Dot-coms to fade as fast as bricks and mortar businesses

NEWS That's the consensus reached by panellists representing the incubator, banking, dot-com and clicks and mortar communities at the most recent Land of the New Giants roundtable debate, organised by the Bathwick Group consultancy. On the back of the high-profile failures of dot-coms boo.com, Clickmango, and Dressmart - not to mention recent lay-offs in a sector known for job creation - there have been doubts raised about some new enterprises. Worries have spread from the business-to-consumer (B2C) sector to business-to-business (B2B) enterprises, and resulted in volatile stock market indices. However, Kevin Turnbull, group director for Ecommerce at Inchcape and MD of Autobytel UK, predicts a consolidation of players. With a background in traditional and high-tech automotive businesses he said: "My guess is that over 80 per cent of these companies will disappear." When asked to provide a figure, Georg Goeres, an associate for the eVentures division of Deutsche Bank, said: "It'll be the same as the old economy." Chris Cass, MD of music content platform Vitaminic and not at the debate, said: "In general, 10 per cent of the companies around now will survive. You have to go in with your eyes wide open." According to a Business Starts & Closures survey by Barclays this summer, since 1988 only one third of all start-ups remain active after five years of operation, and research often cites the eventual survival rate as lower than this. Nigel Drummond, chief executive of Internet Incubator, which mainly invests in internet infrastructure companies, added: "Most companies do fail, especially those that try to build brands. One answer is to be in distribution and leverage other companies' brands." He said the costs of brand building and acquiring customers will hurt most start-ups, and even likened the current B2C market to catalogue shopping where impulse buys such as CDs and books are more likely to take place at traditional shops. Jac Peeris, CEO of Skillvest.com, predicted more established companies "are likely to succeed because they have established brands", but pointed out becoming part of another company should often not be characterised as failure. All agreed that fulfilment will be critical to the survival of many etailers.