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It may be a challenge, but Ethan Allen is willing to try, and the veteran company could be traditional furniture's best shot at e-commerce, says analyst Baugh. "They have a very sophisticated customer base and an established brand name," he says. Ethan Allen is also unique among furniture retailers in that its prices are consistent nationally, and the company manufactures 90% of its own products. For all these reasons, CEO Farooq Kathwari suspected that e-commerce might be a good fit.
"I realized that e-commerce is an attitude of doing things faster, being more accurate, having better technology," Kathwari says. "I saw that it could improve every element of our business." But first Kathwari had to finish a four-year project to integrate the computer systems at all Ethan Allen stores, 70% of which are privately owned. He also needed to convince store owners that they wouldn't be hurt by the new site, which he will do by crediting a fraction of each online sale to the Ethan Allen store of the customer's choice. Now that the site is built, the question is, Will the customers come?
Watching Ethan Allen closely will be Heilig-Meyers, the nation's biggest furniture retailer, with more than 800 stores. The traditional Heilig customer is lower-middle income and lives in a small town--not a big online demographic. Today Heilig has a modest informational website, where customers can print coupons and find stores but not shop. "We're not certain that anyone has got a profitable business model yet in this industry, and so we're taking a wait-and-see attitude," explains Brian Hopping, a Heilig spokesman.
TRADING PLACES How to win tomorrow's investors
If sofas are the last thing you'd expect people to buy online, stocks might be the first. "Financial service is a paper transaction," says Gomez Advisors' Dan Burke. "There's no need to worry about shipping, returns or any of the stuff that makes regular e-commerce so challenging." Yet it will be December before Merrill Lynch, the company that brought "Wall Street to Main Street," offers its first $29.95 online trade. That will be more than three years after both a tiny upstart called ETrade and the discount brokerage Charles Schwab began allowing investors to trade stock on the Net. "We weren't in any rush because our clients weren't clamoring for it," says Susan Thomson, a Merrill spokeswoman.
Maybe not, but plenty of other folks are. The number of online trading households in the U.S., which totaled 4.3 million in 1998, is expected to pass 20.3 million in 2003. And while the average online investor is 39, the average person investing with a traditional broker is 52. That age gap is what finally got to Merrill. Says Thomson: "We had to look around and ask, 'Are we going to inherit the children of our clients automatically, or are we going to have to put up our dukes and start fighting?'"