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According to Dictionary.com,
Online companies, also known as dot.com companies, are businesses that exist purely or primarily in the online environment. These companies first came to light in the early 1990s. Despite the famed dot.com crash that took part in the early 2000s, dot.com companies are now seen as an integrated part of society.
Moreover, online companies changed the traditional form of running business, the infrastructure of the company and also broke the boundaries in order to cover lots more customers. Online companies are able to expand its business globally by the help of the Internet. Further more, online companies use the E-commerce technology to provide online business transactions, electronic data interchange (EDI) for providing interaction and communication between companies (from suppliers to consumers) and in long-term E-commerce also helps the online companies to reduce the cost of production by replacing the paper-based business processes with the latest Information System technology. Please refer to E-commerce for more information about how online companies utilize E-Commerce technology to benefit their businesses.
The 'boom' and 'crash' of the Internet market was arguably one of the most significant incidences in economic history (Culken Cuneo, 2005). The rapid emergence of the Internet, fuelled an historic investment escalation that led to an equally momentous 'shakeout'('crash'), as inflated investor expectations came up against marketplace realities (Miller, 2002). Investors failed to thoroughly research the industry and in turn suffered the consequences of poorly managed online businesses (Miller, 2002). An investigation into the industry would have revealed that the dot.com model was inherently flawed. (Wikipedia, 2005)
The official date of the Internet 'crash' is considered to be in March of 2001, after Internet stock valuations began to rapidly decline (Miller, 2002). Dot.com failures followed stock market recession as venture investors, abruptly stopped investing in new and innovative startup companies (Miller, 2002).
From January of 2000 and into 2002, at least 835 Internet companies either shut down completely or declared bankruptcy. The number of Internet company failures peaked in 2001, and 'shutdowns' and closures began to gradually taper off into 2002. (Miller, 2002). More recently, increasing companies have either taken to the Internet for the first time, or have re-emerged with better business plans and stronger innovated strategies. (Culkin Cuneo, 2005).
In 1994, the Internet came to the general public’s attention with the public advent of the Mosaic web browsers and the World Wide Web (Wikipedia, 2005). Two-way communication over the Internet led to the possibility of direct web-based commerce, also known as e-commerce, and instantaneous group communications worldwide (Wikipedia, 2005).
Ultimately, it was apparent that the Internet had the potential to network unrelated buyers and sellers, or advertisers and clients, in seamless and low-cost means (Wikipedia, 2005). People began to recognise the possible opportunities offered by the Internet and subsequently, online company investments proceeded to emerge (Wikipedia, 2005).
The late 1990s boom in Dot.com company stocks is indicative of what the industry refers to as a ‘bubble’ (Wikipedia, 2005). A 'bubble' occurs when speculators note the significant increase in the value of stock and buy in anticipation of further market increases (Wikipedia, 2005). This notion is evident of the Dot.com 'boom,' where investors began rapidly purchasing shares in companies that were built on advance revenue and operating on overstaffed organizations (Culken Cuneo, 2005). Eventually, the extreme popularity of the 'let's-get-rich-quick' Internet business venture caused market saturation (Peek, 2000). However, there is no real academic or scientific explanation as to why there was such an extraordinary over-investment in the, so-called, new technology sector during this time, or reason for its future capitulation in the year 2000 (Amin & Wheale, 2003).
The dot.com 'bubble' numerically ruptured on March 10, 2000, when NASDAQ's composite index peaked at more than double its value than the previous year (Wikipedia, 2005). Dot.com businesses were instantly transformed from being invaluable assets to worthless ventures (Culken Cuneo, 2005). Accelerated business spending in preparation for the 'Y2K switchover' also contributed to the collapse (Wikipedia, 2005).
The majority of companies affected by the crash were lavishly spending investor’s money in an attempt to become well recognised before becoming profitable (Amin & Wheale, 2003). As a result of this, the time between 2000 and 2002 saw at least 835 Internet companies shut down or declare bankruptcy (Miller, 2002). Furthermore, from November 9, 2000, 245 dot.coms terminated employment of at least 22 155 employees (Peek, 2000). Despite this, retail, Internet companies, Yahoo and ebay, were spared devastation from the 'shakeout' due to their implementation of modest business plan.
The Dot.com 'crash' of the early 21st century essentially shattered the visions of many online companies. As the 'shakeout' diminishes, there are signs that the marketplace is beginning to rebound from the intense aversion to the Internet that developed as a result of the 'crash' (Miller, 2002). However, surviving companies such as, ebay, Google and Amazon are leading the way for an increasing resurgence of wiser and more structurally enhanced Dot.com companies (Amin and Wheale, 2003).
The resurgence of Dot-com was long expected, as the Internet's power as a business tool has remained effective, in spite of the 'crash' (Kirkpatrick, 2003). Nonetheless, the effects of the Dot.com 'crash' were catastrophic and whilst initial signs of re-emergence commenced as early as 2001, many companies are only now re-emerging (Culken Cuneo, 2005). The companies to succeed, will be those who learned from the exuberance of the 'pre-crash' market and have replaced it with strong business models and innovative strategies (Culken Cuneo, 2005).
Despite the obvious scaring resultant from the dot.com crash, the Internet is still regarded as a powerful marketing and selling tool by online businesses (Kirkpatrick, 2003). This is evident as the current market demonstrates considerable popularity and effectiveness of online companies (Kirkpatrick, 2003). The Internet companies returning to the market are indicating improved business practice to ensure longevity (Kirkpatrick, 2003). Moreover, there are lots of advantages and disadvantages for using the power of the Internet and employing E-commerce as business strategy. Please refer to Advantages and Disadvantages of E-commerce for more details.
The future for dot.com ventures is a positive one. The 'crash' of 2000 has not deterred new Internet entrepreneurs but, rather, inspired higher quality facilities (Germain, 2005). With a record number of domain name sales in 2004, it is evident that the business presence on the Internet will only continue to improve (Germain, 2005). Investors are increasingly prepared for market fluctuation and more informed on the structure of the online industry (Kirkpatrick, 2003). Also, the rapid growing of the online shopping and online auction trends with the enormous amount of Internet Usage all over the world provides a bright future for the online companies to adopt E-commerce as their marketing and business strategy.
Carlene Daley 20:29, 5 Sep 2005 (EST)
Roxanne Hawes 22:58, 6 Sep 2005 (EST)
Lauren Spackman 22:08, 6 Sep 2005 (EST)
Bethaney Lawler 11:55, 7 Sep 2005 (EST)
Jaime marin 12:12, 7 Sep 2005 (EST)
Sze Chit NG 15:13, 3 Oct 2005 (EST)
