Connect The Dots Online or brick-and-mortar? Tough question. But if you have a clear picture of your business, you already know the answer.

The smartest thing I've done in business is shutting down mystore and going exclusively online. Now I have a really neatbusiness. I love it," says Sherry Rand, 54, a Salisbury,Massachusetts, retailer whose online store sells one thing and onething only: gear for cheerleaders. You want pompons in any styleand color? You want megaphones for leading cheers? Then you want toknow about PomExpress (http://www.pomexpress.com), whereRand has conducted e-business in the two years since she shut thedoors on her brick-and-mortar operation.

"Online, I don't have to carry the great overhead of astore, and--from a quaint town in northern Massachusetts--I'mselling globally. We get lots of orders from Europe, wherecheerleading is really picking up," says Rand, who adds thatshe herself was a cheerleader through grade school and college. Inthe years afterward, she sold cheerleader supplies as amanufacturer's rep until she opened her own store. Now thatshe's operating solely on the Web, she says, "This is agreat niche, and, on the Internet, I can conduct business whereverI want to be."

Another devoted dot.commer: Nancy Zebrick, 46, the onetime ownerof a traditional travel agency in Cherry Hill, New Jersey, wholaunched a Web site in 1995 to complement her storefront. In early1998, Zebrick decided the online operation had so many strengthsgoing for it, she shut her brick-and-mortar store.

"The profits aren't there in a B-and-M travel agency.Online is much more profitable," she says. "The grossprofit margins [per sale] are lower online, but we make it up involume because we can sell nationally, in factinternationally," says Zebrick. Once her focus becameexclusively online, her Web business took off--so much so that inlate 1998, Zebrick plunged deeper into the Internet by merging heragency with online travel superstore 1travel.com (http://www.onetravel.com), where shenow owns a slice of the company and serves as director of leisuresales. "If you believe in the Internet--and I do--this is agreat place to do business."

Egghead.com Inc. would agree. An early leader in storefrontsoftware retailing--it staked out its turf back in 1984 andpromptly won significant brand awareness--Egghead hit tough timesin the mid-'90s as it faced both big-box retailers, such asBest Buy and CompUSA, who carried more titles and often discounteddeeply, and a crush of new Web-based software retailers, fromBeyond.com (http://www.beyond.com) to Buy.com(http://www.buy.com). Staring atdwindling sales and the mounting costs of running traditionalretail stores, Egghead threw in the towel and closed its real-worldshops in early 1998 to concentrate exclusively on online retailingat http://www.egghead.comwhere, says the company, it now has over one million customers.

Robert McGarvey is BIZ Experiences's "WebSmarts" and "Staff Smarts" columnist.

Should You Go?

Sound good? Is it good enough to persuade you to dot.com? Shutdown a brick-and-mortar operation, go strictly cyber, and, whoosh,you've distanced yourself from monthly rent payments anddealing face-to-face with grumpy customers--and you've alsopositioned your business to sell globally. That's how it seemswhen you listen to the stories of PomExpress, Zebrick's travelagency, Egghead.com and so many more. But can you count on ithappening for you?

"The decision to dot.com has to be made on a case-by-casebasis. There's no one formula that will work for allbusinesses, all the time," warns Barbara Reilly, researchdirector with GartnerGroup, an information technology consultingfirm. What's more, adds Reilly, "there once was a lot ofnaiveté about how easy it is for a business to succeed on theWeb. It isn't easy, but many businesses discover that the hardway."

Sure, there are overnight successes on the Internet, but forevery dot.com that thrives, there are more that flop, says MarkLayton, 40-year-old president and CEO of Plano, Texas-based PSSwebInc., a leading distributor of computer supplies, and author andpublisher of .coms or.bombs . . . strategies for profit ine-business, which analyzes the difficulties of mounting aneffective e-commerce site. "Many dot.coms will becomedot.bombs--they'll fail," says Layton. "Just puttingup a Web site gets you nothing. You have to take steps to buildthat business.

"Online or offline, you need a sustainable businessmodel," adds Layton. "If you don't have that, youdon't have a business."

When the Web was less cluttered a few years ago, virtually anysitecould attract attention simply because there weren't asmany sites competing for it. But the dot.com space has spawnedinnumerable stores, which has triggered an economic Darwinism wherethe weak simply die--or get no meaningful traffic. "No onewill know you're on the Web unless you tell them and motivatethem to visit," says Layton. "Succeeding online hasbecome very difficult."

Best Of Both Worlds

Having second thoughts about burning the lease on yourstorefront and going strictly virtual? Know that there'sanother approach to the Internet, one that isn'tall-or-nothing.

Consider Wine Country Inc. (http://www.winecountryonline.com),for example, which is 25-year-old Adam Chilvers' Winter Park,Florida, wine store as well as its Internet counterpart. Builtaround the tasty proposition that all the wines it sells are $19 orunder and rated 85 or higher by a prestige publication (such asWine Spectator), both the brick-and-mortar (opened inNovember 1998) and the online store (launched a month later) areprofitable, according to Chilvers.

"Doing business on the Web is a dream. The costs are verylow," Chilvers says. But he has no intention of shutting downhis walk-in store, for several reasons. For starters, an onlineoperation still needs some real-world warehousing for merchandise,and a brick-and-mortar provides that.

