SFGate010

Net Unemployment Will the Internet Put You Out of Work?


Hal Plotkin, Special to SF Gate
Monday, January 4, 1999

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/technology/archive/1999/01/04/unemployment.dtl

In March, Palo Alto’s landmark bookstore, Printers, Inc. will shut its doors for good. The owners cite competition from online vendors like Amazon.com as a primary reason for the store’s demise.

Similar closures are occurring elsewhere, beginning what is likely to become a major new trend: Net-induced unemployment. Neighborhood bookstores are just the first penguins off the ice floe.

If the Census Bureau is correct, there are now at least 10 million people working in retail sales. Many of them are at risk of being displaced by the Net’s superior sales channel.

Even traditionally secure jobs, in fields like law and medicine, may also be threatened as the Internet helps erode the quarantine on information previously dispensed for high fees. The Internet’s New Frontier has created the economic equivalent of a raucous Wild West party; some folks are having the time of their lives, while others are getting their heads shot off.

So, how do you avoid getting stuck on the wrong side of the online revolution?

For starters, look to see if what you sell is listed on any of the online comparative price websites, like Pricescan.com or BuyCentral.com . These sites represent e-tailing’s apocalyptic future, favoring only the biggest vendors able to offer the lowest prices.

I recognize the danger these sites pose to local shops but, like most everyone else, I have only so much money to spend. When I need to buy toner for my printer, for example, I log on to the shopper.com site, which serves up a list of the prices charged by different vendors for the specific product I need.

In the few short months they have been up, these sites have unleashed a vicious price war. Competitors have been regularly lowering their prices in two cent increments to make sure they capture the top spot when lists are re-ordered by price (which is something you have to tell some of these sites to do since positions on the default list are frequently sold to the highest bidder). As a result, the price I pay online is often at least 30% less than what I would pay for the same products at my increasingly less-crowded neighborhood computer store.

If you see items you or your business sell on any of these comparative price lists, you may soon be dead meat. There is even a site that pits the sellers of Beanie Babies against one another.

It remains to be seen how many sectors of the product distribution economy will be gutted by the Internet. It’ll probably be a while before enough of us buy groceries online at places like netgrocer.com or peapod.com to jeopardize supermarkets. But the writing is on the wall: sell commodity products or deal in trades that rely on restricted flows of information at your peril.

Fortunately for our neighborhoods, some of the most able local merchants are not yet ready to throw in the towel to their larger online rivals. Instead, they are meeting the enemy in the digital battlefield, offering up creative alternatives to the websites that can get it for you wholesale.

In Menlo Park, for example, Kepler’s bookstore, which reported strong holiday sales, is fighting back with its own nimble website. Kepler’s site artfully conveys a lot of what made the store an institution on the Peninsula: a sense of community, advice from an informed and well-read staff, along with unfailingly excellent customer service. In contrast, a visit to the far less compelling Palo Alto Printers, Inc. website shows how the Internet’s sword cuts both ways.

Kepler’s success demonstrates how savvy local businesses can compete in the online wars. Online, as at their store location, Kepler’s sells a good shopping experience as much as it sells books. In the years ahead, that will likely be the factor that most distinguishes the winners from the losers.

Some businesses and employees are not threatened by the online onslaught. They sell items you can’t get online, such as a meal in a restaurant, a round of golf, or a good massage. But the future looks considerably more bleak for those hawking goods that can be found online. The only way they’ll be able to compete is by creating places people want to shop.

That could be good news. In the future, many customers, save certified shopaholics, won’t be willing to trundle from store to store looking for what they want.

To compete with the Net, merchants are going to have to get into the aisles, give away more samples, introduce more new products, conduct special promotions and find other ways to attract and entertain patrons.

Shoppers might soon find more on-site child care, for example, so they can safely park their kids while sniffing the latest perfumes or sampling food delicacies. Merely offering large selections, which helped big stores edge out mom and pop shops two generations ago, won’t be enough. In the future, how stores sell things will be much more important than what they sell.

There will also be an opening for more enlightened businesses, such as those willing to help patrons locate what they need even if they don’t stock it, as some leading department stores already do.

Now is the best time to consider whether you are on the wrong side of this trend. There are still many opportunities to be found in growing segments of the economy, slots that will become more scarce if and when web-surfers create a tidal wave of lost jobs.

Delivery services, for example, are exploding at a record clip, propelled, in part, by all those online sales. It’s hard to believe that, say, twenty years from now, there will still be only a handful of major delivery services. If so, we probably won’t be getting our Grey Poupon mustard as quickly as we might like.

The collapsing product distribution chain also offers more of us the chance to become small-scale product producers thanks to the low costs associated with selling products online. The same can be said for those providing services. Even the most humble among us usually have at least one thing we can do well. Now is the time to brush up on those skills.

The question to ask yourself is: would I want to do business with my company, would I be a customer here if I could get the exact same thing at home sitting in my underwear? If the answer is “no” it’s time to move on.

Before everyone else does.

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