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December 31, 2004
Make Honest Predictions
By QBlog in
While my wife was involved with Quixtar we were repeatedly told that the "e-commerce revolution" was changing the way Americans shopped and that soon, nobody would go to Wal-Mart or Safeway because virtually all shopping would be done online. Such predictions were often followed by an explanation of Quixtar's business opportunity and how it was properly positioned to take advantage of this retail revolution.
And it seems that much of Quixtar's business is built on the assumption that one day e-commerce will supplant traditional retail sales putting Quixtar in the fabled catbird seat. What a stupid assumption. And I think Jeff Bezos would agree with me.
In the latest issue of Wired Magazine, Jeff Bezos (founder of Amazon.com) talks about his business and e-commerce. The Bezos interview won't be online until Jan. 7 but I've included some excerpts below.
Chris Anderson (Wired's editor in chief) - How much of retail sales do you think eventually will be online, and how much offline?
Jeff Bezos - I think online ultimately will be 10 to 15 percent of retail (it's currently around two percent). The vast majority of retailing will stay in the physical world because people have acute needs, they want things now. Also, there are products, like a yard rake, where the economics of delivery don't make sense. But a 600-pound table saw is a great item to sell online because it always gets delivered. And it's expensive enough that there is enough profit in it to cover the cost of shippiing. Plasma TVs, same idea.
Do physical bookstores have anything to offer that Amazon doesn't?
One thing is face-to-face meetings with authors. And what Howard Schultz at Starbucks likes to call a third place, where people go and sit and spend time. We humans are a gregarious species; we like to mingle with other humans.
That's a realistic assessment from a guy who has helped pioneer the e-commerce industry. And you know what? His honest voice gives him credibility that the Quixtar IBO lacked. Also, Amazon.com is a publicly traded company so theoretically he could be hurting his business by downplaying e-commerce predictions. But his candor on the matter improves my perceptions of him and his company. Quixtar execs should take notes.
You want to follow a leader, follow Jeff Bezos.
Comments
What I find incredible is that my upline Triple Diamond - Brad Duncan of WWDB - used to always say something about this in his meetings.
He would always say that he knew Jeff Bezos and that he liked and admired him.
Brad would also say that he wouldn't be surprised if Amazon was totally gone in a couple of years. Looks like what Brad 'knew' was not so correct after all.
He also indicated that E-Commerce would outstrip all other forms of commerce.
Well, phooey on Brad and his supposed 'knowledge'. From the way the market has been and the way things seem to be going, Brad was just like the atmosphere on Mercury - Full of Hot Air.
I would say that Dogbert's statements of disdain would be appropriate here in relation to Brad: 'Bah!'
Cliff :-)
Hey, Quixtar Blog - what about the Van Andel foundation story? This is HUGE.
I've always thought that the ecommerce would always be a "minor" player. And that is because of the nature of internet commerce.
Fact is, ecommerce is an extension of catalogues. You buy stuff you want that you can't find conveniently in stores. Used to be the main form of marketing before Mr. Sears saw people driving to his Chicago warehouse to pick up stuff. What the internet has done is make a worldwide marketplace, allowing those who know what they want to find stuff they would never have found before, and at a more leasurely pace (Ebay excepted).
Of course, there's some changes that the internet has caused. First, Xmas is perfect for ecommerce, as you don't have to find the item at a store or get it NOW for the gift to work; it wouldn't surprise me if Xmas buying dropped slightly at Wal-Mart, Meijers and Target at some point in the near future.
Also, don't be surprised if selections of certain non-necessary items at various stores shrinks. An example: why should a Borders or a CoCoNuts stock a Cristina CD (http://www.redoverwhite.org/cristina/) when you can special order it through Amazon.com -- and get it cheaper to boot?
The IBO's are going to be there as "middle-men" in a way, but only to get people to buy things online so they don't have to travel go to the middle-men in life.
Think of it this way, if you are shopping online for next months groceries (I know, not everyone is going to do this, just an example) you can look for a day or two, put everything in your cart, let it sit there over night and get back to it when you know other things you need. Then, it gets shipped to you, you don't have to make wasted trips to the store, hustle with traffic, and then deal with ignorant people at the registers just to get a lb of beef for dinner.
Plus, you will save a lot for buying in bulk, the price you pay for shipping is nothing compared to market markups and gas money. An no, gas money isn't going to drop below 1.40 a gallon, trust me on this. It will, if anything get more expensive, which is why internet shopping will be a "bigger bang for the buck."
Chris!!!!
Welcome back buddy! People do shop over a period of days, its called a shopping list.
Gas is expensive, but so is shipping. Is it still 41/2%? Pretty tough to be driving anywhere without passing a store.
Gotta get milk anyway, might as well get the rest of the things I need, lineups or otherwise.
How was your trip? I've missed your visits to the site. It just hasn't been the same without you.
From a woman's perspective, shopping online for certain things is much better than going to the store, especially since you can get things in bulk. Feminine hygeine products and deodorant are things I will use from now until the day I am six feet under. These are also things I do not 'enjoy' shopping for. It is nice to buy feminine products about once a year (yes, there ARE that many in a case!) and know that you won't run out. This is a woman's greatest fear, waking at 2am not having protection. This also works well for cat food and litter. My cats eat and poo everyday so it is nice to have these things delivered to my door.
