The document discusses the transformative impact of the internet and e-commerce on traditional business models, highlighting the necessity for companies to adapt or risk obsolescence. It emphasizes that understanding changes in the digital economy can provide competitive advantages, while also pointing out the growing significance of online sales and consumer expectations. The presentation concludes with actionable strategies for leveraging the internet effectively to enhance profitability and customer engagement.

1. Understanding the Internet & Your Opportunity February 11, 2000 Presentation to the Canadian Resort Development Association William J. Brown Interval International NOTE: advance slides with the  &  keys © 1999 by William J. Brown; where content is cited and attributed to 3rd party sources, copyright is maintained by original author.

2. First: Participate Please ask questions or share your comments as we go forward Later, you can get a copy of this presentation and lots of other independent material by sending a blank e-mail to: [email_address] I’m available to speak or exchange e-mail with you at any time

3. What We’ll Discuss A top-down look at the Internet & E-Commerce Emerging opportunities and challenges Actionable steps for developers and individual properties

4. “ In 5 years, there won’t be ‘ Internet Companies’. We’ll ALL be Internet companies. Or we will die.” Andrew Grove, Ph.D. Chairman & former CEO Intel Corporation Remarks made in May 1999

5. What is the “Digital Economy” The widespread dissemination of information technology among businesses and consumers coupled with the increasing use of the Internet has created a new way to conduct commerce and marketing – and is spurring massive changes in the economies of developed nations.

6. Impact As a result, we can anticipate fundamental shifts in the way many products or services are marketed, priced, delivered and purchased over the next decade.

7. Mandate These changes have profound implications for the business economics of all market participants. Understanding HOW these marketplace changes will unfold is a matter of research, study and pure guesswork. But attempting to understand is a powerful potential source of competitive advantage in the markets where you compete and for the attention of your customers and prospects.

8. 40% of sales occur online $30 MILLION a day! Traditional Companies Use the Web to Reinvent their Businesses Reinventing their relationship with the customer

9. New companies appear who use the Web to reinvent business models

10. The Web also is a powerful communication platform

11. So, Who Invented the Internet? AL GORE Candidate for U.S. President

12. The precursor to the Internet , ARPANET was a large wide-area network created by the United States Defense Advanced Research Project Agency (ARPA). Established in 1969, ARPANET served as a testbed for new networking technologies, linking many universities and research centers. The first two nodes that formed the ARPANET were UCLA and the Stanford Research Institute, followed shortly thereafter by the University of Utah. Today, it’s estimated nearly 300 million adults have access to the Internet worldwide in nearly every country. Nearly 40% of U.S. surfers have made a purchase online; of those, nearly 75% have used the Internet to at least research travel prior to making a purchase or reservation. So, who really invented the Internet?

13. Conducting business online . This includes, for example, buying and selling products with digital cash via Electronic Data Interchange (EDI) . The conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools. Electronic Commerce or

14. Source: Greenfield Online/USAToday Among Internet users who bought books online in the past year, most said the reason they bought books online is because the books cost less.

15. Of the 42% of households with a personal computer, 74% have a modem. Chances are, though, that the modem is a mystery to the computer user. Bandwidth is exploding in U.S & Canada... Source: Gartner Group

16. 150,000,000,000 tons 0 lbs., 0 ounces Total weight of all e-mail sent, all-time Total weight of all mail handled by the U.S. Postal Service in 1998, estimated

17. Internet seen as a mega-trend, not a channel, not a medium. A fundamental shift equivalent to the industrial revolution. Valuations may not be right, but they are rational. Amazon went from $0 to $1 billion in sales in four years in a dead industry. AOL has taken 56 minutes (up from 7) out of traditional media

18. Still, the Opportunities are Just Being Scratched As Robert Shaw once said “ So far we’re only putting lipstick on the pig.”

19. Do You Spot the Opportunities? Market inefficiencies attacked by technology Industry restructuring Cultural obstacles for bricks-and-mortar players Customer-centered design for solutions Moderator: James Ledbetter, The Industry Standard

20. The Internet economy is first and foremost about dramatically reducing those costs, and in so doing restructuring industries, realigning markets, and redistributing competitive advantage. KEY THEMES - More Industries, More Transformations

21. Ronald Coase, Nobel prize-winning economist, recently said that inefficiencies in market transactions (“transaction costs”) could represent as much as $1.2 trillion annually in the U.S. alone. More Industries, More Transformations

22. The General Message Applicable to all of e-business, is that “the Internet” (broadly) helps reduce transaction costs IN ANY EXCHANGE, IN ANY CHANNEL. B-to-B, C-to-C, B-to-C, G-to-C, G-to-B, just different faces of the same basic problem: inefficiencies in the market. Fifteen Minutes of Fame

23. Process Reform: The Web may permit YOU to change EVERYTHING The Web can help you to more efficiently build properties www.buildnet.net www.bidcom.com By using the Web, your staff can become more productive Bottom Line: Used effectively, an effective Internet strategy can allow you to gain more “bang” from your investments and become more profitable More achievable than growing your top-line

24. Marketing Where does the Internet fit into the marketing mix? How do you create an effective marketing plan in the new world? Basic answer: Much confusion. Debra Williamson, Moderator

