October 16, 2000

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Back to Redefining Business homepage E-retail Customer Service: It's More Than Just E-mail (9/25/00) InternetWeek: Site Capacity Isn't Enough (10/2/00) Computer Reseller News: Happy Holidays For Shippers (10/2/00)

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Similar examples of brick-and-mortar and Web-site integration abound. Sears rival J.C. Penney Co. moved its E-commerce group inside its $2 billion catalog business earlier this year and now offers in-store returns for catalog sales as well as Web purchases. Tiffany, while expanding its online product inventory to 1,000 items by Christmas, is also adding instructive content to help buyers with in-store purchases. The Chelsea Interactive unit of Chelsea GCA, operator of 20 high-end outlet malls, is launching Web sites to sell the excess inventory of upscale brands such as Liz Claiborne apparel and Cole-Haan shoes. "Folks in South Dakota won't have to drive 80 miles to the nearest outlet location," says John Reilly, a Chelsea Interactive VP and chief technology officer.

Established physical-world retail brands are clearly starting to get it. "Last year, a lot of the big brick-and-mortar retailers didn't really take Web commerce seriously and weren't ready to scale," says Laurie Windham, CEO of marketing consulting firm Cognitiative Inc. and author of The Soul Of The New Consumer (Allworth Press, 2000). "Now they're realizing that most customers are cross-shoppers. You need to think about the entire customer cycle, not just the sales transaction. Where do customers go to start the process? It's often the Web."

At Tiffany.com, virtually everything about the Web site is designed to improve the in-store experience. In November, Tiffany will begin providing employee discounts on Web-bought merchandise. It's intended to reduce visits by Tiffany employees to its stores this holiday season--freeing up sales associates to spend more time with outside customers, mainly at the Short Hills, N.J., store near company headquarters in Parsippany. Tiffany does 45% of its annual business in the fourth quarter.

For a big-ticket, well-thought-out purchase like those made at Tiffany, the Web can be a critical pre-sale information source. "We're really not there to double or triple sales online, but to drive customers to the stores," says Bob Davidson, Tiffany's VP of IT. "If you know what you want when you come in the store, it helps our associates give you quicker service--and lets them spend more time with less-educated customers."

That kind of integration between Web site and store helps meet rising customer convenience and service expectations. "Brands are increasingly about service, not the product," says Proxicom's Connell. "The ability to buy something, regardless of channel, is key. If I want a sofa and the Web site says it will take four weeks, I'm willing to drive to a store to get it if it's in stock there."

One brick-and-mortar retailer, Dan Howard Maternity of Chicago, has gone so far down this channel-integration path as to rebrand all of its offline locations with its online brand name, iMaternity.

If multichannel options are so important for the service that holiday shoppers demand, how will the pure-play dot-coms survive? Many have recently done what some observers call the ultimate irony--opened their own brick-and-mortar locations or started publishing paper catalogs.

This online-offline hybrid strategy, a major E-commerce trend of the past year or so, has taken many forms. Allergy and asthma medications retailer Gazoontite.com revised its original business plan and opened a store on San Francisco's trendy Union Street at the same time it launched its Web site. (The company says the store is already profitable, while the Web site isn't.) In September, Kmart Corp. online subsidiary BlueLight.com LLC planted its brick-and-mortar stake across town on Fisherman's Wharf, a place where you'd never find a traditional Kmart. And the ranks of E-retailers who've been mailing out catalogs include Garden.com, Greatfood.com, and gift-seller Red Envelope, as well as Gazoontite.com.

"In the heady early days of E-commerce, there was this notion that dot-com retailers could reinvent retailing and keep people away from the malls. It's not the case," says Mark Wright, chairman and CEO of E-retail market-research firm @Plan Institute for Online Commerce, whose clients include Buy.com, eBay, and Wine.com. "People have shown that they like to research prices and products online, then get in their cars and drive to the store, or call the catalog. Pure dot-coms will lose these people."

What haven't changed, Wright contends, are the basics. "You can talk buzzwords like customization and personalization all you want, but the customer wants the same thing as 100 years ago," he says. "A good product at a fair price that the store stands behind so that it can be easily returned, no questions asked. Merchandising isn't that complicated. Executing properly is the Mount Everest challenge, and most online sellers haven't achieved it."

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Photograph of Bob Davidson by Paul Harris

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