Squarespace in the News

Nice article today in today's Washington Post about Squarespace. This is the service I use to create and host this site as well as Lisa's . Anthony Casalena's story is quite remarkable.

An Elder Challenges Outsourcing's Orthodoxy

With all the talk about outsourcing, along with the realities of globalization, it's nice to find a well reasoned article on the topic. The New York Times featured this story yesterday about Paul A. Samuelson's dissent with the popular view that the benefits outweigh the potential harm. I am certainly no economist, and I admit that parts of the story were a bit more than my marketing and sales mind can digest. Nevertheless, the article cuts through the headlines and the mind-numbing clutter that we are fed via political rhetoric and daily sound bites.

The article drives two points home for me. First, unchecked outsourcing could become too much of a good thing. As Mr. Samuelson points out, "a low-wage nation that is rapidly improving its technology, like India or China, has the potential to change the terms of trade with America in fields like call-center services or computer programming in ways that reduce per-capita income in the United States." Could this really happen, though? Mr. Bhagwati points out some important limitations. As has been discussed before , the actual number of jobs being outsourced is much more limited than the media buzz would have us believe.

The second interesting point is that economists on both sides of the issue seem to be united in their concern about protecting displaced workers and/or industries in the short term. "Mr. Samuelson and Mr. Bhagwati agree that the way to buffer the adjustment for the workers who lose in the global competition is with wage insurance programs." I wish they'd defined what "wage insurance programs" are, but knowing these guys, it certainly isn't welfare. What I read between the lines is a concern about the speed of change versus the time it takes the US economy to re-invent itself and cast workers profitably and productively in a new direction.

Another observation: Mr. Samuelson sure has a lot of Karl Marx books on his shelf (see the lower left corner of the image). That's a little disturbing, though I'm sure every good economist has studied Marxism extensively. 

Best quote: "Being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses" (Samuelson).

Ed Yardeni Joins Oak Associates

Ed Yardeni, legendary economist and my favorite source of economics statistics, has joined Oak Associates . Very cool... I think. I will be forced into mourning if Dr. Ed's Economics Network ceases to exist. Nevertheless, having him so close to home is wonderful and a coup for Northeast Ohio. Hopefully, it also bodes well for Doug and his colleagues.

Today's Web Association Meeting

I enjoyed the opportunity today to participate in a panel discussion at the Web Association meeting in Cleveland. It was a good experience, though it has been a while since I've done anything like this. I'm pretty sure this is the first time I've spoken publicly on internet marketing. Have I really become an expert at this stuff?

I met Cleveland Plain Dealer technology reporter Chris Seper at the event. I have been an avid reader of Chris's Monday column for as long as I've been reading the Plain Dealer online. In fact, his column is probably the single biggest reason I subscribe to the PD's email newsletter. It's refreshing to find a business journalist who knows what he's talking about and obviously has some passion for it. (It also doesn't hurt that he writes about stuff that interests me.)

I checked Chris's blog this afternoon, and sure enough, he already posted some comments on the event. Wow, that was fast! I guess that's just another nice thing about blogging. Instant reaction. Instant feedback. Thanks for the comments, Chris. Your opinions are useful and appreciated.

Men at eBay and Other Net Stats

Here are some juicy tidbits from an article in Internet Retailer that got my attention recently:

Among the interesting demographic data that Nielsen/NetRatings reports for the Top 10 sites are:

Travel sites do well with consumers 55 and older.

• 31% of Orbitz's traffic falls in that age group, as does 30% of Expedia's and almost 29% of Travelocity's.
• Dell does well with the older crowd also, with 34.5% of traffic 55 and older.
• Wal-Mart and Target are least popular with the older set, with just over 17% of traffic to those sites in that age group.
• 55+ traffic at the remaining sites are: 22% at eBay, 25% at Amazon, 27% at Yahoo Shopping, and 29% at Overstock.com.
  

Among the Top 10 shopping and travel sites, women dominate.

• Women are more than half the traffic at eight sites: 71.57% at Target, 62.46% at Expedia, 62.33% at Travelocity, 60.58% at WalMart.com, 56.48% at Overstock.com, 55.51% at Orbitz, 55.25% at Amazon and 53.19% at Yahoo Shopping.
• Men are 51.59% of traffic at Dell and 51.31% at eBay.
  

Not surprisingly, travel sites have the highest percentage of upper-income consumers.

