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Small can be beautiful: Niche retailers can gain a lot from the Web, taking local trade to a global stage. And they even have lessons to teach the retail giants.

Article Excerpt
In the early days of e-commerce, the Internet heralded a global revolution for small retailers. In those optimistic times, e-commerce was seen as a way for small retailers to finally compete with their largest rivals, with the Internet rendering geography and location obsolete. With each store just a click away, the corner shop could be as powerful as the retail giant, with branches on every high street. Two and half years since the Internet bubble burst, the revolution in e-tail has come and, some would argue, gone.

Certainly, the history of the VC-backed e-tail pure-play is littered with failure. Pets.com, eToys.com, Boxman.com, and Boo.com, to name but a few, all failed to live up to the promise that e-tailers would one day outsell their bricks-and-mortar rivals. With the failure of so many of these start-ups, critics and naysayers of e-commerce have rightfully pointed out that the 'revolution' hasn't overturned big business, nor has it shifted power away from large retailers to small ones.

But those who would write off e-tail are perhaps still judging it by the outrageous expectations of 1999, when in the spring of that year the eToys.com flotation saw the company being valued at [pounds sterling]11.4bn compared to the $6.5bn ([pounds sterling]4.13bn) valuation of its bricksand-mortar rival Toys 'R' Us.

Lessons of maturity

Since the bubble burst, e-commerce too has begun to grow up and a few ground rules seem to have surfaced. Although few now expect e-commerce to overthrow traditional retail, it has brought tangible benefits to high street retailers too. Large companies like Tesco's and US bookstore Barnes & Noble have increased sales through their online operations. But the true surprises have come with some of the smaller, niche retailers that took to the Web. These small retailers which have survived the downturn tell rather similar stories. They are companies that often grew on a shoestring budget, meaning they could only afford to grow as their business did. Geography has become obsolete, as they tend to sell niche items not readily available on the high street.

Indeed, large retailers can learn valuable lessons from these small players. Supermarket giant Tesco is a perfect example of a large retailer acting as if it were a small one, and succeeding. Since its launch online in early 1999, the supermarket has watched as...