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THE DAY AHEAD: A few real-world businesses have a Web clue

Larry Dignan
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Larry Dignan
3 min read

The problems with brick-and-mortar companies trying to work the Web are well documented. Barnes & Noble allowed Amazon.com (Nasdaq: AMZN) to grab market share. Toys R Us was blindsided by eToys Inc. (Nasdaq: ETYS) and is still fumbling.

But there is a growing number of retailers making noise as e-tailers and threatening those high-flying .coms. Hybrids could be the wave of the future if they can drop silly concerns about protecting existing business.



Hybrids: Finally getting it?




The rise of hybrids makes sense considering real-world retailers can leverage infrastructure and customer data assets on the Internet. Note Amazon is spending millions to build real-world distribution centers.

That infrastructure is why Wal-Mart (NYSE: WMT) could actually become the "Wal-Mart of the Web." Of course, we'll see what Wal-Mart can offer when it relaunches its site this fall.

Meanwhile, the horror stories are aplenty. Toys R Us lost a key partnership with Silicon Valley venture capital firm Benchmark Capital and two CEOs -- one in the real world and one for Toysrus.com. Toys R Us continues to say it will be a leading toy e-tailer, but we'll believe it when we see it.

In a recent research note, Lauren Cooks Levitan, an analyst for BancBoston Robertson Stephens, dropped some kudos to some existing retailers that have integrated the real world with e-commerce.

Here's a look at a few hybrids that get it.

  • Home Depot (NYSE: HD) -- recently relaunched its Web site to offer how-to's and other vital information to the home improvement crowd. According to Levitan, Home Depot said it will expand its online efforts to include new how-to projects, animation and design software features and increased product offerings. The company reported that 39 percent of online registrants reported that they were starting projects.

  • Staples Inc. (Nasdaq: SPLS) -- Staples sees itself as the one-stop small business shop and has put its money where the growth is with investments in Point.com, Register.com, HotOffice Technologies and DSL.net. Staples goal is clear -- sell all it can to small businesses whether it's Post-Its or intranets. Both Staples and Home Depot have online kiosks in stores.

    Other examples of hybrids that get the Web can be found in PC Data's July Web retail figures.

  • Officemax (NYSE: OMX) -- The company has struggled overall, but the Web site ranks right up there with Beyond.com (Nasdaq: BYND) and Drugstore.com (Nasdaq: DSCM). The Officemax site ranks ahead of Staples.com, according to PC Data. Officemax, however, may be a little too brick-and-mortar. It is building new stores at a rapid clip.

  • The Gap (NYSE: GPS) -- Best known for its Banana Republic, The Gap and Old Navy stores, this retailer is also pretty strong on the Web. Gap.com ranked 35 out of the top 40 e-tailers in July, four spots ahead of high-flying MP3.com. Gap will become an anchor tenant on America Online Inc. (NYSE: AOL). The three-year deal calls for Gap to sell products from its flagship chain, as well as its Banana Republic and Old Navy brands, through the AOL Shopping service.

    "Gap already was the 38th most visited shopping site during July, and we expect this ranking to improve as a result of this broadened online exposure," said Levitan.

    And these hybrids are just examples of what's to come. This holiday season will be telling for retailers such as Federated's Macy's, Wal-Mart and a host of others. The hybrid movement is most evident in the drug/pharmacy market. Real world stores such as Rite Aid and CVS are teaming up with .coms so there won't be any Amazon-like ambushes.

    For investors, the risks with hybrids are fairly clear -- you never know much about the online plans because it represents a small amount of revenue. We'll check in on other hybrids as the e-commerce talk heats up.