Transitioning business models.
October 12, 2010 10:48 AM Subscribe
Are there any businesses that successfully transitioned from brick-and-mortar to completely online?
I was reading an article recently about the demise of Blockbuster and its inability to transition into different markets from the get-go (streaming video, Netflix, Redbox, etc.) Most online businesses seem to have either had an online model from day-one (Netflix, Amazon, etc.) or have a successful enough brick-and-mortar operation to subsidize an ancillary online presence. Although the latter are now often getting demolished by the former, like Blockbuster and Netflix.
But are there any businesses that transitioned from a completely brick-and-mortar operation to a solely online operation?
(When I say "solely online," I understand that there is still often a physical component to a business, such as manufacturing, shipping, an office, etc. I'm looking for something akin to if JC Penney closed all its stores and only sold merchandise from a website.)
I was reading an article recently about the demise of Blockbuster and its inability to transition into different markets from the get-go (streaming video, Netflix, Redbox, etc.) Most online businesses seem to have either had an online model from day-one (Netflix, Amazon, etc.) or have a successful enough brick-and-mortar operation to subsidize an ancillary online presence. Although the latter are now often getting demolished by the former, like Blockbuster and Netflix.
But are there any businesses that transitioned from a completely brick-and-mortar operation to a solely online operation?
(When I say "solely online," I understand that there is still often a physical component to a business, such as manufacturing, shipping, an office, etc. I'm looking for something akin to if JC Penney closed all its stores and only sold merchandise from a website.)
Lots and lots of newspapers are trying to make this transition right now. Very few have taken the leap of discontinuing the paper edition, but papers like the Christian Science Monitor have gone from dailies to weeklies plus online. The collapse of internet ad prices in the last couple of years has definitely made this harder.
posted by Oktober at 11:02 AM on October 12, 2010
posted by Oktober at 11:02 AM on October 12, 2010
You won't find anything really big scale this way, of course, I got some relevant looking hits searching for phrases like "we are now online only" or "is now online only". The results seem to be almost entirely magazines/periodicals and small hobbyist/niche businesses like crafters, craft supplies, or collectibles dealers.
posted by phoenixy at 11:10 AM on October 12, 2010
posted by phoenixy at 11:10 AM on October 12, 2010
Yep the big examples of businesses closing their IRL presence in favor of online only would be local newspapers. I'm not sure many people would consider them "successful" however. :-P
:-(
posted by 2bucksplus at 11:36 AM on October 12, 2010
:-(
posted by 2bucksplus at 11:36 AM on October 12, 2010
Circuit City still exists online, but I think all their bricks and mortar stores have been closed.
posted by Lentrohamsanin at 11:45 AM on October 12, 2010
posted by Lentrohamsanin at 11:45 AM on October 12, 2010
Best answer: i wouldn't say successfully, but The Sharper Image has made this shift after going through bankruptcy.
posted by wayofthedodo at 11:49 AM on October 12, 2010
posted by wayofthedodo at 11:49 AM on October 12, 2010
Circuit City is not longer the original company, just the domain really, purchased after bankrupcy:
posted by 2bucksplus at 11:50 AM on October 12, 2010 [1 favorite]
Circuit City.com (CircuitCity.com, Inc d\b\a Circuit City & Circuit City.com) was originally the web domain for the now defunct Circuit City chain of stores. Shortly after Circuit City filed for bankruptcy and went out of business, Systemax, a computer hardware company whose secondary business includes buying defunct retail companies[1] began negotiating to purchase the web domain from the trademark's owners and relaunch it as an online store.[2] The sale was completed on May 19, 2009.Wikipedia.
posted by 2bucksplus at 11:50 AM on October 12, 2010 [1 favorite]
Does Newegg count? They started as a brick and mortar, I believe.
posted by BZArcher at 11:54 AM on October 12, 2010
posted by BZArcher at 11:54 AM on October 12, 2010
Yeah, Newegg was "Egghead computers", I believe.
Does Cracked magazine count? cuz the magazine blew, but the website is pretty awesome.
posted by notsnot at 12:12 PM on October 12, 2010
Does Cracked magazine count? cuz the magazine blew, but the website is pretty awesome.
posted by notsnot at 12:12 PM on October 12, 2010
Best answer: Another example of a transition from brick-and-mortar to web-only is Linens 'n Things. Not sure how successful they are in the new incarnation, though...
posted by DrGail at 12:33 PM on October 12, 2010
posted by DrGail at 12:33 PM on October 12, 2010
Lots of companies are far larger online (and by catalog) than they are in physical footprint. Think Land's End, Harry & David, etc. Really, if someday Sears is online-only, it'll be like the brick-and-mortar era was just a wacky phase.
posted by SMPA at 12:49 PM on October 12, 2010
posted by SMPA at 12:49 PM on October 12, 2010
I hate using the p-word, but there is a management axiom that rings true in these cases: "when the paradigm shifts, everyone goes back to zero." The only problem with this statement is the entrenched leader in the old paradigm almost always seems obliged to waste energy defending the old way.
