launched several Web sites--Trilogy. com, CarOrder. com, FordDirect com--most of which never amounted to anything. But that was in the late 1990s, when it was still unclear how best to use the Internet. Now the automakers-and the auto-buying public--have found ways to use the Internet profitably. Here are a few Search Ebay, the on-line auction giant that makes searching for products of all sorts fast and simple, has become a player in the used car business. Beginning with a few private individuals, the auto auction business took off unexpectedly, so the company formed eBay Motors, which contributed about $100 million to eBay's total revenue of $1.2 billion in 2002. eBay's technology speeds the process of on-line search, and buyers who may have been reluctant to shop for cars on-line are comforted by eBays reputation. eBay and other on-line auto-sales sites make searching for insurance and auto financing easier as well Problem Solving To help its dealers manage inventories more effectively, General Motors Corp. developed SmartAuction. For vehicles that are coming off lease, SmartAuction notifies customers to bring in cars for an inspection before the lease expires. The condition of the car is logged into the system and sent to GM dealers who use it to purchase cars electronically. The system helps dealers find cars that fit their target audience, manages the auto-titling process, and shortens the time cars are carried in inventory Evaluation In the early days of the Internet, most thought that cars would never sell on-line because customers like to kick the tires and take a test drive. This is often still true. But customers who go for a test drive, and have also already researched the car on-line, usually save money when they buy. Economists researching this phenomenon have labeled it the "information effect"-auto shoppers who first gather information on-line are better able to evaluate their purchase Transaction Auto referral services such as CarsDirect have streamlined the transaction process by brokering purchases between dealers and consumers. Through these companies, both new and used cars can be purchased on-line, sight unseen. One shopper, who bought a used car on-line, flew to Fort Worth Texas to pick it up, and drove it 18 hours back home to Ohio said, " in retrospect, I had more information about this vehicle than if I had gone onto a dealer's lot and started haggling over price. " On-line auto shoppers typically save money due to the"contract effect" which occurs because third-party auto referral services monitor the quality of the information provided by dealers and facilitate the transaction. the automobile industry and car buyers have detailed and attractive content. But the used each of these four activities to benefit expense did not generate sales. Content only heir own value-adding efforts adds value if it contributes to the overall valuepropositionAsaresultGarden.com Content as a source of failed in early 2001(but the name is still being Competitive Advantage used by the burp mpany, a 125-year-old supplier of garden products who boug There are other factors that can be important rights to the name) sources of competitive advantage. One of the Three types of content can improve the most important of these is content. The Inter value proposition of a Web site--customer net makes it possible to capture vast amounts feedback, expertise, and entertainment pro- of content at a very low cost Rel.Com, example, a provider of recreational equip- Customer feedback: Buyers often trust ment and apparel, has over 78,000 items what other buyers say more than a com described on its 45,000-page Web site. But pany's promises. One type of content that firms have not always managed content in can enhance a Web site is customer testimo- ways that add value. Garden. com, a site that nials. Remember the leather sofa in the exam- started strongly in 1999 and raised enormous ple above? Even though individuals cant venture capital, spent millions on creating feel and smell a sofa on-line, the unbiasedthe automobile industry and car buyers have used each of these four activities to benefit their own value-adding efforts. Content as a Source of Competitive Advantage There are other factors that can be important sources of competitive advantage. One of the most important of these is content. The Inter￾net makes it possible to capture vast amounts of content at a very low cost. REI.com, for example, a provider of recreational equip￾ment and apparel, has over 78,000 items described on its 45,000-page Web site. But firms have not always managed content in ways that add value. Garden.com, a site that started strongly in 1999 and raised enormous venture capital, spent millions on creating detailed and attractive content. But the expense did not generate sales. Content only adds value if it contributes to the overall value proposition. As a result Garden.com failed in early 2001 (but the name is still being used by the Burpee company, a 125-year-old supplier of garden products who bought rights to the name). Three types of content can improve the value proposition of a Web site—customer feedback, expertise, and entertainment pro￾gramming:
Customer feedback: Buyers often trust what other buyers say more than a com￾pany’s promises. One type of content that can enhance a Web site is customer testimo￾nials. Remember the leather sofa in the exam￾ple above? Even though individuals can’t feel and smell a sofa on-line, the unbiased launched several Web sites—Trilogy.com, CarOrder.com, FordDirect.com—most of which never amounted to anything. But that was in the late 1990s, when it was still unclear how best to use the Internet. Now the automakers—and the auto-buying public—have found ways to use the Internet profitably. Here are a few examples: Search Ebay, the on-line auction giant that makes searching for products of all sorts fast and simple, has become a player in the used car business. Beginning with a few private individuals, the auto auction business took off unexpectedly, so the company formed eBay Motors, which contributed about $100 million to eBay’s total revenue of $1.2 billion in 2002. eBay’s technology speeds the process of on-line search, and buyers who may have been reluctant to shop for cars on-line are comforted by eBay’s reputation. eBay and other on-line auto-sales sites make searching for insurance and auto financing easier as well. Problem Solving To help its dealers manage inventories more effectively, General Motors Corp. developed SmartAuction. For vehicles that are coming off lease, SmartAuction notifies customers to bring in cars for an inspection before the lease expires. The condition of the car is logged into the system and sent to GM dealers who use it to purchase cars electronically. The system helps dealers find cars that fit their target audience, manages the auto-titling process, and shortens the time cars are carried in inventory. Evaluation In the early days of the Internet, most thought that cars would never sell on-line because customers like to kick the tires and take a test drive. This is often still true. But customers who go for a test drive, and have also already researched the car on-line, usually save money when they buy. Economists researching this phenomenon have labeled it the ‘‘information effect’’—auto shoppers who first gather information on-line are better able to evaluate their purchase. Transaction Auto referral services such as CarsDirect have streamlined the transaction process by brokering purchases between dealers and consumers. Through these companies, both new and used cars can be purchased on-line, sight unseen. One shopper, who bought a used car on-line, flew to Fort Worth, Texas to pick it up, and drove it 18 hours back home to Ohio said, ‘‘in retrospect, I had more information about this vehicle than if I had gone onto a dealer’s lot and started haggling over price.’’ On-line auto shoppers typically save money due to the ‘‘contract effect’’ which occurs because third-party auto referral services monitor the quality of the information provided by dealers and facilitate the transaction. 165