Now imagine there are companies out there with all of these intrinsic assets already, and yet are squandering their opportunity. This seems to be the case with almost ALL of Asia's leading department stores. When we look out across the landscape of the new e-commerce economy, key players seem to be missing from the picture. Where are the major stores like Sogo, Takashimaya, David Jones, and Robinson's? In the red-hot on-line books industry where has Books Kinokuniya disappeared to? Singapore's Borders mega-store shows up on the Internet simply as "store #223".

In the race towards building successful online 'mega-brands', these companies are already 80% there. They certainly have the back-end taken care of and what's more their brands are as strong in Asia as any outletmall.com could dream of. In Australia Coles-Myer, the owner of the Target Department Stores was the #1 marketer in 1996 (based on ad-spend). They have several strong brands through their Target, Target Home and Fosseys stores, which could definitely be leveraged on-line. Most of the new dot-com players would kill to have the 130+ locations throughout the country, giving customers could interact directly with their brand through retail environments, customer service staff (for real-world handling of complaints, returns & exchanges) and after-sales support. Unfortunately, this seems to be something the department stores are ignoring to their own peril.

The latest figures from ACNielsen figures show that the number of people in Hong Kong shopping on the net has more than doubled this year to a new high of 110,000 customers. When this is combined with a recent study by Techknowledge Asia which indicates that a substantial percent are buying apparel/Clothes and Shoes. (approx. 12% in Hong Kong and Singapore, and over 20% in China!) The question then is where are these retail dollars coming from? The overall Hong Kong retail market declined by 2% in the second quarter of this year, (following 10% and 17% drops in the previous two quarters) which would seem to indicate that almost every dollar made on-line is at the expense of the brick-and-mortar retailers. One common opinion is that the Orchard Road style department stores are too old and established to adapt quickly to the world of e-commerce.

An excellent argument against this opinion lies with www.sears.com, the on-line outlet of the 113 year old Sears, Roebuck & company. Earlier this year, faced with declining sales and stagnant stores, (over 2,900 of them!) the company decided to move into cyberspace to become the on-line retailer with perhaps the single most recognized & entrenched brand. The reason that sears can serve as a great example to its Asian counterparts is not just because they have moved on-line, but because they have done it well. The Sears website makes use of the BroadVision One-to-One commerce system, allowing Sears to intimately learn about their customers and in return deliver meaningful content to them whilst they shop. As the customer spend more time on the Sears site, the company gets to know them better, and can make informed recommendations through a process called collaborative filtering. This is akin to having a customer service rep on the floor to personally serve every customer that comes through the door. By improving the customer service, the store hopes to also enhance the customer's shopping experience, giving them incentive to return and thereby deepening their affinity with the Sears brand. This type of improved customer service would be a welcome addition to Asia's current shopping environment.

Finally, try to imagine Asia without some of the brands we have come to know so well. Imagine Causeway Bay without Sogo, Orchard Road without Takashimaya or Seoul without Lotte. This imaginary future for Asia is an extreme prediction for the success of e-commerce in Asia. However, if our regional retail giants don't wake up to the incredible new economy assets they have in their established brands and infrastructures, then they can only continue to lose share by the day.