Blending E-Commerce and Street Smarts

Change is in the air, and that is good news for e-commerce. Internet-based selling is about to start Act II.

You remember Act I -- the era when e-tailers were going to change the world? After the curtain came down on Act I, assorted naysayers hobnobbed smugly about the foolhardiness of trying to force consumers to adopt e-shopping.

Fortunately for all involved, the intermission is over, and the curtain gone up once again. From the opening scene, it appears the theme has become integration.

Spreading the News

E-business integration comes in several forms. First, and perhaps most importantly, is the much talked about integration of bricks and clicks, a trend that appeals deeply to the buying public and dot-com executives alike.

Anyone who doubts the relevance of this trend should have been standing in midtown Manhattan last week when E*Trade, the online brokerage, unveiled its swanky new US$12 million, 35,000-square-foot E*Trade Center. The brick-and-mortar version of the former nothing-but-Net brokerage sacrificed little of the company's edgy, forward-thinking online model.

Pedestrians will likely be persuaded to stop in just to see the 100 flat-screen televisions, the fully equipped broadcasting studio and 200 high-end computers.

Numbers vs. Vibes

It's the latest in a line of brilliant moves on the part of E*Trade chief executive officer Christos M. Cotsakos, who evidently realizes the absolute necessity of integrating business models to extend a feeling of inclusiveness to all current and potential traders.

Not all online businesses can afford to debut futuristic buildings on corners like 55th and Madison in New York, especially when the numbers aren't looking so great.

But Cotsakos was never one to be governed by the numbers. Perhaps opening his architecturally stunning location, in a neighborhood already populated by some of the financial world's leaders like Schwab and Citibank, will add fuel to his operation.

Into Print

Other e-commerce players are opting for more modest forms of integration.

Wisely recognizing that many consumers still like the feel of a magazine in their hands. Borders.com partnered with MegaMags to offer thousands of magazines in single copies, back issues and subscriptions on its Web site.

Not to be outdone, Barnesandnoble.com partnered with Enews.com to do almost the same thing. In the interest of massive integration of its online and offline offerings, the company will also offer magazine subscriptions through hundreds of college bookstores.

Amazon.com then went even farther with the whole integration thing, taking over the business of running the Borders.com Web site and essentially forming a brick-and-click alliance with Borders.

Best of the Best

Meanwhile, Style.com, which bills itself as the online home of "Vogue" and "W" magazines, has wisely developed the Style.com online store in conjunction with multichannel retailer Neiman Marcus.

The upscale integration of an already trendy online fashion e-tailer with the pinnacle of offline luxury retailers is an example of integration at its finest.

Catalog Connections

At the more mass-audience end of the integration spectrum is news that business supply retailer Staples plans to merge its catalog operation with its online division.

That move includes withdrawal of a previously announced initial public offering of Staples.com stock. If shareholders give the go-ahead, the company will convert Staples.com stock into Staples, Inc. common stock.

Flash Dance?

What does all of the integration mean? Is it simply a ruse to manipulate consumers into believing that everything is going so well on the Internet that companies have decided to expand operations?

Or is it a wise move by e-business execs who understand that e-commerce and traditional business do not pose an "either/or" proposition.

Likely, it is a bit of both. However, E*Trade's integration step is far too deep and costly to be a smokescreen. Indeed the new Manhattan building is something of a massive billboard for the online brokerage. It is also a substantive attempt to merge e-commerce and street commerce.

Shampoo and Stocks

In the months to come, E*Trade will unveil kiosks in Target stores across the country, hoping to capture the attention -- and pocketbooks -- of middle Americans in the places where they shop for paper towels and shampoo.

At a time when online trading volumes are reportedly down as much as 30 percent from their heyday, the E*Trade-Target alliance is an example of integration as a survival tool.

Does integration of offline and online business models signal the ultimate survival of e-commerce? Keep an eye on it.

What do you think? Let's talk about it.