But the second reason is the clincher: "On the site, wesell to many customers outside our area, but we also get manylocals coming into our store with shopping lists they'veprinted out on the Web." For those customers, the Web site isa great convenience: They hunt for wines they want online, atmidnight or 6 a.m., then they can get in and out of the real-worldstore in a matter of minutes. "I'm happy with how thestore and the Web site are working together to build this business.It's a good combination for me," says Chilvers.

Charlene Steinhauer, 36, goes further in endorsing thedual-channel retailing strategy. Stars Children's Wear, Inc.,her Issaquah, Washington-based brick-and-mortar children'sclothing and accessories store has been open for six years."The business is very successful," she says, "andit's a steppingstone to what we're now doing online atShopStars.com. A big plus for us is that we have established vendorrelations and we can get the merchandise we want to sell, but a lotof online-only storefronts can't because many vendors aresuspicious of them. They've been burned in the past by dot.comcompanies, but they know us and know we understand thisbusiness."

Maintaining a retail outlet has also helped Steinhauer keep upon industry trends. "By interacting with customers face toface, we've learned what they want in children'smerchandise and how they want to buy it," says Steinhauer.

Even so, why did Steinhauer decide to start an online store whenher brick-and-mortar operations have been on a steep upward growthtrajectory? Advantages unique to online retailing drew her tolaunch ShopStars in late 1999, she explains. For starters,there's the ability to reach a wide audience. But anothercritical factor, says Steinhauer, is that "being online for usis about customer service. Our customers are busy--every parentis--and at our site they can shop at their convenience, 24 hours aday. We're open whenever they want to buy clothes or books ortoys for their kids."

But, then, isn't this dual-channel strategy an unnecessarycomplication forcing BIZ Experiencess to focus on two distinctlydifferent venues? The experts don't think so; in fact, manypoint to it as the way to proceed in the next century."Don't close down a successful brick-and-mortar store togo online. Keep the storefront and add a Web site," advisesLeslie Lundquist, author of Selling Online for Dummies (IDGBooks).

And the logic behind this position? "There are tremendousadvantages to be had by leveraging Net sales with a B-and-M,"says Barton Weitz, a marketing professor at the University ofFlorida in Gainesville. Case in point: "You can use the storeto promote the Web site," says Weitz. That means printing yourWeb address on bags, sales slips and advertising fliers. That canbe a big step in overcoming the obstacle facing every dot.comtoday. "It's gotten very expensive to attract people to asite," says Weitz. "Stand-alone sites incur very highmarketing expenses because they have to spend the money to geteyeballs."

Your customers' desires are another strong reason tomaintain both types of operations rather than diving solely intoonline. "Different consumers want different things," saysWilliam B. Gartner, a professor of BIZ Experiencesship at theUniversity of Southern California in Los Angeles. "Somecustomers want the kind of personal interaction that can onlyhappen in a traditional retail setting. For others, it'ssimpler to log on to the Net. The smart, consumer-oriented businessmakes it easy to buy, no matter the customer'spreferences."

But there's a big, worrisome question that remains:Isn't all retailing heading to the Web anyway? Just last year,that was the buzz, but nowadays--with more dot.com's strugglingand few breaking through to profitability--a kind of sobriety hastaken hold, and experts are looking anew at the Web's potentialas a marketplace. Explains Jackie Goforth, an e-commerce specialistwith PricewaterhouseCoopers: "There are certain merchandisecategories that will be slow to succeed online. Women'sfashion, for instance. Shoppers will want to try the clothing on,to touch it. With other kinds of merchandise--commodities likeconsumer electronics--online retailing is the way to go."

As margins get squeezed tighter with hard-charging dot.comsfighting for market share by offering lower prices, it will becomeincreasingly tough to succeed in a brick-and-mortar-only context.Merchants in endangered categories shouldn't panic, however,says Goforth. "We heard that catalogs would put traditionalretailers out of business, and it didn't happen," he says.In fact, some catalog retailers eventually backed into openingbrick-and-mortar stores. Now we hear that the Web will put B-and-Msout of business, and that, too, probably won'thappen."

"A lot of businesses are on the Web, but a lot more arenot, and they're doing fine," adds Jonathan Palmer, abusiness professor at the University of Maryland in College Park."What's important is for the individual business to makethe decision that best serves its customers. Let customers shop theway they want to, and they will."

Decision Time

Want an easy rule of thumb to assess how your business mightfare online? Jonathan Palmer, a professor at the University ofMaryland in College Park, suggests three factors that shine a greenlight on this decision:

• You sell a product line that can be delivered economically andconveniently.

• You have a desire to market to customers outside your owngeographical location and a product that will appeal broadly.

• There are significant economic advantages to going online, suchas lower rent, labor, inventory and printing costs.

Chew especially hard on points one and two, because if they areon your side, the profits implied in the third point will likelyfollow.

A fourth factor might be whether you can economically drawcustomers to your site. Chasing a mass market--and goingbelly-to-belly against Amazon.com, drugstore.com, priceline.com andthe like--means you'd better bring a seven- or eight-figureadvertising and marketing budget to the table, because yourcompetitors will. But the good news is that there is still plentyof room for thinly funded players who have targeted shrewd nichesand developed solid business plans. The experts agree: Those arethe dot.com companies that will be thriving tomorrow.

Contact Sources

Leslie Lundquist, fax: (281) 990-0657, leslie@dwynn.com

PriceWaterhouseCoopers, 2050 N. Woodward Ave., #200,Bloomfield Hills, MI 48304, (313) 394 3939

PSSweb Inc, (972) 881-4700, mlayton@pssweb.com