Internet startup vs. brick and mortar

Many people feel like online retailers have an automatic advantage over brick and mortar stores in terms of potential success because, well, they are accessible online. While this is true in many aspects, it is actually quite difficult to create an online presence and develop a loyal customer base. Many entrepreneurs assume that starting an online business is just like the movie Field of Dreams... "If you build it, he (they) will come." They assume that if they have a website that sells products people use, they will automatically generate sales.

The level of competition in the online marketplace is quite high. It is not difficult to create a website, so the barriers to entry are low. The key to a successful internet venture is to understand the needs of the customer as well as the environment of the market you are entering. This is the main difference between the success of Taxi Magic and the lackluster performance of Musicjuice. As Tim explained during his presentation, Taxi Magic's management team had tons of experience in logistics and travel booking. Their combined knowledge allowed them to develop a service that met the customers needs quickly and efficiently. The founders of Musicjuice had a good idea, but poor execution and a lack of understanding the market and customer preferences kept their website on the ground.

These issues are also prevalent when talking about brick and mortar businesses. While they also have to determine the needs of the customers, they have a physical location, face-to-face interaction with customers, and products that can be examined and felt by the customers. It is vital for an internet startup to create value for their customers because there are often hundreds of alternatives to choose from with the simple click of a mouse.