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Says OrderZone equity swap a wise decision
After winning praise as one of the first old-economy companies to embrace the Internet, WW Grainger Inc. has discovered it can't outrun the dot-oms.
The Lake Forest, Ill.-based distributor of industrial products last month agreed to trade its most promising online business, along with $21 million, to Works.com for a 40% stake in the Austin-based e-commerce start-up.
When Grainger launched OrderZone.com with great flourish a year ago, executives said the Web site would help the company use the Internet to grow sales by expanding its customer base.
But they soon learned a hard les son about electronic commerce. The Grainger name, a fixture of American industry for 80 years, counted for less in a crowded Web marketplace where comparison-shopping is a breeze and price is what grabs attention.
Window shoppers
While OrderZone drew plenty of visitors, too many turned out to be browsers. Grainger acknowledges that sales fell short of expectations. Soon, investors were demanding to know when Grainger's heavy Internet spending would start generating profits.
Grainger executives maintain that the new partnership is the best way to grow the Internet business. But the Works.com deal amounts to an admission that the...