Alsop: "perfecting the transaction." (Stewart Alsop, venture capital partner at New Enterprise Associates comments on online transactions) (Internet/Web/Online Service Information)

Our friend Stewart Alsop (formerly editor of InfoWorld, now a venture capital partner at New Enterprise Associates) showed up at the Software Publishers Association conference earlier this month with an important message: Electronic distribution may be nice in theory, but the actual experience of buying software online is often painful and irrational.

Alsop says he's bought shoes, CDs, books, airline tickets, and flowers from online resellers, and the transactions were usually pretty comfortable. "But it's hard to buy software online," he points out. "You would think that software companies would know how to set up a transaction system that would be pleasing and supportive. That would sort of make sense--but they don't."

One reason, he suggests, is that retail distribution channels have insulated most publishers from interacting directly with customers. "Traditional software companies act like the customer's a pain," says Alsop. "They want distribution to deal with the customer. They don't want to pay the cost of supporting customers."

But that kind of attitude is dangerously misguided in electronic channels, Alsop argues. "The focus switches from the customer's interaction with the software to the customer's interaction with the company. If there's no box, if there's no experience of walking into a store and looking at the yellow versus the red versus the pink, and looking at the box and figuring out what it does, and having an interaction with a sales person--then all you have to influence your customers is the service you provide electronically."

Alsop further argues that the success of electronic distribution will depend largely on the industry's ability to "perfect the transaction"--that is, to convey a sense of friendliness, security, and efficiency that encourages customers to buy online. His comments:

* On creating unnecessary barriers: "I don't mean to pick on anybody, but try to buy NetObjects Fusion 2.0. This has been announced recently. It's in beta. Fusion 1.0 is already out there in the market. So go to www.netobjects.com and here's what you have to do: If you don't want to download a disabled trial version of Fusion 2.0, you have to go back to the order page, you have to order 1.0, you have to register 1.0, then you have to come back and download 2.0. What's the point of this? What little problem were they trying to solve in this particular case? It didn't make me feel good about NetObjects."

* On sending a mixed message about online transactions: "I downloaded a shareware product called Screen Thief. Every time I start the program it reminds me that I have an illegal copy and asks me if I'd like to register it. But the only way to register is to fill out a form, print it and mail it... I went looking for their Web site. They bury the address of the Web site in an About box. When you try to make a purchase from the Web site, the order form requires physical delivery on disks. I don't know if I'll buy this product ultimately. If I could find a product with the same functionality and buy it on the spot, I would."

* On treating online buyers the right way: "The Progressive Networks Web site has a button that says, 'Current RealAudio Plus owners, upgrade free to RealAudio Player Plus 4.0 beta.' In other words, if you're already a customer, you can go directly into this system. It tells you what you're going to get: After ordering, you'll receive instant download access. Wow! What a concept. You've got Player Plus 3.0, you've got 4.0 beta, and free updates to any new versions released within 90 days."

* On small customer-friendly touches: "The next [Progressive Networks] screen you get is, 'Click on the button below to purchase.' You'll see a message that says, 'Processing your credit card may take up to two minutes. When your transaction is complete you will receive an indication of success. Click here if there is no response within two minutes.' The system gives you a serial number, which is crucial. It tells you you've got to save that number because you're going to need it later. It gives you a summary of your invoice. It tells you how much you're spending. Then after you've downloaded and installed the software, you go directly to another Web site called Timecast, where you get to do stuff right away. And it says, 'Congratulations.' I like it when people say, 'Congratulations.'"

* On the "perfect transaction" of the future: "I'd love to get an e-mail that tells me about a new product, or a new version of a product. I'd love that e-mail to have a button in it that I could push that would come back to me and say, 'What's your configuration and what would you like to do?' I would choose the options, and then agree to price and terms. It would tell me I can get a refund, no questions asked. It would install the software and set it up so that it can automatically upgrade itself."

Stewart Alsop, partner, New Enterprise Associates, 2490 Sand Hill Rd., Menlo Park, Calif. 94025; 415/854-9499. E-mail: [e-mail].