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PERSPECTIVE By Ellen Neuborne July 5, 1999


Time for Retailers to Face Their Web 'Terror'
Many traditional sellers have Web sites but wait timidly for customers to find them. A few brave souls are taming their fear of cannibalization

If there's one retailer comment I can't stand, it's this description by a traditional brick-and-mortar merchant of its own Web presence: "We want to let the customer find us anyway she wants."

I'm not even going to get into the fact that retailers still (still!) like to refer to the customer as "she." But let's deal with the rest of the sentence. Many retailers have the mistaken impression that the initiative for using an online shopping channel should originate with the consumer. The phrase I just mentioned gives them away. I've heard it from venerable retail companies, such as Sears Roebuck, Toys 'R' Us, and Home Depot. They want to be online in case I should happen to look for them there.

That half-heartedness is the primary reason the giants of the Internet world are still virtual, rather than earthbound, companies. Traditional retailers are not using their advantages -- such as stores crowded with shoppers and already-launched advertising programs -- to bring their customers online.

 

Starbucks hasn't used its considerable marketing muscle to kick my coffee habit into Web mode
 

Instead, they're doing something they would never ever do in a real-world store opening: They are waiting to let the customer find them. I recently discovered that a favorite retailer of mine, Starbucks, has a store on the Web. Starbucks is getting some investor flack this week for expanding into what seem to be unrelated Web activities. Wall Street might be more enthused if Starbucks had already demonstrated savvy in getting its coffee faithful to visit it online.

But the marketing of the existing Starbucks Web site has been done with positive stealth. I'm in my local Starbucks every day, and I had no clue they were conducting E-commerce. But believe me, I know that Starbucks stores this summer will be serving Tiazzi teas and Frappuccinos. That message has been on every telephone booth, bus shelter, and billboard I've passed this month. There's marketing muscle galore at Starbucks, but it hasn't been used to kick my coffee habit into Web mode. No wonder Wall Street is suspicious of its other Internet plans.

 A SALE LOST. And while traditional stores fail to toot their own online horns, E-tailers are adopting real-world tactics at light-speed. CVS and Rite Aid, both drugstores in my neighborhood, have online pharmacies. But the TV ad I saw last night was for drugstore.com. FAO Schwarz stocks Nickelodeon toys -- my 4-year-old's license of choice -- in its online store. But I didn't know FAO was online until I did a specific search for the store. And in the meantime, I bought his birthday gift at a different toy store because it's hot in New York, and I didn't feel like schlepping to the midtown store. Sale lost, thanks to timid marketing of a perfectly good online store.

 

Who's making the effort? Kmart has kiosks to spur online ordering, and J. Crew handed out hats with its URL on the bill
 

There's a reason that retailers are so hesitant to push their online channels. They're worried about cannibalizing their existing store traffic. And it's no small concern. To the consumer, a dollar spent at a Web store is the same as a dollar spent at the traditional store. But the retail community isn't ready to see it that way. Many retailers -- and their employees -- see even their own Web sites as new competition. "Retailer CEOs have to cope with the fact that their downtown store may take a hit when the online store opens," says Seema Williams, consumer E-commerce analyst at Forrester Research Inc. "Retailers imagine insurrection on their store floors by their regular managers, who still have to meet sales goals even faced with this new competition." Many companies, even as they forge ahead online, are clearly treading lightly to avoid this problem. Home Depot's relaunch of its Web site is designed to "drive traffic into our stores," execs say.

A few brave ones are facing down the cannibalization threat and pushing online hard. Kmart has kiosks in its stores to encourage online ordering. J. Crew has handed out hats in its stores with JCrew.com embossed on the bill. Linens-N-Things is using direct mail to encourage visits to its online site. Lands' End put a computer mouse on the cover of its spring catalog to stoke online sales. "These are the retailers facing their terror," says Williams.

As for the rest, if you're going to go online, better start flexing that marketing muscle a bit. It's your primary weapon in the E-commerce war. Use it or watch your Web competition use it against you.

Neuborne covers marketing and retail for Business Week
Have a question or a comment? Let her know at ellen_neuborne@ebiz.businessweek.com.


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Ellen Neuborne is Business Week's Marketing editor


WEB POINTERS
The sites mentioned in this column:
Kmart
JCrew
Linens-N-Things
Lands' End
Starbucks
FAO Schwarz
Sears
Toys 'R' Us
Home Depot


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