Challenges facing Internet startups

Based on the Taxi Magic presentation and the MusicJuice.net case for next week, what do you think are the key challenges facing Internet startups as compared to brick-and-mortar companies?


Obviously, brick-and-mortar companies encounter several obstacles that Internet startups do not, but here, we discuss the other way around: the key challenges that Internet startups face compared to brick-and-mortar companies:
1. Harder to build trust
When people open a brick-and-mortar company, customers come and feel more secure doing business with them because their presence is known to several parties: property manager/landlord, county/city tax department, distributors, and so on. From customers' perceptions, brick-and-mortar companies also tend to stay long-term since it takes time to move away with  furniture and goods/products. On the contrary, customers tend to be more suspicious when browsing a website because the website can disappear in an hour without leaving any traces and customers have no way to track down if they lose money, need to return, or simply contact the company. As an example, Tim Csontos said they initially asked customers to give credit card info and no single person was willing to do that. If it had happened at a brick-and-mortar store, the chances that customers accepted that request would have been higher. Similarly, among the feedback from MusicJuice was "I do not trust the website with my money." This trust issue can have domino effect: I don't trust it, then my families and friends don't trust it, either.
2. More competitors
Brick-and-mortar companies do have competitors but usually within a specific region, there are no or just a few competitors. In contrast, Internet startups usually encounter more competitors due to:
- Internet is borderless, so competitors can be all over the world. For MusicJuice based in Toronto: competitors Sellaband from Amsterdam and Slicethepie from Berkshire.
- Internet businesses can be easier to be copied. Brick-and-mortar companies usually involve customer services and harder to imitate. For internet startups, if their business models are good enough, giant companies can copy and with their brand names and huge resources, they can beat those startups.
3. Unable to reach customers
Brick-and-mortar companies usually target on local people, So, they usually pick a great location with high traffic or in a shopping mall, so they get more exposure to local people. They can drop leaflets at residential homes to invite them to visit. For Internet startups, they need to deploy different marketing strategies. Taxi Magic resorted to well-known "tech people" such as the co-founder of Twitter and a person in San Francisco who has more than 1 million followers on her blog. It also managed to get voted among the top choices on Apple apps. They also offered free text messages for taxi companies to reach customers. MusicJuice depends on Google AdSense.
4. Website
Since this is the place that customers visit and decide if they want to do transactions with the company, it must invest significantly in design, making the website attractive and at the same time easy to navigate and take actions. The website performance, reliability, and security are also crucial. With limited cash at the beginning, the website development cost MusicJuice.net almost all of its cash, with only $5,000 left. Since there are millions of websites, it's very hard to design one website that stands out and attracts many people, both the look and feel and the activities. That's why MusicJuice got the feedback of boring website with few activities.

Azox Customer Showcase Page

View just some of the work Azox has done by visiting the Azox customer showcase page. There you will find sites Azox has worked on. All of these websites are integrated with Microsoft Dynamics GP, allowing for one point of maintenance for inventory, pricing and order processing. Check them out here.

Business brands for 24/7 workers

24/7 is a dream of efficiency for businesses.
Buying and consuming all day across the world.
Working across each timezone.

You probably work more than 9-5. And you probably check your email at night; at the weekend; again; and again. But that's ok. Because businesses do run all night, and because you might well have your best brainwave at night, or in the shower. And now you can capture it, and act on it, straight away.

We've got the technology to be more connected, and we can make the trade-offs in how we use it.

The acceptance of business as innate to our lives, rather than a prop for them, is changing our habits of consumption. e.g. Business products required in the home - e.g. broadband is often a domestic necessity to keep us online (witness those MP's expenses for it), e.g. Social products required in business - e.g. iPhones and iPads used for corporate email. Both products keep us working and playing all day long. Symbiotically we're connected in technology, but also in thought and focus on priorities of what we must do.

Business brands are having to move further away from the stereo-type "Business Man" to people who live and work in the same life. Accenture focused on marketing through Tiger Woods, to move Consulting to a favourite ground for mixing work and play. Cisco have demonstrated the benefits of their technology to people, more than just technology offices to create the 'Human Network'.

Opportunity to succeed comes from being able to demonstrate benefits to users, that reflect life of ambitions that inter-relate work as well as what we do outside it. Brands who can benefit our quality of life, and our success to manage colleagues, managers, friends and family will succeed in the complex web we've woven.

This is a guest blog, written by Phil Edelin, Brand Consultant for Dave.

Is Big Brother a good concept to base a marketing campaign on?

The concept of Big Brother rarely gets treated with a positive spin. From the television programme to CCTV cameras, the term is awash with negative subtext. People don’t like the thought that they’re being watched, controlled, or left powerless by others. So with this in mind, why would a company design a direct marketing campaign based on the concept of Big Brother?

There are a number of increasingly popular tactics that companies are using that retarget consumers who have visited their site without buying anything. This is called behavioural retargeting. Or behavioral retargeting if you're on the other side of the pond!

For Christmas 2009, I bought my wife some clothes from Oli.co.uk. Later on in the year, my wife was using my laptop and visited the same website. The next time I checked my e-mails there was one from Oli:

I was confused because I'd not visited that site since the previous Christmas. I assumed it was spam. After establishing that my wife had been on the site that week, I understood that the the company had employed retargeting tactics using information from the cookie in my browser. This is a creative marketing strategy. However, I hadn't given Oli permission to contact me in the first place so to receive an e-mail thanking me for visiting a site I hadn't personally accessed was an invasion of privacy. Oli will argue that this e-mail is permissible because they're contacting me for the same reasons that we had originally done business. This is okay without opt-in.

