Seven Blunders of the Internet World

I’ve been involved with web hosting since the early 1990’s, and every week some hopeful bright spark comes to me with a great idea about making a fortune as an Internet entrepreneur. Whilst I hate to rain on anyone’s parade, a quick reality check is in order. Just because Amazon can make a fortune selling books on-line, doesn’t mean they can. Amazon got there first and they’ve got a slick, well organised operation. In short they can buy the books cheap, store them efficiently and, most importantly, stuff them into envelopes and post them quickly and cheaply. This doesn’t mean it’s impossible to compete with Amazon, but they were there first and have a massive advantage. If you decided to by a Cessna and try to compete with American Airlines on the London to New York run everyone would (rightly) say you were nuts, so why should it be a surprise to learn the same applies on-line.

Whatever you do, remember the ease of starting up on the Internet works for you and the competition. You need a unique selling point; a barrier to entry that only you can cross. If you don’t have one you’re competing with the rest of the world.

Here are seven popular but doomed ideas I’ve seen time after time…

  1. Auction Sites. eBay’s doing well, but they’re a bunch of *****s so you want a slice of the action. Unless you’re selling something very specialised (i.e. that eBay can’t handle) then you’re wasting your time. Why should anyone list items with you when you can’t match eBay’s user base? Whatever you think of eBay’s business methods, items auctioned to millions of potential buyers are going to fetch a better price and sellers know that.
  2. Social Networking Sites. So you want to be the next Facebook? Ask yourself why anyone would network their social life through you when there are bigger networks on Facebook (for home users) and LinkedIn (for professionals). Google is, I believe, planning to muscle in. They’re going to find it tough, but they’ve got almost limitless funds they can afford to speculate with, and their developers know exactly what they’re doing (well their top ones do). They’ll still need one hell of a good unique selling point.
  3. Blogging sites. Get someone to provide the content while you rake in the advertising revenue. How many mugs do you think you’ll find? People can either run their own site (and keep the advertising revenue) or use Blogspot.
  4. Directories. If your bright idea is to create a directory of business and get them to pay for a listing, I have to tell you it’s been done. If every business paid to be in every such directory they’d go bust in no time – they’re wise to it. They know that people will find them through Google, not you. There are ways this can sort-of work with advertising support but you’ll be lucky if they cover hosting costs this way.
  5. On-line shops. These do work if there’s a real shop behind them. If you’re plan is to buy a copy of Actinic or download a free copy of Zencart or one of the dozens of on-line shops, put something up and see who bits, forget it.

    Selling on-line you’re competing on price, order-fulfilment and uniqueness of stock – if people can get it cheaper and quicker somewhere else, they probably will. If you’re selling “unique” artefacts such as antiques or objet de art you’re competing with eBay or the artisans producing them, who would need a good reason not to set up their own web site and sell direct. If you’re thinking producers will pay for you to list them, ask yourself why they’d pay you rather than eBay or Amazon, where they’ll get far more exposure.

  6. Web Design Company. Great idea! Download some web template generator for Joomla and make a fortune creating web sites for… well your friends, family and then what? The problem is that there is very little barrier to entry and the market is flooded with the unemployed (and possibly unemployable) looking for a work-from-home job without getting their hands dirty. The real web design companies have real programmers and cater for customers with specialist needs. If you’re thinking of using Joomla you’re not in that league. Sorry.
  7. Internet multi-level marketing seller. Anyone can be a web hosting company, telephone company, ringtone provider or what-have-you – it’s easy! Just sign up to an affiliate programme, choose your branding and sell, sell, sell – along with thousands of others selling exactly the same thing. If it was easy to sell the provider would be selling direct, wouldn’t they?

    All of the above are tried and failed businesses. If you’ve got a plan that doesn’t fall foul of any of the above it’s either completely crazy or it might just work – in which case give me a call. There are some ideas that might just work, but I’m hardly going to reveal them here

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