E-Tailing To Shake Out In 2001: The Dot.Com Death March

Electronic-commerce – the nation’s electronic retailers – are facing the final moments of the critical introductory phase of their new industry, and the great shakeout is about to begin, says a University of Alabama retail marketing expert.

“Make way for bankruptcies, mergers, consolidations and other forms of organizational disaster,” predicts Dr. Robert Robicheaux, Bruno Professor of Retail Marketing at the Culverhouse College of Commerce and Business Administration. “The lessons that were learned during the maturation of the railroad industry, the airline industry and, more recently, the computer industry are about to apply to the Dot-Com industry.

“There have been so many unfulfilled promises,” Robicheaux says. “So many bad decisions have been made. So many investors have waited so patiently for their investments to pay dividends. So many people are so utterly frustrated and so terribly angry. So many were simply gambling on bad advice and poor timing. Quietly and confidentially they admit that they are beginning to wonder if they were duped.”

Robicheaux says investors, for nearly a decade, have been pouring money into electronic retailing ventures that have yet to “turn the corner.”

Many enterprising electronic commerce gurus ran through the investor markets with colorful pictures of enterprises they guaranteed would bring brick-and-mortar retailers like Sak’s, Wal-Mart and Sears to their knees, Robicheaux says.

“To date, almost all of those gurus have been able to stay ahead of their staggering expense budgets and escalating operating-system investments by continuing to offer more and more stock to increasingly wary investors and by borrowing from increasingly unhappy lenders,” he says. “The investors and lenders are waking up now to the realization that many of the information system gurus have sold them a ‘pig in a poke.’ The systems are seeming to look and smell like snake oil.”

Brick-and-mortar retailers knew from the beginning they didn’t understand ‘Internet commerce,’ Robicheaux says, and they were afraid to gamble too much of their scarce capital on the slick promises that all commerce would soon be dominated by the electronic wizards.

So, where are we today? Sak’s, Toys-R-Us, Walgreen’s, Wal-Mart, J.C. Penney and the majority of the brick and mortar powerhouses are moving forward with electronic commerce programs that complement their brick-and-mortar programs.

The coming year will feature a reconciliation of the structure of retailing in America. Some traditional retailers will make giant strides toward capturing their target shares of the Internet commerce markets. “The dot.com wizards, will be found walking in the shadows of Wall Street trying to avoid eye contact,” Robicheaux said. “Darwin had it right. The most fit usually survive. There truly is a natural order in retailing.”