PT Wal-Mart Stores Inc.'s decision to spin off its Web retailing arm might be the first in a stream of similar moves by traditional retailers looking for the right structure to ride the electronic commerce wave. Typically what that means is launching businesses that are directly competitive with the existing core. If you go back to Toys R Us, they were not very successful with the new model because it was very constrained.
Many analysts think the trend is just beginning.
Blodget said there are currently about 50 pure-play online retailers in the public market and he predicts that, within three years, only 10 to 15 of the current players will remain. Still, turning bricks into clicks is not going to be an easy task, as it is difficult to teach an old dog new tricks. Analysts said traditional retailers would have to take several steps, as well as risks, to be successful. Both getting the talent and being where the talent resides is a clear advantage over wherever you may be operating at the moment. The second advantage is by spinning off the site, at least as long as Internet valuations stay as ridiculous as they are today, you're creating shareholder value.