December 28, 2001, 12:00 AM

Lessons from the Top 25

Internet Retailer`s Top 25 list provides a clear picture of the state of the Internet retailing industry. Even a cursory glance at this year’s profiles of the leading on-line merchants leads to one inescapable conclusion.

This issue marks our third annual ranking of America’s top 25 e-retailers, and for the third year running the Internet Retailer Top 25 list provides a clear picture of the state of the Internet retailing industry. Even a cursory glance at this year’s profiles of the leading on-line merchants leads to one inescapable conclusion: the state of Internet retailing is good, very good, and the business is moving in the right direction.

The fulfillment debacle of 1999 and the dot-com crash of 2000 have faded into history, and this year’s Top 25 ranking reveals a much healthier, more viable Internet retailing industry-one that contains many important lessons:

Internet retailing is a lot more about retailing than the Internet. Only four of this year’s Top 25 are pure-plays, compared to 14 last year, a sure sign that the web offspring of established catalogers and retailers now dominate e-retailing, primarily because they have demonstrated on-line the very merchandising and customer service skills that made their parents leading merchants off-line.

Multi-channel retailing has come of age because of the Internet. Big chains like Sears and Circuit City are showing all retailers that the Internet can improve the market position of their stores IF the web is properly integrated with the catalog and the store.

Web retailing does not need to be inconsistent with style. Just look at what Jos. A. Bank and Polo are doing.

The web creates new efficiencies and opportunities for all merchants that did not exist before. Overstock.com and eBay.com, for example, are showing merchants how to use the web to unload unsold merchandise. LandsEnd is providing useful lessons on how to enhance on-line shopping with personalization and customization services that can be automated on the Internet. OfficeDepot.com is using the global reach of the net to move into international markets that have been so treacherous for American retailers prior to the Internet. And vacuumbags.com is proving that the Internet opens up large markets for even tiny players who figure out how to use the web to solve everyday consumer headaches, such as how to find the right-sized vacuum bags without driving to five different stores.

Success on the web often means partnering. When you read the profiles of successful on-line merchants in this issue, count how many are making the Internet work for them by making it work for their growing list of merchandising partners.

Then there is Amazing Amazon. It started out by retailing books on the web but some time ago settled into writing the book on web retailing. Amazon is our Best-of-the-Web pick for the third year in a row.

We select the Top 25 web merchants each year to show how this industry is progressing by highlighting e-retailers who are doing it right. It’s not a ranking based on Internet sales volume, because it’s not how much you sell that counts, but how well you sell it. When you read about this year’s Top 25, it becomes brilliantly clear that a good number of e-retailers have learned to do it well indeed.

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