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Dozens of other online retailers are rolling out similar programs. GetItNearMe is a subsidiary of Boston-based CSN Stores, which owns and operates about 200 specialty retail sites such as Cookware.com and BedroomFurniture.com. Total revenue last year was $250 million. About six months ago, the company began to offer the GetItNearMe service to outside websites and retailers.

Helping sell your rival’s products online is a new twist on an old insight–that it sometimes makes sense to coöperate with competitors. Barry Nalebuff, the Yale professor who cowrote the 1996 bestseller Coopetition, says that as the Internet continues to evolve, online sellers like BedroomFurniture.com will continue inventing new ways to work with their traditional competitors. “Maybe it has discovered what its business model really is,” Nalebuff says of that retailer. “The company thought that its business was selling furniture, but that’s a hard thing to do well [online]. So instead maybe it becomes more of a Yellow Pages, and the traditional brick-and-mortar stores become its customers.”

This business model is also a form of hyper-relevant advertising. Online upstarts are essentially attempting to out-Google Google by discovering better ways to precisely identify valuable customer niches and then sell them to the right marketer. The potential reward for peeling off even a little piece of Google’s business is huge: the search giant’s market value now tops $150 billion.

CSN Stores, for instance, had long struggled with the fact that most people come to their sites just to browse. For years the company’s goal was always the same: turn those browsers into buyers. Now it’s slightly different, says Mulliken: to turn those browsers into the biggest profit, regardless of whether they buy anything directly from the company.

As for the psychological hurdle of persuading retailers to trust their online competitors, Mulliken predicts it will quickly fall once stores get a taste of the new traffic the deals generate. “Once you have the results,” he says, “so what if we are competitors? We are driving your business.”

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Credit: CSN Stores

Tagged: Business

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