December 31, 2007, 12:00 AM

E-retail expansion and contraction sets the stage for 2008

E-commerce is a growing opportunity—but as a recent round of e-retail closings, new launches and expansion shows, some merchants are better able to leverage that opportunity than others. As Tweeter and CompUSA close operations, others including shoe retailer DSW, Buy.com and Overstock.com are expanding.

E-commerce is a growing opportunity-but as a recent round of e-retail closings, new launches and expansion shows, some merchants are better able to leverage that opportunity than others.

After closing some of its retail stores -- 102 remain in operation -- electronics retailer Tweeter has closed its online store as well. Tweeter had filed for Chapter 11 bankruptcy in June. It isn’t the only electronics retailer in trouble-multi-channel retailer CompUSA has announced it also will close its 104 retail stores, though it said it may sell some of its higher-performing locations. For now, its web site, CompUSA.com, will continue to be operated by new owner Gordon Brothers Group LLC, a Boston investment banking firm that specializes in liquidating retail companies, while Gordon Brothers seeks a buyer.

The power of category leaders such as Best Buy Co. Inc. has made it difficult for smaller players to compete, say analysts, and those leaders’ web presence is part of the reason why. “Best Buy’s multi-channel footprint and size along with its customer-centric approach has made it difficult to compete in the specialty electronics category,” says Maris Daugherty, senior consultant at J.C. Williams Group. “It has raised the bar in terms of selection, service and convenience at competitive prices.”

While Tweeter and CompUSA are contracting with e-commerce operations either suspended or in question for the future, other retailers are seeing e-commerce as fertile field. Peter Horvath, CEO of specialty shoe retailer DSW Inc., says the company plans to launch its first online store early this year. It’s already spent about $8 million on e-commerce infrastructure, according to quarterly earnings reports, and expects to spend more. “We understand that multi-channel customers represent significant growth potential for DSW,” Horvath says.

Some e-commerce veterans are finding the time is right to expand already-established online ventures. Buy.com is launching a dedicated retail site for jewelry and watches, starting with an inventory of more than 30,000 products. “We are expanding into categories to benefit consumers by offering a wider selection and the best deals,” says CEO Neel Grover.

Overstock.com has expansion plans as well, of the geographic variety. “We’re anxious to get a foot across the water,” says chairman and CEO Patrick Byrne of announced plans to expand into England, France and Germany as well as Canada, by the summer of 2008. “It’s probably a couple of years overdue.” m

mary@verticalwebmedia.com

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