The Old Order Starts to Re-Establish Itself

SAN MATEO (05/15/2000) - Slowly but surely, brick-and-mortar companies are realizing that they may have less to fear than they thought from upstart start-ups and are beginning to take action. The latest indicator of this is that these brick-and-mortar companies are moving in on the online exchange market, realizing that because they hold the knowledge of their industry sectors, and the purse strings, they also hold the power.

For a long time the perceived wisdom was that the brick-and-mortar set would react too slowly to survive the e-business boom. However, the bottom line is that brick-and-mortar companies do not need to move as fast as pure-play Internet companies do.

Whereas the dot-coms need to prove to their venture capitalists and the stock market that they have come up with the Next Big Idea, brick-and-mortar companies have the luxury of being able to wait and see if the dot-coms are right before acting themselves; they can pick and choose which of the industry trends they feel will be successful and continue to rely on their existing revenue streams in the meantime.

This was shown a few weeks ago as grocery stores took advantage of a depressed stock market to buy in to -- or buy up -- their online rivals, and it is being shown now as they target exchanges.

For the dot-com exchanges, the task is clear even if it is not easy. To use the current jargon, they must achieve critical mass before the companies they serve make them redundant.

Not only must dot-com exchanges build up the number of their customers, but they must also ensure that those customers' supply chains are so inextricably tied into the dot-com exchanges that they cannot free themselves.

And they must do this before their customers realize that they can do without them and go it alone.

Will independent exchanges become obsolete before they even get off the ground?

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