December 28, 2001, 12:00 AM

COVER: Best of the Web

Internet Retailer’s Top 25 retailing web sites, with 15 sites to watch.

A year ago the trend was developing; today it’s in full flower: Traditional retailers are taking over the web. Even the online merchants who envisioned lives as pure-play e-retailers are taking on the multi-channel mantel: Amazon has signed chains Toys R Us, Borders and Circuit City to marketing and merchandising agreements; Drugstore.com has a deal with the Rite-Aid pharmacy chain.

And if the online sellers are not traditional retailers, they’re at least becoming multi-channel. UncommonGoods.com, for instance, mailed its first catalog in December. The only real pure-plays to make Internet Retailer’s Top 25 Web Sites this year are Bluefly.com, which survives because it remains tightly focused on its audience and its merchandise; eBay, which is transforming itself and the retail industry by creating innovative accommodations for retail chains and manufacturers; Overstock.com, which has carved out a unique online operation that would be difficult to replicate in the real world; and Wine.com by eVineyard, which represents the last of the general online wine merchants. By contrast, last year’s Top 25 included 14 pure-plays.

Internet Retailer’s Top 25 Best of the Web recognizes retailers who have adopted strategies that demonstrate why the web will succeed as a retail distribution channel. Success today means applying the tried and true, sound principles of retailing to the web, while taking advantage of the unique powers that the web offers.

Circuit City Stores Inc., for one, is a good example of the blending of the channels. Customers at CircuitCity.com can order online and pick up their orders within about 15 minutes at the store and return to the store as well. In the store, clerks can order out-of-stock items from the web site via POS terminals and have them delivered to the customer’s home or office. Meanwhile, Circuit City management professes to be taking a conservative approach to its web strategy. “Core to our strategy is that we are not looking to excel beyond the pack in any one area,” says Dennis Bowman, senior vice president and CIO of Circuit City. “We believe our strategy is appropriate for anyone who wants to make money on the web.”

While Circuit City is using the web to serve customers and save sales, Hallmark Cards Inc.’s Hallmark.com is attracting new customers. The web site hosts twice the proportion of men shoppers as the stores, says John Sullivan, senior vice president of Internet commerce for Hallmark. “We are reaching additional customers through the web,” he says.

That is not to say that Hallmark is only focusing on new customers. Its entire web strategy has been to link the stores and the web site and that is a strategy that most of the other Top 25 are adopting as well. Sears, for instance, rolled out its buy-on-the-web-pick-up-in-the-store policy in time for the holidays. American Eagle and Williams-Sonoma, too, epitomize the multi-channel approach with their well coordinated merchandising and marketing approaches across channels.

As in the past, criteria for inclusion in Internet Retailer’s Top 25 Web Sites are that the retail operation demonstrate how it has used the web successfully to achieve a strategic goal and that it showcase best practices. These sites are not just the biggest or the best known. They include smaller multi-channel retailers such as Jos. A. Bank Clothiers Inc., which has proven that consumers will buy custom-tailored suits on the web, and RitzCamera.com, which replicates on the web the experience of shopping in a well-stocked photography store. And they include such lesser known sites as VacuumBags.com, which serves its extreme niche well, and Replacements.com, which has adapted the web to its unique needs without spending a lot of money.

But while the Top 25 list changes from year to year reflecting online strategies that come and go, one thing remains the same: Consumers like to shop on the web. Best estimates as this issue was going to press in mid December were that online b2c spending in 2001 would top $50 billion-more than double 2000’s figure-with prospects of another 70% growth this year. Many retailers are finding that the online market is worth going after-and thus it behooves them to learn best practices from each other.

Profiles by Kurt Peters, Andrea McKenna Findlay, Mary Wagner

(on the following profiles traffic estimates denoted by * are from comScore Networks Inc.)

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