BUSINESSWEEK ONLINE : MARCH 22, 1999 ISSUE
BUSINESS WEEK E.BIZ

No Web Site Is an Island
Marketing and bricks-and-mortar outlets can create synergy with cyberspace

Even though he's CEO of a wedding-planning Web site called the Knot, David Liu isn't pledging any till-death-do-us-part fidelity to the Internet. Rather, he's finding out that a fling on terra firma can bring him added exposure--and more cybershoppers. On Jan. 6, Liu and co-founder Carley Roney published The Knot's Complete Guide to Weddings in the real world, the first of what are expected to be three paperback books based on advice and discussions culled from the site. With its books perched on store shelves, the Knot's Web traffic surged to 900,000 visitors in January, up from 400,000 a month earlier. Even for a Net company, ''the best way to [build a brand] is through the power of the printed word and TV,'' says Liu.

He's not the only one who thinks so. As electronic commerce evolves, it's becoming clear that earthly and cyberspace companies can benefit by operating on both sides of the digital divide. Slapping together a Web site to sell stuff isn't enough. Companies need to leverage both virtual and real-world businesses off one another to get the full wallop of the Web.

INTERACTIVE KIOSKS. Already, some companies are blurring the boundaries of the two worlds. In certain Levi Strauss & Co. stores, you can plug your measurements into a Web kiosk and have custom-made jeans delivered to your home in about two weeks. On Walt Disney Co.'s (DIS) cable-TV Disney Channel, buglike creatures called Zoogs encourage kids to log onto Disney's Web site to send fan mail to their favorite stars. And even if you never fire up a Web browser, you'll see more of the Knot: It plans to produce a 13-part Public Broadcasting System series and launch a wedding magazine in June.

There are certain to be miscues. When America Online Inc. (AOL) and ABC produced a Christmas special based on AOL's online character Ozzie the Elf in 1997, it yielded disappointing ratings. All the same, Net companies know they need to reach into the real world--even if it's something as simple as Amazon.com advertising on TV or on Wells Fargo Co.'s (WFC) automated teller machines. ''To get inside the brains of the three-quarters of the population that's not online, you'd better build your brand in traditional channels,'' says analyst Melissa Bane of Yankee Group Research Inc.

This is where physical stores--once scoffed at as ball-and-chain relics by some ''pure'' Net companies--are proving invaluable. Gap Inc. (GPS) has installed interactive kiosks, called Web Lounges, in some of its stores so that customers can get gift ideas or match up outfits without going into a dressing room. Discount broker Charles Schwab & Co. (SCH) is installing about 500 PCs in 300 branches so investors can try its online-trading site. ''The branches are a comfortable place for investors to get started on the Web,'' says Daniel Leemon, the company's chief strategy officer.

Outdoor equipment retailer REI is one of the trailblazers in bringing the Web to the real world. Last June, the company outfitted stores with kiosks so that customers could get product information and place orders online. Now, REI is upgrading all its cash registers so that cashiers can order merchandise from its Web site when they don't have it in stock at the store. Result: REI's online traffic is up about 10% since June, and the site is expected to be more profitable than any of its 55 shops by yearend.

Web companies are finding innovative ways to market in the real world, too. BabyCenter.com, a Web site that sells products to new parents, has cut a deal so that 320 SmithKline Beecham salespeople will distribute educational pamphlets with BabyCenter's Web address to 17,000 obstetricians' offices. ''Only a small portion of expectant parents use Web sites,'' says Mark Selcow, BabyCenter's president.

As E-business takes off, cyberspace and the real world are becoming tightly intertwined. For most companies, it pays to plant a flag in both.

BY CATHERINE YANG

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