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Issue 2001-8 Wednesday, April 25, 2001








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  The telephone is back in full swing and customers now request useful services that really meet their expectancies

The telephone is back in full swing and customers now request useful services that really meet their expectancies

Dot-coms: when your cash stockpile happens to be higher than your market capitalization!


According to a recent survey conducted by Jupiter Media Metrix, CEOs from American financial services companies are four times more interested in offering their customers new services such as wireless products than they are in making their existing Web sites more user-friendly…

According to James Van Dyke, Jupiter analyst, online financial services provider are more interested in launching new High-Tech products than they are in improving the usability of their Web sites (see to that matter my M-commerce article in the last issue).

And yet, according to the same study by Jupiter Media Metrix, 52% of Internet users rate customer service as the most important criteria when selecting a financial services provider.


Only 7% of consumers rate discounted offers as being an important criterion when selecting a financial provider.
The last quarterly study by JF Powers (cf article eMarket) evaluated the satisfaction criteria in the online brokerage sector and gave the same proportions, even though it somehow minimised the customer service criterion.

  • Customer service: 26%.

  • Information and customer education: 19%.

  • Integrity and broker reputation: 19%.

  • Quality of the processing: 17%.

  • Portfolio management: 12%.

  • Fees and commissions: 7%.

And yet, another survey conducted by Harris Interactive confirms this tendency as it reveals that American Internet users who use online brokerage services favoured the telephone over the Internet to purchase investment products during the last quarter of 2000.
This study, that polled a sample of 2.900 users with a brokerage account, proves that the telephone has become extremely used in the following cases (Please treat these figures carefully, as they only correspond to products that were actually purchased by the respondents):

  • Corporate bonds: Telephone 71% - Online 11%.

  • IPO (Initial Public Offerings): Telephone 55% - Online 27%.

  • US treasury and municipal bonds: Telephone 43% - Online 9%.

  • Stock options: Telephone 41% - Online 34%.

  • Money market accounts: Telephone 41% - Online 21%.

  • Mutual funds: Telephone 41% - Online 18%

Only with stocks did we get the same proportion between the telephone and the online channel, as they got 40% each.
These figures, that come from different surveys match each other, and I think they represent a warning shot for all eFinance Web sites. These sites should pay attention to what visitors and clients really expect.

Sources : Harris Interactive - Jupiter Media Metrix

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   Dot-coms: when your cash stockpile happens to be higher than your market capitalization!  

With the $400 million it raised in its initial public offering, which already happens to be quite a large sum to which you must also add what investors pumped into the company, stamps.com just managed to enter a rather exclusive club: the club where dot-coms have more cash than what they got for their market capitalization, despite the fact that their results are still greatly in the red.

And when I say their cash stockpiles are much higher than their market capitalization, it is not an idle fancy: $213 million in cash for $137 million market capitalization!

You will object that the company's "cash burn rate" might still manage to put things back in order.

But this will not happen since stamps.com, as it reduced its work force by 72%, only spends $6 million of cash a quarter and even hopes to reach break-even point in 2002.

Supposing stamps.com never even reached break-even point, and kept spending $6 million cash a quarter, it would need…35 quarters to spend it all!

This is precisely what upsets Robert Chapman, a shareholder who owns nearly 5% of stamps.com and does not seem to have much faith in the company's business model; he would rather see the company return part of its cash to the shareholders…

Life is definitely hard on start-ups with a great cash stockpile!

Source : Industry Standard

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