Christos' Clue - Wrap Clicks Around Mortar

E*Trade, one of the leading online brokerages, says it wants a “bricks and mortar” partner. Chairman Christos Cotsakos told analysts he’s been looking for such a partner for some time.

He’s on to something. By partnering with a chain of storefronts, E*Trade becomes, to the customer, just like rival Charles Schwab & Co., but at a fraction of the cost.

I think the idea of wrapping mortar around your clicks, which I’ll call “Christos’ Clue,” makes a lot of sense, and not just for that industry.

Recently I was contacted by an online pharmacy. They wanted me to write about them. They said they were going to build a bunch of physical pharmacies to complement their online store.

I thought about Ira Katz. He’s my pharmacist. Well, he was my pharmacist. But when my wife’s company changed its insurance carrier, we found neither he, nor any other small pharmacy, could fill our prescriptions. To save money, the insurance carrier had created a separate subsidiary to handle drug bills, which made exclusive arrangements with a few pharmacy chains.

Ira, and other small pharmacists like him, lacks the political muscle to fight these arrangements. But maybe a national online pharmacy can fight for him. If a national online pharmacy could push its way into these plans, it could sign-up small pharmacies as local fulfillment partners. I could go to Ira for my drugs, but the business would be done through the online pharmacy. The online pharmacy would have an “instant chain” at a tiny fraction of the cost of building one, and thus a cost advantage over rivals like CVS.Com.

Here’s another example, from another industry. Early this year, I found that part of my family tree goes back to southern Germany, near Stuttgart. There, Blankenhorns are as thick on the ground as Smiths or Johnsons are here. There’s even a Blankenhorn winery, “Weingut Blankenhorn.”

I’ve never tried the stuff, but I’d like to. Unfortunately, none of the wine merchants here carry it. And even if Virtual Vineyards had it on its virtual shelves, the law in Georgia prohibits them from mailing me a bottle.

The solution would be an affiliate network. My favorite wine shop would become a fulfillment partner for the online wine shop. I’d order the esoteric wine online, paying a deposit upfront, they would import a case from Germany to my market, and I would buy it (and be carded) there. All the laws of Georgia would be satisfied, I could drink any wine I wanted, Virtual Vineyards would become a truly national chain without the expense of building a single store, and thousands of outlets around the country would be putting Virtual Vineyard signs in their windows.

You can probably think of other businesses where such integration would be very powerful. I think it’s a trend. When you see Christos Cotsakos, thank him for me. Maybe you can toast him with some of that Weingut Blankenhorn.