So a Blockbuster tends to get its ass kicked by an upstart like Netflix because Netflix put its heart and soul into a business model that probably seemed like a minor irritant to Blockbuster. "pffft - Our research shows no one wants to wait 2-3 days to get their movie; we'll wow 'em with bigger and better corner video stores. Online streaming of movies? Yeah, right, if you want to wait 2-3 days for the download to complete, plus our content providers don't want to negotiate streaming rights."
And then it turns out enough people WILL wait because they a) want a movie that's not ever at Blockbuster b) don't want to go return the thing. Then Blockbuster et al fool around with things like disposable DVDs that are burned on-site, which solves maybe half the problem.
And by the time they get around to thinking maybe there is something to this website thing, the little Netflix problem has built out a huge distribution empire and, later on, streaming servers.
All of which is to say - few major brands will go from B&M to online-only, because if the stores are an asset, they're not going to get rid of them, and if they're not, some pure online upstart (Amazon, Netflix, etc.) will beat them up (Barnes & Noble, Blockbuster).
As has been discussed, the ones who are sorta-kinda doing this are the ones where the paradigm is going Tango Uniform without a clear, viable business model that really, really works to replace it. Like newspapers. The sad fact is, people aren't paying to buy paper copies, and don't want to pay to read it online, so the business model is in trouble, but people won't wake up to what this is doing to civic life until the only news is from Fox and all our elected officials areformer prostitutes.
posted by randomkeystrike at 1:10 PM on October 12, 2010
So a Blockbuster tends to get its ass kicked by an upstart like Netflix because Netflix put its heart and soul into a business model that probably seemed like a minor irritant to Blockbuster. "pffft - Our research shows no one wants to wait 2-3 days to get their movie; we'll wow 'em with bigger and better corner video stores. Online streaming of movies? Yeah, right, if you want to wait 2-3 days for the download to complete, plus our content providers don't want to negotiate streaming rights."
And then it turns out enough people WILL wait because they a) want a movie that's not ever at Blockbuster b) don't want to go return the thing. Then Blockbuster et al fool around with things like disposable DVDs that are burned on-site, which solves maybe half the problem.
And by the time they get around to thinking maybe there is something to this website thing, the little Netflix problem has built out a huge distribution empire and, later on, streaming servers.
All of which is to say - few major brands will go from B&M to online-only, because if the stores are an asset, they're not going to get rid of them, and if they're not, some pure online upstart (Amazon, Netflix, etc.) will beat them up (Barnes & Noble, Blockbuster).
As has been discussed, the ones who are sorta-kinda doing this are the ones where the paradigm is going Tango Uniform without a clear, viable business model that really, really works to replace it. Like newspapers. The sad fact is, people aren't paying to buy paper copies, and don't want to pay to read it online, so the business model is in trouble, but people won't wake up to what this is doing to civic life until the only news is from Fox and all our elected officials are
posted by randomkeystrike at 1:10 PM on October 12, 2010
A lot of used bookstores have closed their physical stores, since it's far more effective for them to sell online.
posted by xil at 1:15 PM on October 12, 2010
posted by xil at 1:15 PM on October 12, 2010
I was thinking of Egghead and Newegg, too, but according to Wikipedia they're not related. Amazon bought what was left of Egghead Software; egghead.com now redirects to Amazon's software category.
posted by clorox at 1:23 PM on October 12, 2010
posted by clorox at 1:23 PM on October 12, 2010
ING? Not sure to what extent they ever had a big brick-and-mortar business.
posted by kryptonik at 1:28 PM on October 12, 2010
posted by kryptonik at 1:28 PM on October 12, 2010
ING has a brick-and-mortar business, just not in the USA (or really anywhere outside of Europe and Asia). ING Direct, their main consumer product line in the US, has always been primarily online and I don't think they ever tried to do traditional retail banking here. ING Direct actually does have a couple of brick and mortar locations, although they're more for marketing than for actual branch transactions.
I guess one bank that would be an example is GMAC. It closed (I think) all its mortgage branches and now operates Ally (online only) and also seems to be doing the mortgage origination thing entirely online.
posted by phoenixy at 2:12 PM on October 12, 2010
I guess one bank that would be an example is GMAC. It closed (I think) all its mortgage branches and now operates Ally (online only) and also seems to be doing the mortgage origination thing entirely online.
posted by phoenixy at 2:12 PM on October 12, 2010
Best answer: PCs for Everyone was a brick 'n mortar store in Cambridge, MA and transitioned a few years ago to entirely on-line. As I discovered to my chagrin when I called them thinking I'd just swing by and pick up a motherboard...
posted by range at 4:03 PM on October 12, 2010
posted by range at 4:03 PM on October 12, 2010
Here in the UK, Woolworths was a long-time high street brand that went fairly spectacularly bust last year. The domain name was bought by an existing online retailer and relaunched, with mostly the same branding. I don't think it employs any of the previous Woolworths employees though, and I have no idea how successful it's been, but it's definitely transitioned.
posted by Happy Dave at 3:20 AM on October 13, 2010
posted by Happy Dave at 3:20 AM on October 13, 2010
Looking at the examples listed, I'm not sure how many could be said to have "successfully transitioned" so much as "shuttered all but an online rump in a bid to survive".
posted by philipy at 6:10 PM on October 14, 2010
posted by philipy at 6:10 PM on October 14, 2010
This thread is closed to new comments.
posted by phunniemee at 11:00 AM on October 12, 2010