Many e-fulfillment operations, explains Hume, developed from "the catalog model of physical distribution. Only it has been accelerated for e-commerce."

These centers aren't necessarily all that innovative in their use of operational technologies, he maintains. But they have adapted and altered a catalog sales and distribution approach to Internet retailing. And they have met two basic requirements – to fill orders quickly – very quickly, in fact – and to provide real-time customer service data.

Meantime, "The weak have been eaten," says Derewecki, referring to the many failed dot-coms. Surprising to some of the e-pioneers, many survivors in on-line sales are click-and-mortar companies. They include multi-channel sales firms with existing retail or wholesale distribution operations or catalog fulfillment.

Derewecki points, for example, to one client with a click-and-mortar DC operation, MicroWarehouse (see sidebar below - A high-tech DC supports on-line sales ). It has built an on-line business upon its pre-existing catalog model, and now generates dollar sales in nine figures or more annually. And it does so with significant investments in materials handling mechanization and automation. Moreover, the MicroWarehouse multichannel fulfillment operations run in tandem in a single facility.

MicroWarehouse has progressively invested in automation. A new DC now absorbs peak business – not by throwing more seasonal labor at higher volumes – but through automation "that takes the human element out of processes where possible," says MicroWarehouse's Dale Doss, vice president of logistics. New systems rack up a 25% productivity gain.

Yet for some companies it makes better business sense to keep the e-commerce channel separate from retail and catalog distribution operations, as Derewicki acknowledges.

Another Gross & Associates' client, toymaker LEGO, has taken this course of action in its Enfield, Conn., direct-to-consumer facility. "We made a strategic decision to keep our piece picking, on-line business separate from our case shipments," says Eric Elman, director, LEGO Direct Fulfillment Americas. In many respects, this facility functions like a pure play business.


Click here to read sidebar on multi-channel fulfillment at Baker & Taylor. (Servicing online orders swiftly )