Magazine Article | September 1, 2001

Stop It, You're Both Wrong

Source: Field Technologies Magazine

In the past couple of years, traditional retailers and pure-plays have both seen their business models called into question. To rise above the competition, retailers now have to find ways to make both methods work together.

Integrated Solutions, September 2001

There really wasn't a specific instant that seemingly everyone in the business world became completely enamored with dot-coms to the exclusion of all other companies. No line of demarcation exists. Instead, the whole scenario just seemed to gain momentum until it eventually reached a point that almost everyone agreed that pure-play businesses understood the new economy and traditional brick-and-mortar companies just didn't get it. All of a sudden, multi-billion dollar businesses with exceptional brand names had their long-term viability questioned. The inquisitor wasn't some one-man think tank out in left field. This kind of talk was commonplace.

Now, it's déjà vu all over again. No one really can recall the exact moment when the business population thought that all pure-play businesses were doomed to fail. Once again, the snowball effect kicks in. Pundits who predicted success for every dot-com two years ago are now suffering a serious case of amnesia as they outline why most dot-com business plans were destined for the shredder.

Pure-Play Or Brick-And-Mortar?
As with most things in life, the answer is rarely black or white - the truth almost always comes in ugly shades of gray. And, the last few years and the following few years will only go to prove this axiom once again. In fact, the answer is not pure-play or brick-and-mortar. It's somewhere in the middle.

Just because Webvan blew through more than a billion dollars of funding and still went belly-up, doesn't mean that the online grocery shopping and delivery model should be buried along with the company. Look at Peapod, Inc., for example, as an online grocery store that is making it work. Of course, Peapod is not going it alone. No, the once pure-play grocer now has a majority owner in Royal Ahold that is in the brick-and-mortar business (Royal Ahold owns both Stop & Shop and Giant Food).

The Borders Group is a perfect example of a brick-and-mortar company that failed to make a successful run at its online venture as a bookstore. Now, the traditional retailer has scrapped its original goals of beating pure-play stalwart Instead, the brick-and-mortar Borders is now partnering with I don't think that was in the original business plan.

Success Equals Partnering
So, who's right? Is it pure-play or brick-and-mortar? The answer is obvious - they're both wrong. For companies to survive going forward, they must be expert in both traditional and Web-based methods of doing business. While brick-and-mortars can develop an online business and vice-versa, that will likely be too expensive and uncertain for most companies.

Both the long-term and short-term move in this game of business chess is to partner. Make your enemy your ally. It may be a little uncomfortable partnering with a company that tried to drive your company into the ground. But, it's time to bury the hatchet.

The pure-plays looked down their collective noses at the traditional players. The dot-com gurus came down from the mountains to tell us how business needs to be conducted in the new economy. Their smugness was probably matched only by that of brick-and-mortar companies as they watched their Web-based brethren fail and fall.

Now, it's over. Both types of companies have had their laugh. But, to get the last laugh, however, pure-plays and brick-and-mortars will have to join forces.

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