The Electronic B@zaar: Part 4 - Apples from Alaska

* Apples from Alaska *

For existing businesses, survival and success in the electronic economy can depend critically on when they get the "internet wake-up call." Something has to happen to make them see that they face extreme commercial challenges and that time is short. They have to start to see the whole picture. They have to "get it."

For me, the wake-up call began in a bar on Fisherman's Wharf in San Francisco, in 1996. I was relaxing with a cool lager in my hand on a hot Saturday afternoon. The barman seemed to know the guy who was sitting a few yards down the bar very well and was telling him about his latest girlfriend. He said that he had got to know her first on the internet, then he had met her in person in a kind of "blind date" encounter at Los Angeles airport, and now he had been going steady for a few months and sent her email every day. The bar man was not particularly young and he was clearly not a computer geek. In fact, he could be described as an "average Joe." The man he was talking to was also an average Joe and, as far as I could deduce from the conversation, he too was internet savvy. I suddenly realized that for these people and presumably many others in California, the internet was as much a part of their existence as the telephone.

Soon after, on returning to the UK, a business acquaintance of mine announced to me that he was now buying his Apple computers from Alaska. He informed me in a matter-of-fact way that the web-based supplier he had found in Alaska provided him with Apple computers cheaper than those he could get in the UK, and also, more importantly, they were delivered faster. This stunned me. This completed my wake-up call.

The simple example of a web-based purchase of computers from Alaska combines three factors illustrating the economic power of the web:

@ The shrinking of geography. Because of the internet, the geographic barriers that separated markets are collapsing-a retail outlet in Alaska won business in direct competition with British suppliers, without the British suppliers even knowing. Events like this are now happening daily on the web.
@ Consumer education. Consumers can and do shop around electronically to find the best price-finding the best price for an Apple Mac involving risk-free delivery had taken an hour on the web. There are now a whole multitude of sites aimed at informing the consumer.
@ Speed of service. Web traders can provide a better speed of service-this Apple Mac supplier had geared up for two-day delivery worldwide. There are now many examples of trading where the web-based service is an improvement over the normal retail service.

The Alaskan example is useful, because it is so bizarre. It is unlikely in the extreme that Alaska will become the prime supply point in the world for Apple computers. In fact, there is already a strong trend for computers to be supplied direct from the factory, with the consumer specifying individual details of the computer configuration and software to be ready loaded. Thus the wholesale and retail chain for distributing computers could disappear altogether with time.

The example demonstrates the sudden impact that the third of our four hinges, the force of automation, can have. Technologies and ideas for automation are being invented all the time, but every now and then a change occurs that suddenly introduces a discontinuous change into the economy. At that point, the force of automation suddenly hits like a sledgehammer. The building of the railroads and the introduction of the automobile represent discontinuous changes of this type, because they affected the whole economy and they reduced costs significantly and they made some transactions possible that were not previously possible.

'The Electronic B@zaar - part one': http://www.silicon.com/a38281
'The Electronic B@zaar - part two': http://www.silicon.com/a38257
'The Electronic B@zaar - part three': http://www.silicon.com/a38314

** Extracted from 'The Electronic B@zaar: From the Silk Road to the e-Road' by Robin Bloor published by Nicholas Brealey Publishing, £19.99.