Why e-Commerce is different

At first we got confused about how to make money out of the internet. We thought we should be able to demand payment. Silly us, we forgot about the first lesson in economics – that pesky demand and supply. Supply doesn’t automatically equal demand – especially financial demand. On the internet things work in reverse. First value must be created, then it is extracted. It’s the opposite to the previous industrial world of buying and selling.

Now it’s proving, then earning.

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6 Comments Why e-Commerce is different

  1. Robert Showerman

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  2. David Hamilton

    Hi Steve,

    This is a great observation about many online businesses. I came across a good example of “proof before profit” today when I was researching email newsletter ad prices. The prices are based on the current number of subscribers, the number of click throughs, the demographics of subscribers, etc. In other words, the email newsletter has to prove that it’s successful before someone will be willing to provide it ad revenue.

    This business model, of course, is not particularly unique to online businesses. The metrics used in determining ad prices are not unlike those used by newspapers and magazines. Circulation, after all, is a good measure of the value of print ads.

    That said, I also don’t think every online commercial venture needs to prove its value to make money — or at least show its whole value. Funding platforms like Kickstarter offer entrepreneurs the option of getting money so that an idea can come to fruition. The most supported projects on Kickstarter are, not surprisingly, the ones where the creators have shown a great deal of development work or who have past successes to which to point.

    Overall, I think this idea of proof before profit is great advice for online entrepreneurs.

    – David

  3. Internet Marketing

    It has become a necessity to include the various social media services in your marketing strategy. In fact, with the increasing number of people on sites like Twitter, StumbleUpon and Facebook, it has become one of the primary methods of engaging an audience. Using blogs, social networks and other portals to show quality content is called content marketing.

  4. Internet Marketing

    Right here is the perfect blog for anyone who really wants to understand this topic. You understand a whole lot its almost tough to argue with you (not that I personally will need to…HaHa). You definitely put a fresh spin on a topic that’s been written about for a long time. Great stuff, just great!

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