25. Marketing Where does the Internet fit? Not a category killer for other media, but “part of the mix” You need to walk the walk - the proof for an Internet ad is one click away

26. What We Can Learn From “dot-coms” Fifteen Things We’ve Learned Recently: Portals, communities, and commerce emerged all in the last three years! No gender gap. Over 55 is the fastest-growing segment in numbers and attention. Volume and stickiness are up dramatically Chat, auction, and games are the stickiest. My guess as to why: they are the closest to real passions of the users. Fifteen Minutes of Fame

27. Marketing: Auto Industry Case Study 40% of GM cars are being bought over the web, but GM only spends .0025% of its ad budget there. The change is faster than anyone in marketing realizes (Richy Glassberg, Phase 2 Media)

28. Marketing Biggest mistake in Internet marketing plan: Having one at all. This is not a separate thing, but an integrated part of a whole. Having an ad plan, but no marketing plan. Given the pace of change, build the brand with many short tactical plans, not one long-term plan

29. Let’s Try to Learn Some Lessons from Similar Industries

30. Transportation .COM Face-off Cars and air travel - what’s common problem? Gross inefficiencies in buyer-seller relationship (“information costs”) Many of them are hard-coded into the system by regulation Ubiquitous network and cheap computing are exposing these costs and creating huge opportunity for smart people who can “iron them out.”

31. Transportation .COM Face-off Who sees the potential? Startups, of course - Priceline and Auto-By-Tel are outsider solutions Providers, too - Travelocity and deals with others by TWA, but too constrained by channel conflicts and uncertainty to make a big bet. Current distributors - NOT. Are travel agents and car dealers finished? Well, if they add real value Gone, not lamented

32. Transportation .COM Face-off Interesting observations early in the game Besides reducing transaction costs, early signs of changing dynamics Manufacturers actually KNOW what customers want, not what they settle for (Pink Volvos). How long before buyers can overcome collective action problems and get $999 of the $1000 in savings? (“the last stupid customer”).

33. Challenges The great ideas are the easy part. Execution is hard for Dot-coms and bricks-and-mortar companies. Some difficulties are common to both, and become more as Internet time continues to compress the business cycles. Expectations need to be properly set KEY THEMES - Winning E-Business Strategies

34. Offline vs. Dot-Com Key issues: Channel conflict Creating a single experience regardless of where the customer contacts you Managing the brand consistently Avoiding commoditization of price-shopping Unclear role of shopping portals Taxation as the first of many (new) regulatory challenges

35. Looming Policy Issues Current crises: Tax collection Sales tax can’t be avoided forever But the U.S. alone has 20,000 taxing authorities (including, e.g., mosquito abatement districts). Other countries may use e-commerce tax to protect local industries. “ The good news is that nobody has a clue what to do in Washington.” (Irving) Moderator: Elizabeth Wasserman, The Industry Standard

36. Action Steps

37. Set Your Priorities “ E-commerce is all about the consumer.” Consumers have higher expectations on-line. Local car dealer closes 60% of referrals from on-line auto shoppers--the other 40% don’t pass credit checks. (“Did I say $400 over invoice? I meant $300.”) If your customers are looking for you online, you must be there, too. Fifteen Minutes of Fame

38. Analysis of Timeshare Web Sites: An early look at my forthcoming VIR article Sites with photographs 100% (15 of 15) Sites with a consumer focus 87% Sites with e-mail customer support 87% Sites with buttons for employment 60% Sites with special promotions 47% Sites offering visitors transactions 40% Sites with contests or offers 33% Sites with an easy-to-find toll-free # 33% Sites with members-only area 33% Sites with 2 or more photos each/resort 27% Sites offereing privacy statement 27% Sites offering a free e-mail newsletter 13% Based on a survey of 16 resort developers with annual sales greater than US$20 million. NOTE: 1 of 16 did not have a Web site

39. Next Steps Don’t be afraid to take chances Create a community of members Create “stickiness” Offer more than the standard product Speed is important Make each visit valuable Design around the user, not the company

40. Organizational Imperatives Every piece of collateral MUST promote: Your Web site address (URL) An e-mail address that will be responded to Train your people Everyone must understand that you are on the Web to: Drive more sales Build affinity Further “monetize” your relationship with the customer

41. Going Forward Wire your rooms Start thinking about streaming video The printed brochure may go way of the horse-and-buggy Look for non-core revenue opportunities Create reasons for your customers to come back to your brand outside of their vacation Use the Web to put your customers to work for you Empower your customers to help themselves

42. Final Thoughts Don’t be intimidated by the profound changes in technology Embrace change for advantage The Internet is NOT an MIS issue – it’s a marketing and corporate priority Keep learning as much as possible

43. This is only the beginning. Contact me with any questions or ideas: [email_address] Join the virtual classroom for Internet Business Strategy @ University of Miami Send a blank e-mail to: [email_address] I hope that you will become a part of this innovative online community of professionals concerned with discovering better Internet marketing and operating practices. Interface with students, Internet luminaries, executive recruiters, management consultants, Web developers and other professionals who are asking the same questions as you.