A Return to Retail Pure-play ain't what it used to be- some bricks and mortar is what your dotcom needs.

In the traditional realm of business, you open a retail storefirst and then eventually launch a Web site. But now that we'veexperienced the dotcom revolution-and counter-revolution-many ofthe surviving dotcoms that skipped that first step are starting torealize the benefits that come from opening a brick-and-mortarlocation.

For some, branching out at the right time offered the chance toextend their life spans. "We realized very early that we couldnot exist purely as a dotcom," says Sal Perisano, 50-year-oldco-founder, chair and CEO of iParty Corp., a publicly tradedretailer of party supplies. "We knew we needed someterrestrial link, some other reality other than a virtual company,to bolster what we were doing."

So last year the Boston company, which started out as apure-play venture called iParty.com, moved to correct the situation: Itpurchased 33 Northeastern physical retail stores from the bankruptBig Party chain, transforming itself into a multichannel retailerwith retail stores, an Internet store and a printed catalog.

Smart decision: iParty is now celebrating success. During thefourth quarter of last year, the retail stores it acquired duringthe third quarter made sales of $18.6 million. Online divisionsales totaled $395,000-a 194 percent increase over the fourthquarter of 1999.

Multiple Channels

Among the reasons for a dotcom to open a physical store, one inparticular stands out: It gives your customers more chances tointeract with you.

"Ultimately, the more points of presence and the moredistribution channels you have, the better chance you have to playan important role in a consumer's purchasing behavior,"says Elaine Rubin, executive director and chair of Shop.org, atrade association for Internet retailers.

Moreover, having multiple channels increases your chances ofobtaining loyal customers-something most pure-play dotcoms fail toestablish. According to Rubin, "Customers who are engaged witha retailer in more than one channel usually have greater averagesales and greater customer loyalty to that particularretailer."

Another plus: Having physical stores gives dotcom retailers agreater opportunity to acquire new customers. "One of thebiggest challenges dotcom companies have is capturing or acquiringcustomers at a reasonable cost," says Chris Merritt, aprincipal at the Atlanta office of New York City-based retailconsulting firm Kurt Salmon Associates. "Owning a store,however, offers a natural traffic flow into and out of the store,which allows an entrepreneur to gather names and begindirect-to-consumer marketing programs, advertising [either] thesite or the store."

Perisano agrees. "The cost of acquiring customers online isgoing to make any pure-play business model extremely difficult, ifnot impossible," he says . "It's always easier todrive people to your Web site if you already have stores."

Physical stores also give your customers a more convenient wayto return goods and try out products-two options analysts say aresorely missing from Net stores.

Getting Physical?

Of course, opening a retail store-or buying an existingone-brings significant challenges to someone who only hasexperience starting a Web site. "There are significantdifferences between running a store-based business and running anonline business," says Rubin. "Staffing, customerservice, inventory issues, real estate, leases-all these thingscould be fairly foreign to [a netpreneur who's] absolutelygreat at creating an incredible customer experienceonline."

Not to mention, opening a retail store is an expensiveproposition. "You can spend, on average, $800,000 to open onestore," says Merritt. "You have to pay for employees, theproperty and the inventory you put into the store-those are thethree big buckets of cost."

For those of you who lack the funding needed to open a retailstore right now, try renting a kiosk in a local shopping mall. Youcan even feature Internet terminals allowing customers to interactelectronically with your Web site.

"Kiosks have short-term leases, and they're not asexpensive as a retail store to launch, but they allow you theopportunity to get your brand out there," says Merritt."Kiosks also allow you the ability to measure demand and seewhether or not consumers are interested in shopping with you. Thisinformation can drive your decision about whether or not you shouldopen a store."

If you do want to set up shop, you should do whatever you can tolearn about launching and running a traditional retail businessbefore you do so. Get help from people who have experienceoperating brick-and-mortar establishments, for example.

Of course, if you already have physical retail experience, youprobably have greater chances for success. Perisano, for instance,had established a background in retail prior to launching iPartyCorp. In fact, he actually started Big Party, left thecompany-which later went bankrupt-and then bought the storesback.

Your best bet is to determine ahead of time whether amultichannel strategy is a good move for your dotcom. Because thedotcom-only model hasn't done too well, Perisano saysmultichannel is the way to go: "Anyone who has just a Website, that wants to make a business out of it, needs to connect itto a retail reality. Anyone that has a business plan with a goal ofe-commerce needs to augment that business plan with a retailreality. Unless you do that, you're not going tosucceed."

Melissa Campanelli is a marketing and technology writer inBrooklyn, New York.