A year later, while the company was codifying its e-commerce strategy, it struggled with how to fund its vision of multichannel retailing. Venture capitalists were not throwing millions Circuit City’s way. Though hype about the Web was brewing hotter and faster than lattes at Starbucks, shareholders still viewed the new medium as a risky investment. If Circuit City wanted to do something about the Web, it was going to have to do it on a budget.

Circuit City’s penny-wise attitude led it to use its own assets to set up its e-commerce infrastructure. Had the company spun off its site as a separate entity (as so many other enterprises did in order to fund their Web initiatives), Circuit City (like others) would have wound up with a website that was not integrated with its other systems.

"We thought of the Web as just another store. We basically set it up as a virtual location," says E-Commerce Director Steve Duchelle.

That notion that the Web store was no different from any other store led Circuit City to adapt its proprietary POS technology?which already let stores sell from one to another?to sell across channels and offer pickup services.

"We already had an existing capability called alternate-location sales where you can sell the inventory of one store from another. It came to us that when you buy on the Web, you’re basically doing an alternate-location sale," says CIO Bowman.

To help the company identify which systems needed to interface in order to support multichannel retailing, Circuit City developed a business process flow diagram. The diagram made the integration look easy, but when the systems engineers got down to work, they realized this was not just a matter of writing a bit of code and patching some middleware between systems. It involved complex systems interface changes and developing entirely new business processes.

If, for example, a customer arranged to pick up a portable Sony CD player in a store that was priced on the Web at $99.99 but sold for $89.99 in her local store, the IT staff had to write some business logic on top of the merchandising system so that the POS system in the store would know to ring the CD player up at the lower price.

Once back-end kinks like that were ironed out, Circuit City was ready to roll. On July 21, 1999, shop online, pick up and return in store was inaugurated. The company soon found out, however, that it had some wrinkles on the front end to smooth over.