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Net firms move from "clicks to bricks"
By Greg Sandoval
Staff Writer, CNET News.com
October 26, 1999, 4:00 a.m. PT

Maybe selling products out of real stores isn't such a bad idea after all. Just ask a small but growing number of dot-com companies.

For several years, traditional brick-and-mortar retailers have rushed to get onto the Internet, inspiring the term "bricks to clicks." But now Internet retailers are turning the tables and beginning to open physical stores, a trend called "clicks to bricks."

Net firms such as online brokerage house WebStreet.com and allergy company Gazoontite.com have opened physical stores in the past few months and plan to expand further in the coming months.

PC maker Gateway is perhaps the most obvious example. The so-called direct sales company, which previously sold direct to consumers via the phone or Internet, has opened nearly 200 stores across the country.

Such firms are betting that physical stores will help capture shoppers who are not yet online--and give customers a convenient way to return goods and try out products, a benefit that analysts say is sorely missing from Net stores. This thinking follows industry analyst predictions that successful retailers in the future will operate online and offline.

"The retail business of the future has a brick-and-mortar and Internet side," Jupiter Communications analyst Ken Cassar said, adding that soon there will be much more crossover than there is today.

One of the primary reasons for companies making the shift is to attract more customers by putting the products out in front of them. "People often need to see the products they buy," Cassar said. "Some people like getting advice from store clerks or [exchanging] merchandise."

Gazoontite.com, a seller of allergy and asthma treatments, opened a 1,500-foot store located in an upscale neighborhood of San Francisco in May and plans to open another store in Los Angeles by November. Customers who suffer from various respiratory ailments can visit the stores and tryout air purifiers, inhalers, and aroma therapy.

A computer kiosk located inside the store helps customers look up the latest treatments and order products from the Web site. "We want to completely integrate our offline presence with our Web site," Gazoontite.com chief executive Soon Yu said.

Gazoontite executives originally drafted a business plan to sell products solely on the Web but changed their minds soon after, Yu said. They realized that although millions of people in the United States suffer from respiratory ailments, few were aware of the level of treatment available.

"These are products that some consumers need to experience before they feel comfortable buying," Yu said. "We wanted an environment kind of like the Nike store, where people come and touch and learn."

Educating customers is also one of the main reasons WebStreet began selling stock out of a small storefront in Beverly Hills, California, last July. The company intends to open similar offices in Chicago, New York, and San Francisco sometime next year, said WebStreet vice president Harleigh Mandell.

The company conceived the idea after executives noticed there were many people who want to trade online but don't know how to get started.

"We don't want people standing around our offices trading stock," Mandel said. "We want to conduct seminars in them, have people come in and learn, and then start trading on our site."

Even PC maker Gateway invested in physical stores to complement its Internet ordering system. In 1996, the company launched Gateway Country, a network of physical stores around the United States where customers can "test drive" Gateway computers.

The stores differ from traditional retail outlets in that they do not hold inventory. Rather, customers can test the hardware, learn how to use software, and order customized Gateway systems via the Net--all from within the physical store.

"The stores serve as outposts for the brand in particular communities," said Greg Lund, Gateway Country spokesman. Today there are 191 stores.

As the lines between online and offline businesses blur, brick-and-mortar companies will continue to play a big part, Jupiter's Cassar said.

"Eventually, Wal-Mart will have a [full-service] Web site and Amazon will have some offline stores," he said.

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