Online retailers will fail without bricks and mortar

Online retailers need to set up clicks and mortar operations and balance diverse channels to market - or face going bust.

Speaking at SAS's annual user conference in Dublin, Dr. Jim Goodnight, CEO of SAS Institute, said dot com businesses will fail if they only have one sales channel.

Goodnight said: "Business-to-consumer is undoubtedly good business, but you've got to be bricks and clicks to survive - you can't just be an e-tailer and expect to escape the current fallout in dot-coms. Good business cannot be solely dependent on one channel to market."

SAS, which claims to be the world's largest privately held vendor of software, sells business intelligence software to both dot-coms and traditional retailers.

The news comes as the web's most famous retailer, Amazon.com continues to suffer after analysts comments at the weekend sent stock plummeting by over 20 per cent.

Amazon's share price has now fallen by 70 per cent from its high last December. Furthermore, a report by Lehman Brothers on Friday said Amazon faces severe difficulties, as previously generous sources of funding dry up in the current, more cautious, climate.

Industry reaction to Goodnight's comments was mixed.

Steve Frazier, MD of Amazon.co.uk, said: "I really don't understand where people who say this are coming from. There will be many successful models on the internet - but the clicks and mortar approach is not our route. If you talk about channels to market you can access Amazon by both your PC and your mobile phone - we are already diversifying."

However, Sarah Skinner, European internet analyst at Durlacher Research, said e-tailers will have to find new business models.

"Unless you have a really core software proposition which differentiates you, you will need the internet as one of a number of channels. You'll need offline and online channels to succeed," she said.

Skinner predicts this move will see massive consolidation and partnerships over the next 18 months.

Jo Mosaku, advertising and sponsorship director at UK web retailer Zoom.co.uk, claimed the truth is not as cut and dried as Goodnight suggests. "Grandiose statements in this area aren't helpful - there will always be niches where e-tail can survive as a pure play internet venture," he said.