I understand the strategy behind it, however I wasn't impressed and it left me with a poor impression of the company. I talked to my wife about this and her first reaction was of shock that a. Oli had the capability of doing this and b. they thought it was an acceptable tactic. Oli.co.uk has since merged with Freemans.com, so it will be interesting to see whether their retargeting tactics change.  

This is an example of behavioural retargeting based on my previous interactions with the company. Companies are also using behavioural retargeting even when they don't know who you are. 

You can visit a website, search for or view certain products and the site's cookie will then intelligently seed adverts through networks with the same or similar products, encouraging you to come back and convert into a customer. Therefore, if you visit a website that's part of the network, you'll be served with adverts that present you with similar products. 

I'm going to Nice later this year, so I'm looking for hotels. After visiting Expedia, I left without booking because I wanted to check out the prices of the same hotels on other sites. Today, I visited a non-travel related website and was presented with the ad to the right with details of three of the hotels I was looking at a few days previously. Clever.

Again, this could be regarded as invasion of privacy, however I'm not as shocked about this as Oli's retargeting. Why?

Sure, Expedia is hitting websites I visit with records of my previous searches, however I don't feel like it's invading my privacy. It's not pushing its way into my letterbox and telling me that it's spying on my every move. These ads are taking a more subtle approach and although it's a reminder that my online activity isn't private, it doesn't feel invasive.

I asked my wife what she thought about this retargeting technique and her instinctive reaction was that it was clever. After some thought, she then started questioning how it worked and exactly what information was being shared with third parties. She ended up having so many questions that her initial enthusiasm was forgotten. 

This is still relatively early days for this type of tactic. While retargeting is one of the more advanced ways of improving conversion, it needs some refining and I think it will improve as consumers' awareness of it grows. 

If you look at the bottom right hand corner of the ad above, there is a small i symbol. When clicked, this gives you more information about how the ad works and also an opportunity for you to opt-out of behavioural retargeting. This is good because transparency is important; however I wonder how many people actually click it? I'm guessing the number is very low! It's pretty inconspicuous. 

So how can this awareness and transparency grow? Should websites carrying these adverts have some responsibility for explaining to its users why they're being served targeted ads, or is it the advertisers responsibility? Should consumers have to opt-in to this advertising instead of having to opt-out? I think in the case of Oli.co.uk, opt-in should be a given.

When Passion for Movies, Technology Collide

The article is from WSJ on Feb 10, 2011 http://online.wsj.com/article/SB10001424052748704422204576130312463129144.html?mod=WSJ_Tech_LEFTTopNews
Netflix definitely pushed several competitors out of business but in this article, Mr. Skorman, an Internet and retail entrepreneur, "believes rental stores with loyal followings in vibrant neighborhoods will survive.", citing that people still need "community element" that online can't offer.
Notice that there are at least two conditions for the brick-and-mortar model to survive: loyalists and vibrant neighborhoods. So, this model can work but only as highly specialized boutiques located in some crowded areas due to the two dramatic limitations that Chris Anderson pointed put in "The Long Tail".

Netflix

What do you think is the best long-term strategy for Netflix, given the recent growth in popularity and competition in the market for online streaming content?


Netflix is a great example of adjusting its strategies based on the user feedback and changing environments, either internal or external. It started with a pricing model similar to the one used by traditional video stores: $4 per movie plus $2 shipping and handling charge and late fees. Customers voiced their frustrations and Netflix switched to no-late-fee subscription model. A great way to differentiate itself from brick-and-mortar competitors and bring more value to customers. Another example is moving from no direct relationships with major studios to direct revenue-sharing agreements with nearly all of them.
To sustain its position as a giant in the media industry, it needs to pursue a long-term strategy with several moves:
1. Continue the close watch of VOD developments and adjust the strategy accordingly. Partner with key IT players in this trend since as Sarandos explained "What we do is probably 70% science, 30% art." To live up with the three strengths: convenience, value, and selection, Netflix definitely needs to invests continuously in IT.
2. One primary limitation of VOD is content availability. Netflix can add more content to serve the "long tail" community by reaching out to more foreign major studios. As Chris Anderson pointed out in "The Long Tail", with this new economics, in which it matters not where customers are or how many of them are seeking a particular title but only that some of them exist, anywhere. With more diverse content, Netflix can both satisfy current subscribers and attract more new customers.
3. Add more "extras" on Netflix. 
When users select a title to watch instantly, Netflix offers services such as Order Foods and Drinks and Share with Friends. If the users select Order Food and Drink, Netflix can give recommendations based on their history, the statistics of others watching the same title, and the ratings. The idea is similar to movie recommendations. The users can choose to enter their inputs. To make this work, Netflix needs to partner with restaurants. Share with Friends is letting the users' friends know that the users are watching this movie now. The purpose is that their friends can pick that movie to watch, too and later on, they can discuss the movie.
When users select a movie for their queues, Netflix displays the list of their friends who have already watched it. This way, the users can have reviews from their friends, making the reviews more likely to be reliable and valuable. Netflix can partner with Facebook, Twitter, or other social media.
After users watch a movie, Netflix displays All About <the movie title>, for example All About Finding Nemo. It is basically a store where users can buy CDs, books, posters, toys, games, clothes, and anything related to that movie. 
The ultimate goal is to deliver more content instantly and conveniently, more relevant services, and greater viewing experience.  

Additional Gateways for Azox Credit Card Extension

Azox Credit Card Extension is now compatible with two additional gateways out of the box; Chase Paymentech, and Global Payments.