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Readers react to articles in Inc. Technology 2000, #1, including Bob Duncan's "First Do No Harm," Rachael King's "Cheap Talk," Michael Warshaw's "The Thing that Would Not Die," and Gerard J. Holzmann's "Outside the Box."

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Ode to an Ode

Chapeaux off for your fine doggerel [" Ode to a Code," by Leigh Buchanan, Bulletin Board, Inc. Technology 1999, No. 4]. Your iambic was grand; your pentameter was precious! Good stuff; please keep it up. Have you considered coming up with a new national anthem for the United States? Perhaps an Ode of the Month in future issues?

Jerrold Asher
Agoura, Calif.

The editor replies:

The "Ode to a Code" by
our Leigh,
Was received quite favorably,
If we'd put more odes in,
Perhaps more readers we
could win,
But rhyming is not our
strong suit.

Sitting Pretty

I wholeheartedly agree with Bob Duncan's article [" First Do No Harm," Inc. Technology 2000, No. 1]. While the furniture industry is a laggard in the high-tech world, people must realize that retailers, designers, and decorators are an essential part of the furniture-buying process. Consumers must touch and feel the product before they buy. For an addition to one's home, an online picture doesn't do the product justice.

As an importer of fine home furnishings, we have run into many of the same issues American Leather has. Our solution is to rely on our retailers even more and to use our Web site to refer clients to them. In addition, we use wholesale online companies that sell to designers and retailers only. We never disclose our prices online, and we recommend our best customers to anyone who has any interest in our product. The furniture industry is a dinosaur of sorts, but some things are better the good old-fashioned way!

Esther Emergui Gillette
Executive Vice-President
S.E.E. Imports
Hayward, Calif.

I have great respect for people like Bob Duncan who have built substantial real businesses. For more than 20 years, I was involved with a business that was similar to his in many ways.

The company was a luggage manufacturer and wholesaler for 75 years -- a mature market, to be sure. We watched our largest competitor change its strategy from selling to retailers to supplying an even split of retailers and outlet stores. Gradually, it lost its retail base, which hurt it mortally. We bought it out for 50% of one year's gross sales (and most of that figure was based on the potential improvements we could make).

The acquired company's 110 outlet stores, which sold mainline merchandise, were more financially successful than wholesaling was. Eventually, our consolidated companies started producing specific product lines for the outlet channel that were substantially different from those of the retailing channels. That was not much of a success. Successful vertical integration requires a bigger commitment than either company was willing to make.

Duncan is starting down the path of vertical integration in the retailing direction. Retailing -- whether it's full price and high service, outlet-store price and medium service, or E-tailing and low service -- is as complicated a business as manufacturing and distribution are. Duncan's plan of paying retailers their lost margin for his Internet-site sales is a short-term Band-Aid that fails to recognize what retailing is all about. A retailer wants to sell every company's product he can. So companies need to be partners, not competitors, with their retailers.

Partnering requires imaginative support policies. Duncan is obviously already successful with that. Support your company's retailers and E-tailers with policies that enhance their businesses, and let them fight it out for the consumers. The strong will succeed, and your base customers will have increased sales to send your way.

Dennis P. Malone
President
Malone & Assoc. Consulting
Arvada, Colo.

I know what Bob Duncan is going through. I've been involved for 20 years in the world of manufacturers, manufacturers' representatives, and distributors in industrial automation. I also deal with territory rights, E-commerce, and factory-direct issues.

Duncan is on the right track with his next step, paying territory distributors a fee for factory-direct orders from his Web site. He's taking on the burden of the cost of shipping, selling, and collecting, so adopting a set commission fee is proper, as opposed to figuring out the distributors' margins. Essentially, the distributors are acting as a territory warehousing agent.