Three Out of Four Successful Online Strategies
ActivMedia's research, ``E-Survivors! Winning E-Commerce Strategies for 2001," identifies four basic online strategies. Three of the styles are generally "success" styles, while the fourth, practised by some of the most publicly visible, over-hyped sites, is a clear loser.
"Niche Defense" is a solid, long-term survival strategy, adopted by older offline companies that have a well-developed offline presence. These firms turn to the Internet as an additional sales channel. Their strategies online are very traditional ones and are the same customer-focused strategies that have worked well for them offline.
"Growth Through Positive Cash Flow" is a strategy undertaken by generally larger-sized companies for whom the Internet portion of their business is fairly small. This group has benefited extensively from the Internet. They have been able to switch more expensive sales and distribution channels to the Internet, thereby improving profitability and cash flow.
Firms that are young and financially very healthy "Invest Heavily in Online Growth" because of fierce competition. These websites are active who oftentimes make many purchases per year. In order to keep attracting visitors and past customers to their sites, these businesses invest heavily in their online Web technology. The challenge for these firms, with many transactions selling many products and receive many visitors, has been to maintain a high level of Web investment in site design and maintenance.
Of the four Internet strategies identified by ActivMedia, this is the one that is not a successful strategy. Firms that adopt an "Aggressive Site Promotion" strategy do not focus on developing a unique market position, and are therefore vulnerable to other competitors entering the market with superior and more differentiable products. They also do not focus on cutting operational costs or increasing operational efficiencies, while pouring money into their Web business primarily as advertising and marketing expenditures. Most of the companies currently using this strategy are not profitable.
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