I believe ecommerce has it's strengths and weaknesses and they are different for everyone. I can't buy most of my food from Q because of my dietary restrictions so that won't work for me but the examples I gave above work wonderfully. Everyone uses the internet for different things and that is why ecommerce will never be as big a Q says it will. Too much competition and not enough people to go around.
First, Chris, you may not mind having someone else pick out your beef for you at the store, but I'm much more particular. If the store doesn't have the cut I want, I'm not buying. If I'm shopping online, even if there is a web-cam, it just isn't the same as an on-sight inspection. And if you think I'm anal about meat, you should see me picking out eggs!
As for gas, sure there are plenty of rural dwellers that have to drive a significant distance for groceries, but I would bet for the majority of city slickers, the drive to the nearest store is less then 5 miles round trip. It's called demographics, and when there is a neighborhood that has significant density, the grocery stores follow. In fact, the nearest grocery store for me is .5 mile from my house, so it is a gallon of gas. My car also gets about 30 mph, so even at $2.00/gallon, I'm using maybe $.07 of gas? And even if I go to the next farthest store, which is 1.5 miles away, the round trip is still only 3 miles, meaning I'm using about $.20 gas. Compare this with shipping, and even a first class stamp is $.37! And by the way, if I only need a couple of items and the weather is nice, I'll walk to the store costing me no gas!
And for Sheep, sure some people like to buy bulk online, but there are other places to shop for bulk like Sam's Club and Costco. My company has a Costco account and gave me a card because I occasionally make runs for my office. I can also use it personally, and do so to buy bulk. And while the closest Costco is about 8 miles from my house, it is only about 1 mile from my office, so after work, about once every two months, I make a Costco run. Again, the two miles I have to drive out of my way to get to Costco only costs me $.13 gas, and for me, it's just cheaper and easier. And yes, I will even buy feminine products for my wife.
In the end, the guy from Amazon is dead on. There certainly is a market place for online, but 10% to 15% is probably the max. And for things that are just cheaper and easier to get from Wal-Mart or the grocery store, online will only get the small niche market that pre-online catalogs had, which is about 2% - 3%. Quixtar/Amway traditionally fit into this percentage of the market and I fail to see why they will ever grow significantly from this.
Chris:
I think I am going to side with the Amazon billionaire over your punk-ass. Sorry.
The internet serves a certain niche, just as the AmQuix cult does. To think that AmQuix is going to exceed that niche is extremely naive.
As you say "trust me on this".
Saying that Safeway and Wal Mart will fall due to online shopping is stupid, but so is saying that online shopping will have little to no impact on this world.
Interesting to note that your plugging Amazon at the same time as carrying an ad for the. QBlog shilling for ecommerce companies......................
Rocket said: Chris!!!!
Welcome back buddy!
Imran> I think it's different Chris.
http://profiles.yahoo.com/xzandelar
Doesn't look like father of 2 kids to me. Which other chris claimed to be.
Im an IBO. I'll admit it now, before you continue reading, so that if you think I'm brainwashed, you don't have to bother finishing this article. But here is the bottom line: a technology which is dependent upon another technology will only grow as it's foundation grows. In other words, Quixtar will only grow as the internet does. This is exactly what is happening here and in other places.
For example, look at the growth of Quixtar in markets such as India and China, where the internet has completely integrated itself with the culture of said countries. Wireless web and broadband access are available to practically everyone in all of the developed areas of these countries, and these areas have the largest population boom(duh!). What's my point? Look at the U.S. and consider the amount of economic infiltration of the internet (no I won't quote Bill Hawkins). I have worked at RadioShack for 6 years, and I tell you in all sincerety, that most people over 35 hit the internet and stop as fast as a bird to a window.
I agree with Jeff in the area of a 10% number in internet sales over the next few years. But, in my opinion, as the majority of the MSWindows generation grows older and takes hold of our economy, more and more adults will use ecommerce for at least 40-60% of their purchases. Personally, I wouldn't be so silly as to follow the Quixtar plan as deep as many would, but I recognize it as a solid generator of income if you put forth the effort, which I have.
Many people don't buy into the Quixtar plan, which is why it will top out eventually. But truthfully, every turnkey business tops out, regardless of which kind of industry it is in. And when that happens to Quixtar, the Diamonds' income won't fade away. Those Diamonds will just change the plan to target a new way of thinking.
I remember cell phone example in the plan. Not many ppl used cell phone in early to mid 90s and now every one does and ppl who had vision made big bucks. Same goes with online shopping.......
BUT even if we shop 100% online, does it mean IBOs will make much more money? I don't think so.
One of the things eCommerce does it remove middlemen and connects customer directly to the business. In Quixtar whole opportunity is being a middle men. More middle men the better.
Besides, between wallmart.com, Amazon.com and Quixtar.com, we'll see :D
Also, if IBOs and Customers all bought only what they need, I really wonder how much sales would be!
Posted by: Imran Aziz | December 31, 2004 11:29 PM