Bizmology

Posted: 12 Nov 2010 10:21 AM PST

I’ll admit to abandoning many an online purchase when the shipping costs are finally tallied. Even standard ground shipping can add as much as 25% to the total cost of an online purchase. Of course, you don’t find that out until the very end of the transaction — after you’ve already entered addresses and credit card numbers, etc — making it even more annoying! Online shoppers are often faced with a choice: Spend more than they want to on merchandise to proportionally diminish the cost of shipping (or to become eligible for free shipping), or, hit the cancel button and head to the mall. The savings incurred by not paying sales tax (something many states, including New York and Texas, are attempting to collect), are far outweighed by shipping costs.

Along comes Wal-Mart.com, which is challenging Amazon.com and other e-tailers this holiday gift season with the enticement of free shipping (no minimum purchase required!). The offer extends to some 60,000 eligible items, including electronics, fragrances, toys and games, and jewelry (read here).

Wal-Mart Stores has traditionally leveraged its clout as the world’s largest retailer to undercut competitors on price. For years, the company has lost money on certain products, notably toys, during the holidays to lure shoppers to its stores. Now it’s extending its loss leader strategy to the online world. As a result, all e-tailers are under pressure to offer aggressive free-shipping programs of their own. Online giant Amazon already offers an unlimited two-day free shipping program, called Amazon Prime, for an annual fee of $79. A quick online survey of Wal-Mart’s key competitors found Target.com touting its own free shipping program on more than 80,000 items, but orders must be at least $50. Toys “R” Us’s website screams FREE SHIPPING on EVERYTHING. However, when you read the “fine print” you’ll find it extends to standard shipping only, up to a $20 value, on purchases of $100 or more. Kmart and sister company Sears are offering a 30-day free trial of their ShipVantage free-shipping program that requires no minimum order. It looks pretty good, but costs $79 when the free trial expires. Still, none of these deals match Wal-Mart’s current offer. What will become of Wal-Mart’s free-shipping program after December 20th is unclear, but the company says it expects to continue to offer free shipping after the holidays.

Equity analyst Jeff Stinson of Cleveland Research Co. wrote recently that Wal-Mart may fail to turn its sales around by the holiday season (read here). While it enjoyed booming sales during the depths of the recession, Wal-Mart has struggled for the past five quarters to revive sales at its US stores. With online shopping capturing a bigger slice of the holiday fruitcake each year, Wal-Mart is looking to its online operation to boost sales this season.

Internet radio defies expectations

Posted: 12 Nov 2010 07:52 AM PST

Internet radio, the supposed also-ran of online streaming music, isn’t going down without a fight.

UK streamer We7 announced in October that more than 80 percent of regular visitors and two-thirds of all visitors tuned in to its Internet radio feature. The feature now accounts for more than half of all tracks experienced on the site.

The findings suggest that consumers are perfectly content to let their music service choose their songs for them, rather than pre-selecting a playlist as most streaming music sites require. That’s welcome news for We7, says Billboard, since radio streams cost much less than on-demand streams, including lower royalty expenses.

This is all well and good for UK music fans. Stateside, some ponder a stormier future for Internet radio’s prospects, though. Brandon Matthews, founder of satellite radio fansite Satwaves, posits that the recent party shift in Congress coupled with the FCC’s difficulty in implementing net neutrality rules puts Internet radio in a precarious spot.

“With no congressional support, and no judicial support, the F.C.C. is now left to try to overstep its authority on its own, and hope it sticks,” Matthews says. “These self proclaimed ‘free offerings’ will be forced into charging subscription fees. When considering the subscription fees, and the data fees, there is little hope that this market can ever compete with the content provided by Sirius XM Radio.”

Others are more hopeful, however, as developers race to make Internet radio on phones and in cars a reality. If We7′s experience is any indication, the market stands to tune in to a bright future.

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Friday, November 12, 2010

Bizmology

Bizmology

Photo by Alosh Bennett, used under a Creative Commons license.

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