Dotcom Execs Consider Brick-And-Mortar Competition

By ELLIS BOOKER

Lake Buena Vista, Fla. -- Brick-and-mortar companies are finding both friends and enemies among dotcom companies. That was the split decision among four pure Internet company executives during the opening session panel of the GartnerGroup Symposium/ITxpo99 here today.

Tim Stojka, president and CEO of Plasticsnet.com, which has built a business-to-business trading hub for the $420 billion plastics industry, said existing distribution channels were still valid, if they provided additional services such as customer care, logistics and fulfillment. But he argued that distributors who act merely as brokers will be disintermediated by business-to-business trading hubs.

“Brick-and-mortar companies can look at our concept, or channel, and maybe put a kiosk in their store,” said Salim Teja, co-founder and vice president of strategic development at Accompany Inc., which aggregates buyers to negotiate discounts with suppliers. He said he had been pleasantly surprised by the receptiveness of brick-and-mortar companies toward the idea of partnering, and conceded his real competition will probably come not from these companies but from other dotcom sites, such as eBay or Amazon.com. But even these Internet players could be partners, added Teja.

Both Plasticsnet.com and Accompany have established system-integration teams, which do the work necessary to connect their services to supplier systems.

But not all the dot.com executives were as hospitable to brick-and-mortar players.

“What's going on in travel is massive disintermediation along the entire distribution channel,” said Brian Thompson, founder and president of Trip.com, which has targeted the business traveler. But brick-and-mortar companies evaluating this competition must not view the threat too narrowly, he said. Storefronts like Trip.com are competing with brick-and-mortar suppliers but are also working their way up to suppliers, such as carriers like United and American, “to help them distribute their inventory in innovative ways,” he said.

In the case of a financial service such as making loans, “the idea of the Internet is to replace three or four steps,” said Cameron King, senior vice president of technology integration at E-Loan. He believes these traditional players are his competitors, and he said one of the reasons he left a traditional loan company was its “inability to produce products that were unique and truly designed for the Internet.”

E-Loan, which is morphing its service beyond mortgage products to other types of consumer loads, claims to be handling 1,000 new loan applications per week, and will grow “exponentially” over the next five years, King said.

All four executives agreed on one thing: Brick-and-mortar companies should somehow spin out their e-commerce units, in order to maximize speed-to-market and innovation of these efforts.