A just-released study of a sampling of Southern California e-commerce companies found that many of them didn’t have a business or marketing plan in place when they launched their web sites.
The study, conducted by Irvine accounting and management consulting firm Haskell & White, is further evidence that many web ventures are unsophisticated, seat-of-the-pants operations that don’t lend themselves to making money.
The firm surveyed 300 companies, then took a closer look at a smaller sample of 26. Among this smaller group, the study found that only one-third had a formal marketing strategy in mind when the site launched.
“We found there was no focus on who the customer was,” said Steve Haskell, managing partner in the accounting firm. “It is obvious that nobody focused on who they are trying to sell to and what is the best way to reach these customers. They think web sites are like electronic billboards, and they hope that people will remember their name somehow.”
Brick-and-Mortar Extensions
Eighty percent of the web sites surveyed were extensions of brick-and-mortar operations, which was cited as one of the reasons there was a lack of advanced planning.
“We have been seeing this attitude of, ‘Let’s get this web site up and running and start selling,’ ” said Scott Capifoni, who manages the technology division of Haskell & White.
Some common mistakes included:
n Assuming that people will click on a web site just because it exists.
n Lack of advance planning.
n Not understanding how to service web customers.
n Web designs that were difficult to navigate through.
n Not spending enough time or money to develop the web site.
“Two-thirds of those surveyed spent less than $1,500 preparing their web sites, and the others spent up to $1 million,” Haskell said.
Bad Vibrations
One mistake frequently made by traditional manufacturers or wholesalers venturing onto the web is starting an e-commerce site and then angering retailers.
“Home Depot last summer sent out letters to its suppliers that said, ‘If you are going to go on the Internet and sell your product directly to consumers, we will take your product off the floor,’ ” Capifoni said. “Levi Strauss halted its web site after Macy’s and J.C. Penney said that if they were going to sell Levi clothes on the Internet and cannibalize the department stores’ sales, then they should forget it.”
The study’s findings come as little surprise to Brad Jones, managing director of Redpoint Ventures, a venture-capital firm that specializes in investing in Internet companies.
“Some companies haven’t any idea of what they want to do. They just want to build a web site,” Jones said. “Even the biggest companies don’t get it right the first time.”
Good Vibrations
One of those the report cites as doing it right is Buy.com in Aliso Viejo. The site, which sells everything from golf clubs to computer software, is easy to navigate, Haskell said.
Another good but simple site was donnab.com, which sells baked goods as an extension of Donna’s Bakery in Laguna Niguel.
“The web site isn’t going to win any awards, but it was easy to use and to the point. Everything seemed to click,” Haskell said. n
Belgum is a staff reporter at the Los Angeles Business Journal.
