long ago, the ability to manage a store, attract customers, control
inventory and pricing — whether online or offline — was a big job. Now, it’s only part of the job.

"Today, to compete anywhere, you have to be everywhere," says Jeffrey Grau, eMarketer Senior Analyst and author of the new Multi-Channel Shopping: The Rise of the Retail Chains
report. "Wal-Mart and Target have joined Amazon and eBay as the most
heavily trafficked e-commerce Web sites, and chain retailers account
for about 40% of online sales, compared to just over 25% for pure-play
Internet retailers."

During the past holiday season, seven of the ten-most visited
retail Web sites belonged to dominant brick-and-mortar retailers, and
the key to commercial success is becoming increasingly dependent on how
well retailers manage their multiple sales channels.

"One reason traditional retailers are going online in droves is
the shift in consumer spending from stores to the Internet," says Mr.
Grau. "In 2000, Internet sales represented 0.9% of total retail sales,
according to the US Department of Commerce. eMarketer predicts that
that rate will rise to 3.4% by 2008."

"Most of the thousands of Internet startups that were launched
in the 1990s did not survive the dot-com crash. However, these
trailblazers, high on vision but short on business fundamentals, helped
pave the way for the emergence of traditional retailers’ Web sites,"
says Mr. Grau.

Retail chains and other offline sellers became serious about
the Internet when they realized that if they did not follow their
customers online they risked forfeiting them to more fleet-footed
competitors. Now they threaten to overwhelm the pure-play e-tailers.

"Sophisticated shoppers, many of whom are also the biggest
spenders, expect their favorite retailers to offer a satisfying
cross-channel shopping experience," says Mr. Grau, "whether it is to
browse print catalogs before buying from e-catalogs, order goods online
followed by in-store pickup or research online prior to making store

Cross-channel behavior that drive traffic from a retailer’s Web
site to its store can potentially lead to up-sell and cross-sell
opportunities. Research from the e-tailing group found that 40% of customers who pick-up online purchases at a store make an additional purchase.

More here.