• Households with income of $100,000 and above were 26.37% of Travelocity's traffic, 24.83% of Expedia's and 21.89% of Orbitz's.
• Also scoring well with high-end consumers were Amazon, where 21.96% of visitors have incomes over $100,000 and Target, with 21.61%.
• WalMart.com and Overstock scored the lowest with $100,000+ consumers, at 15.97% and 17.8%, respectively, but Overstock did better with the ultra high-end consumers, $150,000+. They represented 7.54% of Overstock's traffic, a percentage exceeded at that level only by Travelocity's 8.19% and Expedia's 7.9%. Orbitz's $150,000+ traffic was 7.38%.

The fact that women are more than half the traffic on Target.com, Walmart.com, Amazon.com and Yahoo Shopping (among others) is a yawner. What amazes me is that men are over 50% of the traffic at eBay. Wow! I wonder why this is. Are women more intimidated by the auction format? Is it because men tend more to be collectors and are, therefore, drawn to eBay in larger numbers? 

Brush, Floss And Gargle ... With Root Beer?

According to an article in the June 26 issue of Time magazine, Root Beer potentially causes less tooth decay than other types of pop (i.e., soda). Pretty cool since I love root beer.

Each year Americans drink, on average, nearly 600 cans of soda apiece... What does that do to their teeth? Professor J. Anthony von Fraunhofer of the University of Maryland Dental School decided to find out. Fraunhofer and dental student Matthew Rogers took 20 healthy teeth extracted for orthodontic or periodontal reasons, cut them into tiny blocks of tooth enamel and exposed the blocks to a variety of popular soft drinks, including Coke, Pepsi, Mountain Dew, Dr Pepper, Sprite, Canada Dry ginger ale and canned Arizona iced tea. All the drinks weakened or permanently destroyed the enamel. Diet sodas were just as bad as regular sodas, and canned iced tea caused 30 times the damage of fresh-brewed tea or coffee. The worst offenders were noncolas like Mountain Dew, which caused two to five times as much damage as the cola drinks. The main culprit in this dental destruction, says Fraunhofer, is the presence of chemicals, such as citric, malic and tartaric acids, that are added to impart tartness to the drinks. Of the soft drinks tested, the one that caused virtually no harm to teeth was A&W root beer. Reason: it has the fewest flavor additives.

26% of retailers fail to reply to customer e-mail inquiries

Yet more amazing statistics in Internet Retailer about knucklehead customer service when it comes to responding to customer email. I wrote about this a few weeks ago when another study came out. Here are a couple tidbits:

Although more than a quarter, or 26%, of retailers failed to respond to e-mail inquiries from customers seeking to make a purchase, the retail industry outperformed the cross-industry response rate of 41% in a recent study by Benchmark Portal and sponsored by eGain Communications Corp....40% of online-only businesses, a category that includes online recruiters and shopping comparison sites, also failed to reply to customer e-mail inquiries.

Study Questions Impact of DVD Sales on Video Rentals

This appeared in Supermarket News this morning. It's not exactly earth-shattering news, but it got my attention.

Findings from a new study from Lyra Research here question the widely held assumption that the increase of DVD sales has negatively impacted video rental activity, said the research company. "Flicks for Hire: A Video-Rental Survey" shows that people who own more DVDs also rent more DVDs. The report is based on a survey of video renters conducted in June and July. "We can construct obvious logical theories why consumers who own more DVDs would also rent more videos," said Steve Hoffenberg, principal analyst for the DTV View report series and Lyra Research's director of electronic media research. "For example, the more people like to watch videos, the more likely they are to both own and rent them. But such theories don't jibe with a commonly espoused assumption in the video rental industry that the dramatic growth in consumer purchases of prerecorded DVDs is the chief cause of this year's slump in video rentals. Our findings call into question whether DVD buying is indeed the primary factor reducing video rentals, and they suggest a more complex relationship between rentals and purchases."

I find it illogical that DVD sales are putting the damper on rentals. When you buy a DVD, you pay 3 to 5 times the cost of renting one. Presumably, this is because you like it enough that you plan on watching it over and over. This makes sense for children's videos and movies that you absolutely love, but that's been the case for years. We bought plenty of VHS tapes long before we owned a DVD player. Why would the advent of DVD's have a significantly greater impact on the propensity to buy versus rent a video?

