Alan Goldstein: E-tailers struggle with attitude adjustments

Friday, March 3rd 2000, 12:00 am

By: News On 6

Judging by the market values that Wall Street is awarding to dot.com stocks over their traditional business counterparts, one might conclude that the battle for customers on the Internet has already been won and lost.

Well, let's hang on a second. These Web billionaires may be moving in Internet time, but the rest of us are making our own transition to the digital lifestyle using regular clocks {mdash} one book, plane ticket or load of groceries at a time.

The point is that some of the traditional companies that have winning brands in the economy of the physical world, even heavyweights such as Bank of America Corp. or Nordstrom Inc., have barely gotten started in the virtual world.

"To date, dot.coms have not faced much competition from traditional companies," argues Forrester Research Inc. analyst Mary Modahl, who was in Dallas last week for a presentation on what she calls the battle for Internet consumers.

"Traditional companies will respond, and it will change the landscape for the dot.coms."
The transition for brick-and-mortar companies will not be easy, she says.

Traditional companies are bound by the ways they have always done business, by internal conflicts over how to deal with the threats and the opportunities of the Internet and by the reluctance to invest too much in risky electronic-commerce strategies.

But the dot.coms have their own set of problems, Ms. Modahl adds.
While it may be easy to recruit people with the promise of stock options and vast wealth, many will walk out the door looking for the next opportunity if the stock doesn't soar at a triple-digit pace within a few weeks from its initial public offering.

"What can the dot.coms do? They need to have a mission bigger than an IPO and money," she says.

Ms. Modahl discusses many of these themes for the digital economy in a book she wrote last fall, Now or Never: How Companies Must Change Today to Win the Battle for Internet Consumers.

One of the most important realizations for online marketers, she says, is that Internet consumers don't respond to pitches based on traditional demographic groupings.

For example, Ms. Modahl says, she and her friend, Sue, look exactly the same to a conventional marketer.

Both are married women in their late 30s living in the same Boston suburb. Both are moms of young kids. They drive similar cars.
But Ms. Modahl, not surprisingly, considers herself a technology optimist.

She is eager to spend time learning about technology and recently prided herself on tracking down Pez candy dispensers in the shapes of Star Wars characters for her son's birthday party. Sue is a technology pessimist.

She can't see any reason to take the time to figure out how to use a Palm organizer for managing her busy schedule. In general, she thinks technology may do more harm than good in society.

Do their different attitudes toward technology make a difference in how they deal with Internet shopping? You bet.

And while most of the early adopters of e-commerce were technology optimists, the mainstream looks a lot more like Sue.
Technology pessimists such as Sue own computers, but they don't use them much.

When they do, they visit fewer Web sites. Ms. Modahl says her father, an avid reader, goes online to buy books from Amazon.com but does little other shopping over the Internet.

"The high-income pessimists are in some ways the best customers because they are so loyal," she says.

One conclusion that Ms. Modahl draws is so-called clicks-and-mortar strategies may be big winners {mdash} that trusted, existing brands can have a big advantage if they can find innovative ways to blend their physical presence with their virtual one.

And the dot.coms, she says, may need to develop a physical presence.

Microsoft Corp. endorsed this idea when it signed a five-year agreement with Fort Worth-based Tandy Corp. in November. The 7,000 Radio Shack outlets nationwide will open displays for Microsoft products and services.
Amazon.com arrived early enough on the scene that it has a well-known brand name without any stores.

But a physical presence can help other dot.coms cut through all the noise of today's hyperactive Internet marketing that deluges consumers with the names of more new Web sites each day than they could ever remember.

"Mainstream consumers relate to a physical presence," Ms. Modahl says. "Why shouldn't something be on the Internet and in the shopping mall?"

Technology editor Alan Goldstein writes about the Internet and electronic commerce for The Dallas Morning News. His e-mail address is agoldstein@dallasnews.com.