InformationWeek

As of late May, Saks was completing functionality testing of its new Web site. An important advantage, says Dykman, is Saks' ability to leverage existing fulfillment and call-center systems that were first built for its retail catalog. That cost savings, as well as the strong gross margins it has built up over the years with its brick-and-mortar stores, give it a leg up on dot-coms, most of which have consistently found themselves working off thin profit margins.

Following the formal launch, slated for sometime in June or July, the site will offer up 10,000 items, expanding to 100,000 by year's end. There's also a substantial content commitment that includes a customer chat area, designer information, and exclusive online events.

Dress Barn, in Suffern, N.Y., shares many of Saks' offline advantages-a back-end fulfillment system, catalog and database architecture, and an eager online customer base-but it's taking a more tentative approach to E-commerce, says VP and CIO Ron Shaban. "We're not going to be a barn-burner out the door,'' he says. "This is more of a branding issue for us. We know we had to get on board because competitors are climbing on, and we're very conscious of our customers."

Dress Barn's initial site last spring was basically nothing more than an electronic brochure, says Chris Correia, the company's Web-site technology specialist. By the end of this month, its site will let customers order store merchandise online. Customers will also be able to return merchandise bought online to any of Dress Barn's 700 stores.

While Dress Barn has hung back, a slew of clothing retailers such as J.C. Penney hit the Internet hard. Several, including Lands' End Inc., are in the middle of their fifth or sixth site revision, offering up features such as three-dimensional viewing of products and site applications that track past purchase orders and push related items to shoppers' virtual dressing rooms.

But it hasn't all been smooth sailing online for pioneer retailers. Many, including Toysrus.com, learned how site stability-or the lack of it-can drive financials downward, as well as damage the brand. "We held back and let the big companies make mistakes first,'' Correia says.

One reason for Dress Barn's cautious approach is that it wanted to make sure it stayed focused on customer needs and didn't just deploy the latest and greatest technology. Internal market research indicates that the retailer's customer base-mostly working women in their late 30s to 40s-aren't interested in technical bells and whistles. Mostly, they're looking for specific products to purchase during store visits.

Dress Barn's decision to outsource the site to NaviSite Inc., an application service provider and Web-hosting company, also demanded a slower approach because it required researching and choosing a partner and hosting provider. "Our IT staff is stretched extremely thin, so we're outsourcing most of the site," says Correia.

Future plans include tying the Dress Barn site to stores using Web kiosks, Correia says. The kiosks would let customers order products that are out of stock at the store, or purchase a product in a color not hanging on the rack. This kind of integration between physical stores and the Web site is an important part of any brick-and-mortar's online success. "E-commerce is opening up an additional distribution channel for us," Correia says. "Because we already have brand recognition through our stores, we'll have an advantage over many dot-com companies."

From all accounts, brand recognition is the crown jewel of a brick-and-mortar's online efforts, although customer service and satisfaction are also required ingredients for a successful online business. No one knows that better than Egghead.com Inc. The Menlo Park, Calif., discount computer retailer was well-known nationally for its 200-plus brick-and-mortar locations built between 1984 and 1997. While declining revenue forced the company to shut all those doors in 1998, the business survives online. Today, Egghead .com goes up against established dot-coms, including Buy.com, as well as brick-and-mortar office-supply sites such as Staples.com and OfficeMax.com.

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