Net Prophet

Moving to the Net Award

Is there anything more painful than watching successful companies make a transition to the Internet, only to be caught flat-footed by their start-up competitors?

Charles Schwab & Co. demonstrates that pre-Internet companies can not only compete on the Net, they can prosper. Schwab was an early discount broker and one of the early adopters of information technology.

Although many brokers either halfheartedly embraced the Internet or have been dragged kicking and screaming into that market, Schwab has taken the lead.

And it is a lead which has paid off; the company has more than US$250 billion in assets traded online, almost 10 times what dot-com rival E*Trade has.

If you want a company to which flexibility and innovation are more than bullet points on a mission statement, look to Charles Schwab & Co.

Realtailer of the Year

It's great to order everything from CDs to office supplies to steel girders on the Net, but there's inevitably a gap between the online purchase and the eventual delivery of merchandise.

Narrowing that gap so that Internet commerce operates in real time will prove a vital survival trait for companies.

This real-time Internet retailing, or realtailing, is extraordinarily tough and costly. Delivering merchandise as promised and on time is a huge challenge; witness consumers who ordered gifts for last year's holiday season only to have them show up too late.

Companies that master distribution are going to distinguish themselves from the crowd.

Some scoff at the $1 billion distribution infrastructure Webvan is building to deliver groceries. Then again, some scoffed at Federal Express and United Parcel Service when they announced that they were going to compete with the U.S. Postal Service.

But as I-commerce grows, the proverbial last mile between the distribution center and the consumer's home will be critical.

Any way you slice it, Webvan has been a logistical tour de force, delivering perishable groceries within a half-hour window specified by consumers. Some argue that grocery delivery is an impossibly difficult market to scale. But consider everything else that Webvan might eventually deliver.

The last mile is a space that's completely up for grabs, and Webvan is positioning itself to deliver.

I-Commerce Site of the Year

What makes a great I-commerce site is more than just bleeding-edge technology.

Sure, the technology is critical, but features such as a terrific user interface and a real connection with the customer are what distinguish the leaders from the "me too" players. is one of the best I-commerce sites you'll find on the Net., as you might guess, sells gardening supplies. More than that, delivers on the promise of community -- community that's more than just chat software. hosts online chats, and it has gardening experts who answer questions. It also has a slick print publication -- part catalog, part magazine -- that tightly references its online presence. sends out e-mail messages reminding gardeners when it's time to plant. And the site has a great application that guides you through picking the right plant for your garden based on your location, weather conditions, and desired plant color. officials realize that "Internet community" is about making a connection with the consumer. It's a psychological state of mind in which the consumer identifies with your business, and that's where brand loyalty is born.

But don't take my word for it. Check out's rating on, where consumers give the site stellar ratings on nearly all points.

Innovation of the Year

I-commerce and the stock market are practically synonymous these days, yet few things feel as out of step with the Internet's open culture as the initial public offering (IPO) process with its cigar-puffing investment bankers and their backroom deals.

Traditionally, companies have needed the gold-star approval of a premier investment bank when they have gone public.

Then along comes Bill Hambrecht of WR Hambrecht and his Open IPO concept. It's a simple idea: Give the average person a shot at a company's IPO.

Earlier in the year, Salon's Open IPO underwhelmed, but the fortunes of the Open IPO took a major upswing when VA Linux debuted, setting the current record for first-day gain. And's debut was similarly spectacular.

Just as the promise of open-source software has captured the imagination of geeks everywhere, the Open IPO has the potential to radically shake up the status quo -- which pretty much defines Internet innovation.

(Sean M. Dugan is senior research editor for the InfoWorld Test Center. Write to him at

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