The New Economy & the Internet

In the late 1990s, the press announced the end of the "old" economy, and the rise of the "new" economy. The New Economy was based on the Internet and was called "e-business" or "e-commerce" to indicate that it relied heavily on the Internet to conduct business electronically. During these heady days, venture capital actively sought out new enterprises that used e-business as part of their business strategies, or as their entire business strategy. Fundamentals such as financial planning, marketing plans and even business plans were overlooked or discounted in the New Economy, and companies such as Amazon.com dominated the news with their astronomic profits made on initial public offerings. So-called naysayers pointed out that many of these new companies were failing to meet even the most basic financial requirements such as profitability for long-term success, but investment money continued to seek out the New Economy. Eventually, the bubble burst. Companies that had attracted venture capital but which had poorly thought-out business plans failed despite their reliance on the Internet. Increasingly, analysts began to view the Internet as a tool that could be used by traditional businesses as well as companies that were based on e-business alone, but everyone began to recognize that business fundamentals could not be overlooked just because goods and services were now being bought and sold on the Internet in additional to traditional supply channels. T

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ldren. Television is considered particularly effective as it is with adults because of the intense images that it conveys and the level of reality that many associate with the medium. Increasingly, the same problems are arising with the Internet where Web sites offer games and even educational information to children while advertising is subtly placed on the site, as well. This, according to critics, leads to significant influence by advertisers over children who may not differentiate between messages that are bought and paid for, and messages that are more objective in their content ("Targeting," 2004). AN E-BUSINESS FAILURE: WEBVAN.COM Webvan combined high-technology with an innovative approach to a basic need: how to get food to consumers. Despite the many advances that have been made in daily life, obtaining food for consumption in the home has not changed much at its most essential level in many years. Consumers go to the local store or farmer's market, purchase processed and fresh foods, and bring the food home. The store might be a local bodega or a giant superstore that combines personal services with groceries, but a key feature is that the consumer must allocate time in the store. Grocery delivery services are

Category: Economics - T