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Sure, manufacturers of any size can sell anything online, even without the help of retail partners. But most still value retail as a distribution outlet. Take Cranium, for example. Founded in 1997 by Richard Tait and Whit Alexander, this brain-teasing game company sells direct through its site (www.playcranium.com) and others, as well as through specialty brick-and-mortar partners. Because he's sold online and off since his company's inception, Tait says, the retail channels have not complained that his site is a competitor. Tait also argues that traditional retail stores have a distinct advantage. "Customers can't get a play experience or a trial experience online," Tait says.

His online retail partners, on the other hand, give Cranium a distribution ubiquity that the company wouldn't otherwise enjoy. Even the deep discounting favored by dot-coms like Cranium's partner Amazon.com hasn't hurt Cranium's relationship with other retailers. Tait asserts that since Cranium is the #1 game on Amazon.com, for instance, the behemoth bookseller hasn't felt a need to lower its price.

Shoemaker Dansko, an Inc. 500 winner with 1999 revenues of $26 million, grew up offline and has taken a different approach. Since Dansko doesn't sell through its own stores, "I owe all my success to the retailers. They're on the front lines," says cofounder Mandy Cabot. She believes that selling the company's European shoes direct online would be a slap in the face to those retailers. "They're the ones who talk to consumers," Cabot says. "They're the ones who fit the consumers. I would be shooting myself in the foot if I competed head-to-head with them."

So instead of selling direct, Cabot links www.dansko.com to the sites of retailers who do sell her shoes online. She also sells factory seconds at a 30% discount on Dansko's site but says, "I want to bury and downplay that," anticipating concern from her retailers. "I want to be active, not reactive. I want to anticipate their concern. I'm not going to wait for them to bitch about it."

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