I find shopping to be a tedious task. The purchase of something as basic as a shirt becomes a complex venture that involves locating a store, finding the men's wear department, sorting through the many choices of color and style, selecting the right size, finding a cashier, and so forth. To search through all the possible choices would be impossibly time-consuming. Fortunately, the suppliers of shirts provide navigational tools such as advertising that can simplify my task. Catalog vendors provide even more-specific navigational tools that cut down on the time needed to make a purchase.
But navigational tools are changing, say business consultants Philip Evans and Thomas Wurstler in their new book, Blown to Bits: How the New Economics of Information Transforms Strategy (Cambridge, MA: Harvard Business School Press, 1999), as a result of the spread of electronic commerce. Until the advent of the Internet, manufacturers and retailers created the navigational tools, such as advertising and catalogs. Now, the new navigational tools are provided by Web sites that usually have no connections with traditional physical retailers. "On the Internet, millions of people can exchange massive amounts of information directly, quickly, and for free," say the authors. The new navigators, such as Yahoo and Excite, can help the buyer compare and select products without being a party to the purchase transaction.
Even electronic retailers, such as Amazon.com, are navigators, say Evans and Wurstler. Amazon has broadened its offerings from books to CDs, toys, movies, and drugs. "Precisely because it is not clear what limits the domain for which Amazon is the preferred navigator, Amazon is worth more than the entire publishing industry put together," claim the authors.
So far, the traditional bricks-and-mortar retailers have failed to compete with the new navigators. But they will have to compete to survive.
Reach, richness, and affiliation
The new navigators have three important dimensions—reach, richness, and affiliation. Reach is the number of customers a business can connect with and how many products it can offer to those customers. Richness is the amount of detailed information the business can provide the customer and, vice versa, the amount of information the business can collect from its customers. Affiliation is the interests the business represents. Unlike a vendor, the pure navigator can represent the interests of customers. Even electronic retailers are beginning to shift their affiliation toward customers. Should manufacturers become navigators?
Although many manufacturers, both large and small, have set up their own Web sites, such sites are often no more than an HTML version of a product brochure. These sites do not provide the three key dimensions of navigational advantage just described. In the business-to-business world the leading navigational tools have traditionally been provided by trade magazines such as the one you are now reading. It is no accident that Laser Focus World has been a pioneer in setting up an affiliated Web site. The magazine reaches more than 130,000 readers with each monthly issue while our Web site has more than 600,000 visitors annually. The old and the new navigational tools coexist and complement each other.
Competing navigators
In the optoelectronics industry, there are several competing new navigators—the trade-magazine Web sites, the professional-society Web sites, and independent Web sites. All of these Web-site operators are struggling to become involved directly in electronic commerce as the most likely route to profitability. But I believe the route to success is to become the navigator of choice by providing compelling value in terms of richness and completeness of information. Size does matter. The Wall Street Journal is the most widely read daily newspaper in the USA because it provides its readers with credible and useful information presented in a readable style. The paper has a highly respected Web site whose richness exceeds that of the newspaper. Advertisers want to be associated with both the old and the new navigational tools because they offer massive reach to an audience that trusts the source of information.
As Evans and Wurstler say, "Navigation is the battlefield on which competitive advantage will be won or lost." The Web sites that provide the most extensive navigational tools with high credibility will win both the customers and the suppliers.
Jeffrey Bairstow | Contributing Editor
Jeffrey Bairstow is a Contributing Editor for Laser Focus World; he previously served as Group Editorial Director.