The Great Online/Offline Divide

Written by Evan Schuman
January 10th, 2007

Despite cross-channel initiatives of every kind at virtually every major retailer, it seems that certain capabilities at any one company either shine offline or online, rarely both.

The best evidence of the great online/offline divide can be traced to the earliest days of the Web. As the Web was just creeping into prominence, if you had asked any hotshot market observer who would likely run the biggest online bookstore in the new medium, the answer would have been Barnes & Noble or Borders, anything but

Had the question been online auctions, Sotheby’s or Christie’s would have been the choice, not eBay. What will be the dominant business news site? Naturally, they would have said, Time-Warner’s Pathfinder had the titles, the deep pockets, the name recognition and the content. And yet, the leaders in the offline world have barely made a dent today.

This comes to mind as the industry is seriously trying to figure out social networking. Having already embraced user-generated content and customer written reviews, many E-Commerce sites are trying to truly build communities, giving their customers a place to talk, exchange ideas and feel like a part of the community.

The retail world has a wonderful model for such retail community building: Starbucks and Barnes & Noble stores. But have done wonderful jobs of making themselves truly desirable destinations for meetings, dates and simply being a fun place to hang out.

Therein lies the huge irony: Starbucks and Barnes & Noble have mastered social networking on a huge national scale and yet their web sites have gone meaningfully nowhere with social networking.

Is it a biological issue? Do retailers simply have genes for one or the other? Starbucks can have a great Web site, but if they do social network well in-store, they can’t do it well online?

Think about that as you ponder the news that three major newspaper groups?Gannett, the Tribune company and McClatchy?want to challenge Google and Yahoo for national online ads. Wall Street traders beat up the stocks of both Google and Yahoo when the news broke on Jan. 10.

These traders?who were the same ones to put $2 on Sotheby’s to win, Borders to place and Pathfinder to show?need to study history a little more. Then again, for many Wall Street traders, their idea of institutional memory is remembering the name of whoever their supervisor was two months ago.

The same portfolio logic that had Barnes&Noble being the hottest bookstore site has Gannett overtaking Google: They have the assets, the business relationships, the brand recognition and an understanding of advertising. What they consistently fail to factor into the equation is a company’s stubborn insistence to continue its processes and procedures until it’s too late. Once sales have dried up to the point where management is willing to shift strategy, there’s not enough left to build on.

The online world is about interactivity and the Web way of thinking. I have serious doubts about how well Google will do with many of the 19 decillion initiatives it’s launching or piloting, but not with online advertising.

Another coalition of newspaper publishers?lead by Hearst and MediaNews Group?has already put its lot in with Yahoo. That makes a lot more sense. Giving their market clout to an establish Web player like Yahoo is a much more effective strategy. Will it topple or seriously damage Google? I doubt it, but it’s possible. It’s certainly a lot more possible than Gannett’s approach.


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