Everyone knows that it usually costs companies less to conduct business over the Web than through traditional channels. An on-line banking transaction, for instance, costs just 2 cents, compared with 36 cents for an ATM transaction and $1.15 for a teller-assisted transaction. So it’s not surprising that many companies are desperately trying to attract consumers to the Internet channel. What is surprising, however, is that most have had dismal results. In retail brokerage, for instance, only 2% of households trade on-line. And the figures for the airline industry are even worse: less than 0.1% of households purchase tickets through airline Web sites.
A version of this article appeared in the May–June 2000 issue of Harvard Business Review.