I wanted to read you two Hasidic texts that somehow remind me of your work. The first says that in the service of God, one can learn three things from a child and seven from a thief. "From a child you can learn:

1. Always to be happy
2. Never sit idle
3. Cry for everything one wants

From a thief you should learn:

1. To work at night
2. If one cannot gain what one wants in one night to try again the next night
3. To love one's coworkers just as thieves love each other
4. To be willing to risk one's life even for a little thing
5. Not to attach too much value to things even though one has risked one's life for them - just as a thief will resell a stolen article for a fraction of it's real value
6. To withstand all kinds of beatings and tortures but to remain what you are
7. To believe that your work is worthwhile and not be willing to change it

Cott then reads the second one:

Another Hasidic rabbi once said that you can learn something from everything. Even from a train, a telephone, and a telegram. From a train, he said, you can learn that in one second one can miss everything. From a telephone you can learn that what you say over hear can be heard over there. And from a telegram that all words are counted and charged.

So until I write one myself, this plagiarism will have to stand as my contribution to the other thought-provoking pieces in Hugh's series.

Posted by Craig Danuloff at 9:26 PM | Permalink

When Hugh Macleod and Seth Godin team up it's bound to be great. This cartoon and manifesto don't disappoint.

(note this part of a series of 'manifestos' Hugh is currently featuring.)

Posted by Craig Danuloff at 11:09 AM | Permalink

Today Netcraft tells us there are 100 Million websites. CNN heralds it as a milestone. It strikes me more like the US hitting 300 million or the earth hitting 6 Billion. In other words, it isn't good news.

A little more color from the report:

The 100 million site milestone caps an extraordinary year in which the Internet has already added 27.4 million sites, easily topping the previous full-year growth record of 17 million from 2005. The Internet has doubled in size since May 2004, when the survey hit 50 million.

Think for a minute about 100 million websites, and the pace at which they're being created:

1. How many of these sites exist only to foster the pagerank of another site? For a long time (and still) many SEO's create 'fake' sites to increase the number of inbound links.
2. How many of these sites exist only to gain search traffic for Adwords revenue. The blog version is now called splogs, but these have existed in many forms for some time. Many are auto-generated and contribute nothing to the net, in fact they detract from it.

I'd not at all be surprised to find 25% or more of the world's sites fit into one of these two categories. Maybe a lot more. Of the rest, I'm sure far less than half are of any commercial nature, but this still leaves 30-40 million sites. Some questions about these:

• How many have no search engine optimization - the webmaster hasn't even done the basics to help the engines properly classify what they've got (let alone all those terms they would legitimately want traffic for but aren't getting).
• How many have horrible navigation and worse copy and make it really hard for the visitor to easily know what they're trying to say (or sell) and why?
• What percentage don't at least basic analytics code on them and/or have webmasters that do not look at that data AND do something because of it at least once a month?

I would easily expect the answer to each of these questions to be at least 75%. Does that sound harsh? Do you think there are 7-10 million websites which exist for a good reason, are reasonably well designed, optimized, and analyzed? Sounds optimistic to me.

On the other hand, my analysis would leave 25-35 million sites that need optimization, architectural and content improvements, and better measurement. That sounds like an opportunity.

Posted by Craig Danuloff at 2:46 PM | Permalink

Years ago your little Real Estate Agency put up a web site and you began to notice that visitors were coming from sites with strange names like Yahoo and Alta Vista. Later you got hip to how things worked and gave your sisters' son a few bucks to 'optimize your site' while he was home from College on summer break. Next they offered to put you right on the front page for any term you wanted, if you'd just give them $0.05 each time someone clicked - sounded like a good deal. And today you spend hundreds of thousands (no longer at $0.05 per click) and have a team of 5 who write copy and work on organic optimization.

One small problem. Your relationship with the search engines isn't what you think. They're not trying to organize the world's information and help people route to the most relevant stuff. Despite what they say. They're trying to own it all. One step at a time.

So one day you wake up and find out that they've built a Real Estate page. More focused and will help bring in more views for your paid ads they tell you. But week by week you watch more and more services inhabit the page until you get the idea that maybe nobody needs to visit your site anymore.

-- Now change 'Real Estate' to the name of your vertical market, and re-read those three paragraphs. Welcome to your future. I'm not saying they don't have the right to do it, and I doubt most industries or advertisers are going to stop subsidizing them on their way. But it might be time to think long and hard about a backup plan.

Oh ya. Yahoo improved their Real Estate section today. (comments here and here and here.) Google did Finance recently. Watch for Travel and many more.

Posted by Craig Danuloff at 10:43 AM | Permalink

The AOL/Thelma Arnold fiasco has proven the risk and potential value of what John Battelle called the 'Database of Intentions'. The implications of the issues surrounding this database will be discussed and debated for days and weeks to come.

Jason Calacanis, who has some juice at AOL but probably can't make it happen, suggests that AOL for one stop collecting search data.

While that debate begins and then rages, I'll suggest a less drastic option: opt-out.

All the engines should agree to a delimiter that when it precedes a search, leaves that search out any permanent tracking. Any search that starts with "!!" for example a search on "!! the stupidest person at AOL", would return results but not be added to the 'database'.

Don't we at least deserve that level of control?

Update: Traffick reports that iquick does not retain any search data.

Posted by Craig Danuloff at 11:57 AM | Permalink

Let's a play a little game. Was the following excerpted from a speech given by (A) a United States Senator in charge of The Senate Commerce Committee, which does semi-important things like manage bills that could control and regulate the internet, or (B) a psychotic homeless man standing at the corner of 36th and 7th Avenue?

Ready to play? Here's the quote:

There's one company now you can sign up and you can get a movie delivered to your house daily by delivery service. Okay. And currently it comes to your house, it gets put in the mail box when you get home and you change your order but you pay for that, right.

But this service isn't going to go through the interent and what you do is you just go to a place on the internet and you order your movie and guess what you can order ten of them delivered to you and the delivery charge is free.

Ten of them streaming across that internet and what happens to your own personal internet? I just the other day got, an internet was sent by my staff at 10 o'clock in the morning on Friday and I just got it yesterday. Why?

Because it got tangled up with all these things going on the internet commercially. So you want to talk about the consumer? Let's talk about you and me. We use this internet to communicate and we aren't using it for commercial purposes. We aren't earning anything by going on that internet. Now I'm not saying you have to or you want to discrimnate against those people [...]

The regulatory approach is wrong. Your approach is regulatory in the sense that it says "No one can charge anyone for massively invading this world of the internet". No, I'm not finished. I want people to understand my position, I'm not going to take a lot of time. [?]

They want to deliver vast amounts of information over the internet. And again, the internet is not something you just dump something on. It's not a truck. It's a series of tubes.

And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material. Now we have a separate Department of Defense internet now, did you know that?

The answer, sadly, is (A). Senator Ted Stevens delivered those lines as part of his rational for his vote on Net Neutrality. Yes, the man in charge of possible internet legislation thinks he gets his email the same way that the tellers at his bank get his weekly deposit when he's sitting in his car in lane #2.

You can listen for yourself here.

I wonder how he thinks television works?

[via Wired and Firedoglake]

Posted by Craig Danuloff at 11:09 AM | Permalink