Marketing the New Venture 235edge of language and customs and on a network of contacts. Other opportunities may
be constrained by industry and economic forces the entrepreneur cannot change.
The Resource-Based View and the Internet
The resource-based view is a theory of what makes new ventures successful. It states that
companies with rare, valuable, hard-to-copy, and nonsubstitutable resources and capa-
bilities will achieve a sustainable competitive advantage. Resources and capabilities may
be physical, reputational, organizational, financial, intellectual, and/or technological (P-
R-O-F-I-T). Let’s review these and see how they influence the success or failure of mar-
keting efforts by Web-based businesses, e-commerce, and e-entrepreneurs.
Physical Resources. In Chapter 2 we concluded that physical resources, things you can
buy in a market, seldom play a decisive role in the success of an e-business. Nevertheless,
a couple of physical elements do seem to matter—logistical capabilities and “bricks and
mortar” presence.
Web-based businesses must often be able to gather the components of an order, box
them, ship them, and deliver them. The inbound logistics of taking orders are usually
handled through the Web site. The outbound logistics require the correct product to
be sent to the correct customer by the promised delivery date. This has sometimes
proved problematic for e-entrepreneurs. Many e-tailers, failing to anticipate the prob-
lems of outbound logistics, did not invest in the necessary physical resources (warehouse
capacity and product-picking and moving equipment) to fill the orders they received.
Others tried subcontracting order fulfillment to independent businesses like Fingerhut
Business Services, Inc. But fulfillment companies have problems of their own: they
operate on narrow margins and face tough competition. An e-tailer has to make a
choice:^29
- Build a fulfillment capability. On the positive side, this gives the entrepreneur a
greater degree of control; full knowledge of the fulfillment system’s capacities, tim-
ing, and quirks; and a fulfillment agency that handles only the entrepreneur’s prod-
ucts. On the negative side, a state-of-the-art warehouse costs around $20 million. - Hire someone else to handle fulfillment. On the positive side, this eliminates the
need for a huge capital investment and opens the doors for money-saving volume
discounts that can be negotiated with companies like Federal Express. On the neg-
ative side, during busy merchandising times, the contractor may not be able to han-
dle the order volume, which means that the quality of delivery service is uneven.
The other question is: Should an e-business also have a “bricks and mortar” presence?
Many companies began as stores or manufacturing plants and then added a Web-based
capability. These companies can relate to suppliers and customers at one or more loca-
tions. Businesses that begin on the Web can be at a disadvantage. Such new ventures
must decide whether a physical presence is critical to their success—and they have very
little information to go on in making that decision.
Reputational Resources. A good reputation is critical to e-commerce success. First, it
gives a business positive word-of-mouth and viral marketing reports. Second, it creates
trust. This is vital because of the remoteness of much e-commerce. Consider eBay’s rat-