Definition
Dotcom, short for dot company, refers to a business or corporation that primarily functions on the internet, often denoted in its web URL ending with a “.com”. The term emerged during the late 1990s with the internet and ecommerce boom, known as the “dot-com” bubble. This period saw a rapid rise and subsequent fall in the equity value of these internet-based companies.
Phonetic
The phonetics of the keyword “Dotcom” would be: /ˈdɑːtkɑːm/
Key Takeaways
- Dotcom, also known as internet commerce, refers to the buying and selling of goods and services using the internet, and the transfer of money and data to execute these transactions.
- Key components of Dotcom include Business-to-Business (B2B) and Business-to-Consumer (B2C) sales of products or services, online marketplaces, and electronic data interchange (EDI).
- Dotcom has drastically changed the way businesses operate today, enabling companies to reach a vast global market, operate 24/7, and provide customers with more convenience, variety, and competitive prices.
Importance
The term “Dotcom” is significant in the business/finance domain as it signifies the start-up businesses that emerged during the internet bubble of the late 1990s. These were enterprises primarily functioning online, offering products and services via the internet. The “Dotcom” term comes from the “.com” used in web addresses. The importance of Dotcom businesses lies in their potential for rapid growth, wide reach, and pioneering role in electronic commerce. The Dotcom boom also led to the Dotcom bubble, a period of overvaluation and subsequent crash of these enterprises, which has played a significant role in shaping perceptions towards investments and valuation of internet-based businesses.
Explanation
The term ‘Dotcom’ primarily refers to any company that operates its business through a website, with the internet being its principal and primary medium for all business activities. The .com in ‘Dotcom’ comes from the domain suffixes used in internet URLs, and originated during the late 1990s, when numerous Dotcom businesses emerged. The purpose of a Dotcom is essentially to leverage internet technologies to provide products, services, and solutions, often with a focus on convenience, user experience, and global accessibility which may not be afforded by traditional brick-and-mortar establishments. Dotcoms can serve a range of purposes depending on the nature of the business. For example, some Dotcom companies operate as online retailers, offering products to users that they can purchase from the convenience of their homes. On the other hand, some Dotcoms provide services such as streaming entertainment, educational platforms or even financial services. They may also serve as platforms connecting users to information, services, or other users – indeed, search engines, social networking sites, and online marketplaces are all examples of Dotcoms. Regardless of the variety, the shared goal of Dotcoms is to harness the power of the Internet to reach potential customers without the geographic limitations of traditional businesses.
Examples
1. Amazon.com: This is perhaps one of the most successful examples of a dotcom business. Founded in 1994 by Jeff Bezos, Amazon initially started as an online marketplace for books, before expanding to sell electronics, apparel, furniture, food, toys, and jewelry. It’s now the world’s largest online sales company and one of the largest Internet companies by revenue worldwide. 2. eBay.com: Another classic example of a dotcom business, eBay started in 1995 as an online auction and shopping website. People and businesses buy and sell a wide variety of goods and services worldwide. 3. Pets.com: This is an infamous example of a dotcom that failed. It sold pet accessories and supplies online, but went from IPO to liquidation in just 268 days in the late 90s/early 2000s. Despite heavy advertising, including a memorable sock puppet mascot, the company was never profitable. These examples show both the immense success some dotcoms have achieved, and also the risks associated with such business models, especially during the “Dotcom Bubble” of the late 90s/early 2000s.
Frequently Asked Questions(FAQ)
What is a Dotcom?
When did Dotcom companies become prevalent?
What is the Dotcom Boom?
How do Dotcom companies generate revenue?
What happened to many dotcom companies in the early 2000s?
Are there any successful Dotcom companies?
What lessons were learned from the Dotcom Bubble?
Related Finance Terms
- E-commerce
- Startup
- Internet bubble
- Online business
- Initial Public Offering (IPO)
Sources for More Information
