A Bright Future: After the Train Wreck

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In addition to providing lock-ins, Amit says, companies can offer customers products that complement the one they just bought. For example, European-travel company E-Bookers offers its customers convenient access to information about such things as weather and currency rates in the countries they plan to visit. Likewise, Road Runner Sports' site ( www.roadrunnersports.com) specializes in selling running shoes but also offers running clothes, timers, sports drinks, fitness calculators, heart monitors, and even framed art oriented toward the runner. The company's Run America Club creates its own lock-in by offering customers a 5% discount on regular catalog prices, a free magazine, and E-mail notifications of specials.

A growing type of complementary marketing can also be found in the so-called "bricks and clicks" sector -- established brick-and-mortar retailers that have launched E-tailing sites (Kmart and Bluelight.com, for example) and pure-play E-tailers who link up with complementary off-line retailers. Levitan cites Drugstore.com's relationship with Rite-Aid as a prime example of a complementary brick-and-click relationship. Drugstore.com shoppers can order prescription drugs online for same-day pickup at a Rite Aid drugstore and get the pharmacy-benefit coverage provided by the insurance companies with which Rite Aid has relationships.

Levitan also stresses the importance of offering Web visitors what he calls an "aha!" moment. For instance, Drugstore.com could provide "something your physical pharmacist would not or could not do," he says. That might include creating a list of all the products the customer has bought before, which makes it easy to reorder the same items. "The site already has an online prescription-recall alert that can send you an E-mail regarding FDA actions," Levitan notes.

Successful sites must seek to do more than just emulate brick-and-mortar retail models. They must use technology not for its own sake, but to solve a compelling need and provide a valued service that can't be replicated in the physical world.

The future of E-tailing, then, looks a great deal like retailing, only enhanced by new technology. In reality there is no old economy versus new economy. Profits matter; customers reign; solid business practices still trump flaky fantasies that sell $5 bills for $4 and try to make up the difference in volume.

But the Internet has made E-tailing a globally competitive environment in which, more than ever, the entrepreneur has to do everything right. Bad site design and slow downloading equal no customers. The SitStays of the world will need that affiliate program; Shoebuy might want to think about selling socks or shoe trees; DVD Empire might want to bundle some discount videotapes, since VCRs are still grinding away out there. All three of them might want to see what sorts of deals they could work out with brick-and-mortar merchants. And the lessons they learn will be repeated a million times over as companies move faster than ever in the race to remain among the quick and not the dead.

Lewis Perdue is the author of 18 books and has founded or helped launch four technology companies.

With no fanfare and little venture money, the companies profiled here are delivering real stuff to paying customers and making a buck in the process. There may not be any "new rules," but there are rules, and we suspect every one of them will look familiar.

DVD Empire: The Bootstrapper
SitStay.com: The Mom-and-Pop
Shoebuy.com: The Scorekeepers
Accuship.com: The Traditionalist
Fashionmall.com: The Conservative
Healthcommunities.com: The Underwriter

Commentary
E-tailing
Intermediaries
The Markets

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