hich formula really creates the best E-commerce sites: dot-com or brick and mortar? The dot-com fallout has lent urgency to the question. Catalog companies are showing there's a third way, though, and Internet companies and traditional retailers alike can learn from their success.

"Of all the old-line companies in the E-commerce market, the catalogers get it the best. They already have what the dot-coms wanted," Gartner analyst Rob Labatt says. What they have is direct-marketing savvy coupled with infrastructure, brand, a loyal customer base, and digital images and content--a compelling E-commerce formula.

Catalog retailers have had years of experience in selling without the benefit of stores. The three clothiers profiled here--Lands' End, J. Crew, and Eddie Bauer--have loyal customers who buy without trying on clothes first. They also know how to fulfill orders and deliver products. And all three catalogers' well-established customer-service processes can be easily adapted for the Web.

Their common background--clothes and accessories with an outdoorsy air--allows a close comparison of their E-commerce approaches. All three also are similar in their self-assured take on the Internet and the way it fits into their businesses. They're alike in seeking out Web-interaction tools without overloading on technology. And they've all developed solid business models.

But in this tough economy, a sound E-commerce business model may be secondary to factors such as deep customer bases and deep pockets. Lands' End is the second-largest direct clothing retailer in the world, with almost $1 billion in revenue and 6.2 million customers; J. Crew has revenue of nearly $800 million; and Eddie Bauer is part of direct-retailing giant Spiegel Inc., with $3.72 billion in revenue. "We haven't had to fight a lot of the battles the dot-coms have had to," says Sally McKenzie, division VP of Eddie Bauer's interactive media operations. "We certainly can weather the storm better."

Lands' End
Retailer Lands' End has managed to provide almost legendary customer service without benefit of the technology that many companies take for granted. But E-commerce and customer-relationship management tools are finally bringing automation to the aid of its customer-service personnel.

The Dodgeville, Wis., retailer comes to E-commerce with many fundamentals in place: particularly, order-fulfillment and logistics software. But it has managed to do without some key pieces of technology, such as a CRM package or computer-telephony integration. "Lands' End has done a great job of handling customer relationships without a lot of technology support in the past," says Giga Information Group analyst Erin Kinikin. For example, the company's catalogs aren't in electronic form for sales reps; when a customer calls with a question, a rep has to leaf through a catalog to find the answer.

Lands' End also has to pull together customer information from disparate systems. For instance, it has seven (going on eight) contact centers that handle interactions via phone and Internet, each served by a variety of custom front ends that link into back-end systems such as Axciom for direct marketing and WebLine for Web customer service. Things get more complicated when Lands' End tries to reconcile its various lines of business, which include a unit that sells promotional goods. "We haven't taken the time to build a single picture of the customer," says Vicky Heinz, director of customer service. "If a customer calls our B-to-B center, we have no way of knowing you did business with us in the morning."

That's no longer acceptable to Lands' End, so it's embarking on a CRM initiative that entails replacing a 20-year-old mainframe system and building a new order-management system based on applications from Trilogy Software Inc. The project is slated to be completed next year.

Trilogy will become the heart of the CRM system. Lands' End will use three Trilogy products, MCC Catalog, MCC Pricer, and MCC Config, which will help contact-center employees suggest appropriate products in light of customers' past purchases. Trilogy will integrate with other CRM products, such as Unica and Axciom, for marketing and customer profiles. The combined system will help keep track of customer tastes and customer-service problems.

The customer-service technology Lands' End built into its Web site convinced the company of the benefits of extensive customer-service automation. Lands' End could focus on the customer-service tools because it already had much of the distribution and order-taking technology for E-commerce in place. "It's just a matter of taking an order over the computer vs. over the phone," E-commerce marketing manager Terry Nelson says. That's helped Landsend.com evolve quickly from an experimental site launched in 1995. After putting all its inventory online in 1998, Lands' End has seen rapid E-commerce growth: Sales jumped almost 60% from $138 million in fiscal 2000 to $218 million in fiscal 2001, ended Jan. 26.

One of Lands' End's real-time customer-service features landed it in the Smithsonian. Lands' End Live, powered by software from WebLine Software, now part of Cisco Systems, was rolled out before the 1999 holiday season. It lets shoppers speak to customer-service reps live over the Web via chat or voice over IP. If a customer can't find an item, the rep can take the shopper's browser to it. A customer with a question about an item can similarly guide a rep's browser.

The feature doesn't offer one of the perceived benefits of Web customer service: lower cost. But the main point of Lands' End's service innovations is to distinguish the company from the competition. That's true of another feature, My Virtual Model, which lets customers enter their measurements to see how clothes would look on them. The feature, created by My Virtual Model Inc., helps consumers overcome hesitancy about buying clothes sight-unseen. "Clothing fit is one of the biggest barriers in buying clothes without walking into the store," Nelson says.

Lands' End is also investigating personalized content. A feature called My Personal Shopper, developed internally and launched for last year's holiday season, analyzes customer preferences and helps them find suitable items.

Whatever new technology Lands' End adds--or doesn't add--the keys to its E-commerce success will continue to be that it knows how to sell and deliver in a direct model and how to treat a customer. "CRM doesn't succeed or fail based on technology," Kinikin says. "It succeeds or fails based on the commitment of the company to focus on the customer."

J. Crew
Clothier J. Crew didn't find selling on the Web all that different from selling through catalogs--except, of course, for the unlimited space, interactivity, and instant feedback available to it online. Those factors have altered what J. Crew is able to do with its Web "catalog." Unlimited space, for example, means it can show every item in every color.