Lessons from the dot.com era

James Kerr
BBC Northern Ireland business editor

Whatever happened to the dot.com revolution?

The internet was supposed to turn upside down the way we shopped, almost overnight.

It didn't turn out like that, with dozens of companies going bust.

Blackstar ships DVDs and videos around the world

Many more found themselves scrambling to survive, while many young entrepreneurs who thought they would get rich quick, had to put retirement on hold.

But while the dot.com boom didn't live up to the hype, some local companies are proving that we are now starting to take the internet seriously to do our shopping.

Blackstar is perhaps the biggest name in Northern Ireland e-commerce.

The local video and DVD company is currently busy with the pre-Christmas rush, and will ship around two million items this year.

Now based in Dunmurry on the outskirts of Belfast, Blackstar once employed 150 people and there was talk of a stock market floatation at a fancy price.

However, after a couple of years of major internal restructuring, the firm only employs 50.

We've just had to go back to business fundamentals Ian Loughran Blackstar

It is now satisfying the first requirment of a conventional business - making money - and is still selling right around the world.

The company's managing director, Ian Loughran, who was brought in during 2001 as financial controller, has seen some turbulent times.

"When we talk about the bursting of the bubble, what we are talking about is the bursting of the finance bubble," he said.

"There was no more money out there in the market. However, there are still enormous opportunites for us. We've just had to go back to business fundamentals."

Difficulties

'First movers' in business often have a huge advantage, but with e-commerce, it hasn't been easy to get the business model to work quickly.

Firstly, consumers are only now getting to grips with the internet - they now have the access and are becoming more comfortable with sending financial details over the net.

Five years ago it was a different story.

At that time, there was the whole issue of making the technology work - nothing puts off a potential customer faster than a clunky website.

Thirdly, there is the question of how to promote an online business.

Some companies blew huge sums of investors' money in expensive advertising that had limited return; only now is there a better understanding of how best to sell an online presence.

At one time, the dot.coms had a certain amount of derision for the traditonal business that wanted to move online.

New channels

However, some of these firms have proved adept at developing a new sales channel on the web.

The fact is that they know their business and know their customers; not something that all the dot.coms could say.

One such success story is Portadown-based company, Farmrite, which as its name suggests, supplies local farmers with a whole range of products.

The last five years have been a real rollercoaster, but all the trends are moving in the right direction Martha Lane-Fox Lastminute.com

The company has been in business for nearly a decade, but only started selling via its website three years ago. Internet sales now account for a quarter of all its trade.

The company's owner, Philip Crawford, says e-commerce seemed the obvious way to go.

"We were getting requests for us to develop a catalogue and provide a mail-order service, but we felt that publishing and updating a catalogue would be too expensive, so we developed a website," he said.

"We keep costs under control because we are able to update and amend the website easily. Ninety percent of everything we sell online goes outside Northern Ireland, with a lot of it going to remoter areas in Scotland badly served by farmers' suppliers.

"Here in the store, we are limited in the number of farmers we can serve - online, its limitless."

One of the pioneers of online retailing, Martha Lane-Fox of Lastminute.com, recently shared experiences of the ups and downs of the last five years with a Belfast audience.

She argues that the real growth in e-commerce is in the future.

"The last five years have been a real rollercoaster, but all the trends are moving in the right direction," she said.

"Importantly, people will have easier and cheaper access to the internet. The best is yet to come."