Great as its marketing weight will prove to be, the Impulse Economy is not just about bigger sales for niche products. It is also about purchaser convenience. If I can buy tickets for Friday’s showing of the new Quentin Tarantino film right after reading the review in Monday’s paper, rather than trying to remember four days later what I had read about it, I get more bang for my consumer buck.
The Impulse Economy is also about business process. It is about harnessing the Internet’s innate ability to let enterprises integrate, collaborate, outsource, and bid out slices of their activities in ways that are so closely integrated and so invisible to their customers as to have been unimaginable just a few years ago. The Internet allows any pair of kids in a garage to carve out some shelf space and start serving a constituency with content and interactive forums, regardless of how small or far-flung that constituency is. Elements of the rising Impulse Economy enable them to offer their audience books, music, conference calling, fax services, email, trips to Mongolia, and a whole palette of other goods and services — all without expanding their head count, facilities, or balance sheet one iota.
The fifth-generation Internet media property/store/lifestyle center of a few years hence will seamlessly integrate the work of dozens of enterprises. Many different companies will sell and ship products selected for their appeal to audiences. Others will personalize content for visitors, sell ad impressions, serve targeted ad impressions, provide live-video services to link visitors to one another, sell tickets to events, or pipe in background music for visitors — all within a single, coherent, branded environment.
The Impulse Economy is in its earliest days, and no one can predict precisely how it will develop or how quickly it will grow. Some fundamental changes in our ways of interacting with and conceiving of media and commerce must occur before it can become very large. But the Web itself was similarly tiny as recently as 1994. Its proliferation likewise required a fundamental shift in our approach to media and business information, and this shift came swiftly.
It is impossible to say exactly what form the Impulse Economy and its various players ultimately will assume. However, it seems likely that we will see the gradual rise of two distinct types of business (although there will be many companies in the gray zone): demand generators, such as The Atlantic Monthly or TheDJ.com, and demand fulfillers, such as Amazon.com and CDnow. In many cases, demand generators will be boutique businesses, because those who fuel demand best often appeal deeply to narrow segments of the population. Demand fulfillers — with their warehouses, shipping departments, and volume-driven pricing agreements with suppliers — will tend to be larger businesses that enjoy scale economies, in some cases network economies, and have relatively low margins. Margin pressure will come from the fact that good agents of demand generation will have strong bargaining positions in picking their fulfillment partners. For instance, if I can guarantee my book vendor 1,000 sales per month, I may as well stage a bidding war between Amazon.com and BarnesandNoble.com for my royalties. One early indicator of this margin pressure surfaced in March, when online toy retailer eToys announced that it would give its affiliates 25 percent of the sales they generate, up from 12 percent.
Whatever the scope of tomorrow’s Impulse Economy, one thing is clear. Like Internet commerce itself, it is at take-off, just rising off of the end of the runway. Make sure your seatbelts are securely fastened.
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