Unlike travel service customers, most homebuyers and sellers still want to work with an agent, and during the past year dozens of real estate sites have gone out of business. Homestore.com has been able to turn a profit by expanding its original homes-for-sales listing to a broad Web business that includes selling software to real estate agents as well as a service that generates leads for custom home builders. This year Homestore reported a first-quarter net income?excluding various charges?of $4 million on revenues of $118.4 million, compared with a pro forma net loss of $33.7 million on $57.6 million in revenues for the same period a year ago. And the Internet company predicts full year pro forma revenues of $500 million, compared with $230 million last year.

Mo’ Better Channels

It’s not surprising that catalog retailers such as L.L.Bean and Victoria’s Secret have prospered on the Web. After all, they had already mastered the tricky business of fulfilling orders and shipping boxes around the planet. They had call centers up and ready, and their customers were already willing to buy things without touching them. And they knew the value?in dollars and in loyalty?of treating customers with equal importance no matter which channel they shopped, store or catalog.

What is surprising is that so many traditional companies failed to learn from the cataloger’s experience when they were devising their e-commerce strategies. Instead, they were so focused on establishing their Internet presence that they failed to exploit their brands and their brick-and-mortar stores. "Those companies that tried to emulate dotcoms, like Toys "R" Us and Barnes & Noble, did a lousy job," says Glenn Rifkin, coauthor of Radical E: From GE to Enron?Lessons on How to Rule the Web, which analyzes Internet strategies of large corporations, including General Electric and Staples. "They decided that brands would conflict, so they separated them and neglected to use either channel to promote the other."

Meanwhile, the list of catalog companies making money online is long and growing. Eddie Bauer, which made a profit in 2000 and predicts the same for 2001, saw its sales rise almost 100 percent in the fourth quarter of 2000. From the start, Redmond, Wash.-based Eddie Bauer, owned by Downers Grove, Ill.-based Spiegel Group, allowed customers to return purchases made online to a brick-and-mortar store. Barnes & Noble, for example, only recently wised up to that customer-considerate strategy. "We saw early on that if we can get customers to shop in more than one channel, their overall loyalty goes way up," says Sally McKenzie, division vice president for interactive media for Eddie Bauer. "Selling apparel online is pretty tricky?but it’s pretty tricky in stores as well."