Live from Online Merchants Have Yet to Deliver, Diller says

LAS VEGAS–Online retailing is barely in its infancy and other than a few notable exceptions, such as and eBay, most online merchants have yet to deliver a truly compelling merchandising proposition, said Barry Diller, chairman and CEO of online media conglomerate IAC/InterActive Corp., during his keynote presentation here yesterday.

“Online retail has been a tough one to crack,” said Diller. He said merchandising online is “vastly better” than it was just a few years ago, “but nowhere near where it needs to be.” When asked by an audience member what he envisioned a mature online retail industry to be, Diller said, “how the hell should I know?”

During the question-and-answer-style presentation, Diller, who was chairman and CEO of QVC in the early ‘90s, took swipes at much of today’s online conventional wisdom. For example, he said he sees little value in online consumer product reviews.

“Any good merchant has got a brand and that is a review system,” he said. When session moderator and Forrester Research analyst Carrie Johnson countered that the entire online retail industry thinks differently, Diller quipped: “That’s fine. If I’m right, I’m the only one.”

On the current trend of self-publishing online, Diller said: “There are very few people who are effective writers and most of self publishing is drivel.”

As for his own company’s business strategy, Diller also said his IAC/InterActive considered buying a comparison-shopping site, but decided against it because they are uninteresting. “We looked at them and said ‘yes, they do something good, but it’s boring and we don’t want to do it,” he said. “Plus I thought the valuations were insane.”

Diller also questioned the wisdom of eBay’s acquisition of VOIP provider Skype. Where eBay’s PayPal acquisition was a natural fit because PayPal was the engine that enabled eBay transactions, the Skype deal’s fit isn’t so clear.

“To make a phone call to talk about the purchase, you don’t have to buy the phone company,” he said. “I was really surprised at eBay impurifying the pureness of their brand.”

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