E-commerce: Not a new economic model

The advent of the Internet has spawned E-commerce, along with hundreds of new millionaires, new life styles and the promise for changes in all aspects of our lives. E-commerce is the business manifestation of the Internet. This was to be the new business model, the Next New Thing. Everyone wanted to be involved in this new business model; students were forgoing the competition of their degrees, established professionals left their lucrative careers; old-line corporations thought that if they did not have an Internet component, that they would lose ground to their competitors. And so the rush was on.

The opening of any new frontier is always followed by a stampede of people wanting to be the first to stake out the most promising territory. Some people are lured by promises of riches, others by the chance of a new start in life. This new frontier, that is E-commerce, likewise, had qualities that attracted many people. There was the opportunity for wealth, for adventure, as E-commerce was seen as the start of a brand new world; a shift in the economic paradigm. Thus, together, with youth, promises of wealth, and the opportunity to remake ones career, E-commerce went about to make its mark on the world. Having missed the sixties, and being too young to have participated in the seventies, this era of the Internet seems like an opportune moment for me to brand myself to a specific generation. Years from now, I, too, will be able to sit back in my rocker, lost in nostalgia and remembrance of things past. Will youth, money, and adventure be enough to bring about a change in society? Will E-commerce be the new economic model?

The champions of E-commerce was being led by the young, with all that youth implies; freshness and new. Youth was a natural selling point for E-commerce. The exploitation of youth is also a long-standing method of selling in America. Movies, television, and clothing are all made and market with the young in mind. Youthfulness and all its corresponding attributes; freshness, a certain potency are qualities to which Americans respond. Thus, the Internet and E-commerce were seen as the province of the young. This was to be a New World, where old economy conventions were disdained and rule books rejected, old verities – about management techniques as well as office protocol no longer applied. E-commerce was to revolutionize the business world. In most cases this was literary so, as E-commerce existed on the Internet, in virtual reality, free from the physical structure of a building, the so-called bricks and mortar business To paraphrase a popular commercial, ‘this was no!
t your father’s commerce.

Another factor that fueled the youth movement in E-commerce is the technology that is the Internet. Justified or not, older people thought that youth and the Internet and therefore E-commerce go together. The thought is that the younger a person, the more comfortable he or she is with technology, that is the computer, the medium through which E-commerce is conducted. Maybe, it’s the familiarity of video games; that vast (wasted) time spent in front of video monitors. But, in all, this proximity of youth to E-commerce is in itself self-fulfilling, making E-commerce attractive.

Nothing can beat youth and money as a selling point. For the past couple years, stories of the young striking it rich in E-commerce have been dominating the covers at the newsstands. They were reports of countless young men (it was usually young men) just out of college or dropping out off college to make their fortunes. There was the college dropout who developed Napster, the music sharing software. There was Jeff Bezos, the founder of Amazon.com, who was Time Magazine’s 1999 Man of the Year. And lets not forget the individual most recognizable with the computer, although not necessarily with E-commerce, but whose software is the engine that runs E-commerce; Bill Gates, the richest man in the world. His fortune is all derived from the computer and its accompanying innovations.

A new lifestyle formed around E-commerce, somewhat blurring the lines between work and pleasure, workplace and living space. Young entrepreneurs worked long hours, played hard, earned obscenely huge salaries and spent wantonly. (Ironically, their spending went towards traditionally old economy business such as real estate, bars and restaurants) The age of the dot-comers was upon us.

The avatars of E-commerce, these dot-commers, were E-commerce’s best advertisement. They ditched their suits for the so-called Causal Friday look – everyday – khaki and polo shirt. Some even wore T-shirts, shorts and sandals. Their attire was not their only informal outlook on business. The hierarchy of the old economy was also abandoned. Both executives and workers mixed, during work and after work hours. The dot-comers were also noted for the perks they provided to their employees. The mother of all perks, that which created the dot-commer, was the stock option. Tens of thousands made fortunes, albeit on paper, overnight.

Other perks that added to the notoriety of the dot-commer, were the expensive ergonomically correct chairs in lush offices. There were free snacks and not to mention the generous expense accounts. It’s no wonder everyone wanted to be an E-ntrepreneurs.

Those were the glory days. By now, everyone has come to see E-commerce as a flash in the pan. E-commerce has lost its allure. There has been an economic downturn, with the technology sector been hit hard. Many E-commerce companies have laid off workers. The sin qua non of E-commerce, the stock price has fallen. This has been followed by the closing of many an E-commerce company.

Why such reversal of fortunes? The history of E-commerce has not yet been written, but historians may want to look at the hype surrounding E-commerce. The emergence of E-commerce seemed like a marketing campaign to create a demand for a product for which no one had any use. We were drawn to E-commerce’s association with youth, the appeal for the opportunity for great wealth. Then there was the lifestyle of E-commerce. Americans seem to like era defining trends, something that defines a certain moment in time. Remember the sixties with its civil rights and youth movements? The dot-comers will likewise define the ending of twentieth century America.

Thus, we have an attractive package covering E-commerce: youth, money and the lifestyle. But, the question must be asked, what’s under the covering? More to the point, where’s the beef? The most important aspect of business, nay, the only reason, for the existence of business, is the profit motive. E-commerce as a business model has yet to show a return of profit. Amazon.com for all its exposure has not made any profit. Virtual reality is littered with the corpses of E-commerce companies: Pets.com, DrKoop.com. The list goes on and on.

In the end, E-commerce will not be a revolutionary force as envisioned by some, but more evolutionary, just another component to the old economic model, taking its place alongside that of the humble catalogue.

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