Yes, there are those special features that appear on many DVD's and the picture quality is great, but it's still a movie. It still costs a lot more to buy it than it does to rent it, and face it, how many run-of-the-mill Hollywood products do you really want to see three times or more?

In our house, DVD purchases are virtually always in addition to our rental activity, not a substitute. The only exception is when we see something in the theater that we really love. In those cases, we'll often buy the DVD just to have it. Because of the quality and features. We might be slightly more motivated to buy the DVD today than we were the VHS version a few years, but that should be a benefit for the industry.

If the rental industry is broken, then why has NetFlix been so successful? And why is Wal-Mart getting in on the same business? Something doesn't add up.

The sinking value of the Wal-Mart experience

I stumbled across this commentary while reading one of my regular Wal-Mart-related feeds. I'm not disputing Stephen Crockett's points or debating his motivation for taking a stand against Wal-Mart. That's his business, and his reasons are well stated, whether I agree with them or not.

What caught my eye is the startling contradiction, if I may call it that, that emerges from his statements. On the one hand, he says:

I limited my [Wal-Mart] purchases somewhat as a result [of Wal-Mart's anti-union attitudes] but still bought some things because of convenience... I also limited my purchases there because Wal-Mart hurts many local businesses when it moves into a community.

Interestingly, these comments follow this admission:

I bought 20 pairs of the same type of shoe from Wal-Mart over the past six or seven years. Men are creatures of habit.

Two things really jump out at me. First, it sounds like Mr. Crockett shopped at Wal-Mart more often than he thinks he did. At the very least, it's safe to say that Wal-Mart was the first place he shopped for shoes. Second, people are indeed creatures of habit.

In these statements you find the fundamental building blocks of Wal-Mart's dominance: convenience and habit. That's why they have grown and why they continue to grow. As Wal-Mart opens more stores, they become even more convenient, and consumers become even more habitual in their shopping patterns.

I shop at Wal-Mart. I admit it. Sometimes I like what I find there. Sometimes I don't. I also shop at Lowe's, Target, Home Depot and other big box retailers. We all do. Why? Because this is what is available and convenient. These retailers have connected their operating models to American lifestyles and culture. The connection is so strong that even Mr. Crockett was willing, for a time, to disregard his strongly-held beliefs in order to buy shoes at Wal-Mart.

Mr. Crockett didn't stop shopping at Wal-Mart because of his ideology. It was because he was treated poorly as a customer. Poor customer service caused him to reevaluate everything he believes about shopping at Wal-Mart, not the least of which is Wal-Mart's abandonment of Sam Walton's "Buy American" purchasing ethic.

My point is this: Wal-Mart and other big box retailers will remain dominant until other retailers come along that can connect with customers even better than they do. Governments can try to stop the big boxes. Unions can organize to fight them. Individuals can start boycotts. Sure, Wal-Mart itself might hasten the process if they keep letting down customers like Mr. Crockett. But ultimately, only that quiet majority of consumers, those creatures of habit and convenience, will create substantive change.

And you know what? No one knows this better than Wal-Mart.

A Product is only as Good as the Company that Sells It

My primary transportation is a 2002 Volkswagen Jetta station wagon. Driving it is a drug. The performance is just amazing. Unfortunately, the quality is typical VW. Little stuff breaks all the time. I've had no major nightmares, and most of the problems have been covered by warranty. Nevertheless, there is indeed a trade-off between VW's performance and quality. (My experiences with the dealer's service department have echoed this, but that's another story.)

An article in the Cleveland Plain Dealer this morning tells the same story about the VW Passat wagon. Here's a company that makes cars that are simply amazing to drive and are priced affordably. But there's a catch. The company has a track record for being finicky about how they treat their customers.

Volkswagen has always had a reputation for occasional quality problems, but I don't think that's what hurts them the most. The only thing keeping me from considering another VW is the matter of whether or not I can trust VW to stand behind the product. Is the sublime performance worth the risk that I might get stuck paying for the product's shortcomings?

A remarkable product can be killed if a company gains a reputation for not standing behind it. People are willing to take some risk on quality if they know they are protected on the down side. Once doubt exists, the product's performance becomes nearly irrelevant. The review in the article would have been glowing, and I would have immediately put the Passat wagon on my short list of cars to consider next time. Unfortunately, all it did was confirm my doubts. Hopefully, VW will turn the corner. I hate the thought of giving up this wonderful driving experience.