Makeover Draws Skeptical Reactions

NEW YORK (08/04/2000) - Tragically hip crashed with a loud thud in May when investors pulled the rug out from under the London-based retailer's bold, free-spending attempt to become the first online fashion retailer to succeed on an international scale.

Now, the New York-based company that acquired's trademark, Web addresses and content is facing skepticism about the business model behind a planned relaunch of the brand this fall.

At this week's eTail 2000 conference held here, Inc. unveiled plans to launch a more frugal under a phased-in approach that will free the company from the burden of supporting inventory, distribution centers, fulfillment, customer service and heavy staffing.

But no sooner had the company unveiled its plans than some industry observers started to poke holes in the concept. The detractors claim that runs the double-edged risks of confusing or alienating customers who may have to turn to multiple companies for service while looking for partners who are able to distribute goods for individual customers. "spent 20 minutes advertising and they think that's all they have to do. The fantasy that you can do a virtual storefront with no physical distribution or control of fulfillment is just that - a fantasy," said Kathleen Biro, president of Digitas Inc., an Internet professional services company in Boston that counts L. L. Bean Inc., The Neiman Marcus Group Inc. and General Motors Corp. among its clients. CEO Ben Narasin disagrees. "We've had actual experience with this, so our self-skepticism is much lower" than others', he said.

Visitors to will find an array of products for sale. Once they click on a product image to buy the item, they will be linked to the site of the manufacturer or retailer, officials said. At what point customers will be linked to the outside site is still being worked out.

"We don't want to have a situation where we send you into a store and you wander at will" through a selection of 200,000 products when "only 200 are very Boo," Narasin said.

Customer purchases will be aggregated into one shopping cart, but anyone buying items from more than one vendor will receive multiple shipments and bills. runs the risk of giving consumers "a completely inconsistent experience across the site," said Seema Williams, an analyst at Cambridge, Mass.-based Forrester Research Inc.'s new president, Kate Buggeln, who joined the company last week, is trying to establish partnerships with e-commerce-enabled manufacturers and retailers of hip and hot merchandise. But Narasin notes that she will be careful in choosing partners because each will be handling distribution and customer service.

Established catalog retailer Spiegel Inc. understands the challenge she is facing.

Richard Burke, a divisional vice president at the Downers Grove, Ill., company said Spiegel counts on "big, reliable" companies to ship about 20% of its merchandise, "and if there's any question on their reliability, we don't drop-ship with them."

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