Thursday, June 12, 2008

An example of an E-Commerce failure and its causes



1-800 MUSIC NOW was a short-lived venture by MCI Communications to open a music store operated through automated telephone and online prompts. It also introduced one of the first ever serious attempts at an e-commerce music store. The service was run out of MCI's offices in Arlington, Virginia (Pentagon City).

The telephone service allowed United States users who dialed the toll free number 1-800-687-4266 to enter the name of a performing artist by touch-tone, then select one of that artist's albums (available on CD or cassette) from the catalog and hear clips from that album before buying by credit card. Once users made selections on the automated service, they were transferred to a call center where an operator established an account, collected payment and shipping information, assisted in ordering, and completed the order.

The online service was located at http://www.1800musicnow.mci.com. It was the first to offer free music sampling for most of its catalog, initially in RealAudio 1.0 and eventually in RealAudio 2.0. The online store shut down in early 1997.

The service began in 1995 (the same year Amazon.com opened, and three years before it started selling music) but was taken down in December 1996. The promotion totaled about USD $40 million. Meanwhile, its top-selling CD allegedly sold only 400 copies. Ultimately, over 1 million pieces of music were sold within the year. One survey noted that many who called the number did not sign up to make purchases, some citing shipping fees, but most saying that they didn't have credit cards.

That failure was attributed in the press to a variety of causes, including:
1. weakness in the music industry on that particular year, leading to deep discounting by retailers;
2. site was not easy to use; consumers prefer ordering through traditional stores;
3. Prices were relatively high, compared once again to traditional stores. Print this post

No comments: