Clicks and mortar

Retailers wrestle with Internet selling

Amazon.com; bn.com; toysrus.com; landsend.com; target.com; walmart.com; even Albertsons.com –just click online to the Internet, whip out your credit card and shop till you drop.

As we enter a new millennium, Americans have discovered a new way to shop — via the Internet. And companies from the largest national chains to the smallest mom-and-pop shops are rushing to jump online or risk being left behind.

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“I believe the entire retail landscape is changing, that a great deal of channel shift is under way,´ said Philip A. Wiland, president and CEO of Concepts Direct Inc., a Longmont catalog firm that recently launched its first e-commerce venture.

“Certainly the majority of all retail has always been in brick-and-mortar stores and probably will be for the foreseeable future, but I think the way the pie gets divided between the retail stores and catalog stores and e-commerce is going to shift dramatically over the coming years.”

A hundred years ago, Americans were shopping from mail-order catalogs, and they still are. But as the century turns again, e-commerce is the hot rage.

When Amazon.com started selling books over the Internet in 1995, skeptics abounded. But Amazon’s amazing success has all but silenced the critics and started a modern-day gold rush to cash in on the largely affluent audience found online.

With 12 million customers from 160 countries, the Seattle-based Amazon claims title as the nation’s leading online retailer, but in the past two years it has attracted a host of company online, from rival bookseller Barnes & Noble to retail giants such as Wal-Mart. Virtually every national chain has developed a Web presence on the Net.

StarTek Inc., founded in Greeley but now based in Denver, recently launched gifts.com, an online shopping service in partnership with Reader’s Digest.

You can even buy groceries online from Albertson’s in Seattle, a service that is likely to soon spread to Colorado and even north into Wyoming.

Observers nationally and locally see continued explosive growth in Internet e-commerce. And while few predict the demise of traditional brick-and-mortar retail stores, many see the rise of e-commerce as forever changing the ways all businesses do business.

E-commerce portends both threat and opportunity for many smaller retailers, particularly in sparsely populated areas of Colorado and rural Wyoming.

“There’s no question that the growth of Internet access and shopping is increasing in exponential fashion nationwide and worldwide,´ said Bill Schilling, president of the Wyoming Business Alliance. “And increasingly there will be threats for smaller businesses, especially in rural states like Wyoming, because of Internet shopping.”

Lynn Birleffi, executive director of the Wyoming Retail Merchants Association, knows of one small book retailer whose sales are down 20 percent this year because of computer competition from the likes of Amazon and Barnes & Noble.

“It’s quite a challenge for some retailers,” Birleffi noted. “What the Wyoming Retail Merchants Association is trying to do is at least help members use the Internet to their advantage themselves, because it’s not going to go away.”

Phil Noble, a consultant to the retailers, agrees that small retailers need to learn to use the Internet just as Colorado and Wyoming consumers are learning.

“It is so easy to shop online,” he says. “Consumers want ease and choice and price, and you’ve got all of those on the Internet.”

The Wyoming retailers focused on Internet retailing at their state convention, and the association has devoted portions of recent newsletters to the pros and cons of Internet retailing, including a guest column by Dayton-Hudson vice president Jerry Storch, who concluded that Internet retailing is “just not a good retail channel.”

In 1997, only 2 percent of Wyoming’s retail sales were electronic or mail, according to U.S. Census figures, but that number is climbing.

Dave Lerner, president of Wyoming Network, a series of Wyoming community Web sites, believes even small Wyoming and Colorado retailers will be missing the boat if they fail to go online.

“I think it’s going to be essential for retail businesses to offer their products online,” he said. “Those that don’t offer their products online will be missing a huge opportunity to reach new customers.

Competing against giant national chains on the Internet isn’t any easier than it is going head-to-head across Main Street, but Lerner and Noble believe it is possible.

“A small business that goes online needs to do some work in terms of advertising and marketing and promotion of their site to make it as successful as possible, but it’s not out of reach for anybody,” Lerner advised.

“Can they compete with the big guys? There’s always going to be big guys. If they have the right niche and right marketing approach and put together the right advertising campaign, absolutely,” Lerner said.

“The Internet is a great leveler, because all you need to have is the right product at the right price. It’s very easy to do comparative shopping, and if you have the right product at the right price, you’ll make sales.”

“For the mom-and-pop retailer, they can compete by offering more unique and special items — which is what they’ve had to do in the last few years anyway — and by offering, more than anything else, superb service,” Noble said.

The move into Internet retailing often is particularly easy for catalog companies, because they already have the shipping and handling infrastructure.

Wiland’s Concepts Direct, for example, has 11 million customers for its five catalogs, but its Internet sales (ConceptsDirectInc.com) are growing at an astounding rate.

“We launched our first shopping site in June with sales of $1,000, and we’ve doubled or more than doubled every month, to $47,000 in October,” Wiland said. “Still a small number but an incredible curve.”

Sierra Trading Post, a Cheyenne-based clothing catalog company, opened its Web site (SierraTradingPost.com) in March and within three months exceeded sales at the Cheyenne outlet store, according to Gary Imig, Sierra Trading Post’s chief financial officer and current WMRA chair.

One area particularly beneficial to businesses is using the Internet for business-to-business sales.

“Business-to-business is just as important as business-to-customer, and that may be where there may be some opportunities in Wyoming,” Birleffi observed.

And all agree that the Internet is not going to replace retail stores completely, at least in our lifetime, if for no other reason than people like to get out and go shopping.

“There will always be a need for a store where people actually go, because the big advantage a retail store has over an Internet store is personal customer service,” Lerner said. “The comparison that the Internet will kill retail stores is like the comparison that television would kill the movies.”