Part 2: E-tailers, Garden failures and Cool Tool future

Why aren't e-tailers more successful on the Web? After all, you don't have the cost of paying rent (at least, those solely based on the Web) and catalog businesses have been successful for years without a storefront.
Now you've hit a sore spot!

I think that it's wrong to say that etailers weren't "successful" on the Web. It's not that the model is necessarily wrong, it's the way it was implemented that didn't work. A whole lot of dot.bomb etailers went out of business not because e-commerce somehow doesn't "work" but because they spent themselves out of existence.

It's not that e-commerce doesn't work, but that it might be extremely difficult to get it to work for certain categories. Goods that must be "experienced" before purchase, furniture and high-end jewelry, for example have a tough time online. The medium just isn't enough to convey the quality of experience that can be conveyed through print or in person.

But commodity categories: books, CDs, etc., seem to do well online, simply because there's no question about what you're getting when you buy it, a CD, is a CD, is a CD.

The idea of experience also comes into play when you consider the category as a whole. People are still very nervous about putting their credit card numbers into an ecommerce site. Why? Because many people perceive that the barriers to entry for putting up a website is very low. After all, if you can "teach yourself HTML in a week," what's to stop any scammer from putting up a fake site and collecting credit card numbers?

On the other hand, when you get a printed catalog in the mail there's a feeling of solidity, of legitimacy, or trust. You know (or at least strongly suspect) that you're buying from a real company.

Finally, a lot of etailers shot themselves in the virtual foot by not paying enough attention to the customer once they'd gotten to the site. Many of them (especially the ones with loads of funding) spent enormous amounts of money on very "successful" advertising campaigns, which got lots of people to their sites...once.

However, when that customer got to the site and wanted to find stuff or buy products, they were often stymied by poorly designed interfaces and technical glitches. If they did manage to actually buy something (but needed help with it later on) the after-sale customer support was usually so poor that they'd never buy from that company again.

In the end, ecommerce is about value: how much value is the etailer providing to the consumer. If they're not adding enough value to make the online transaction worth their while, the customer isn't ever going to buy again. No customers? Poof! No company.

To paraphrase your interview with Media Life Magazine, you discuss Garden.com, and how it quickly became a dot com failure despite $455 million in venture capital. What should they have done better to succeed?
Focused on actually building a business the way businesses have always been built: with an eye to the bottom line. They should have grown as the market showed support for their concept. They should have focused on tight, lean operations. They should have focused on highly targeted advertising in niche markets that have always been well served by the garden industry.

And they never should have expected that people would use them simply because they were on the Web. They should have proven themselves and built a brand that went beyond name recognition.

Finally, what's next for you? What's next for Cool Tool?
I've got a book about the dot.com implosion coming out in the late summer that should be pretty interesting, though with the number of dot.coms going out of business every day, it's been a struggle to keep it up to date!

Also, my company continues to evolve and now employs a network of over 2000 anthropologists around the world to get out and observe consumer behavior on a global scale...insight we work into every project we do.

As for Cool Tool, we plan on keeping it running as long as there are software junkies alive on the Web to read it! We never have made a fortune off of it, but it's really a labor of love, our contribution to the global sphere of knowledge and (we hope) entertainment. We've got a pretty loyal readership and love doing it, so I see Cool Tool living a long and happy life.

Thanks for the terrific insight into ecommerce, Sean!