While companies struggle with this issue, one interesting snapshot of the power of community vs. the draw of e-commerce is on the consumer side, where two entrepreneurs are butting heads in the baby business -- and taking on the big guys in the process.
Stork Site -- a community
Stork Site is a typical Web start-up. Founded by Tori Kropp in 1996, the site evolved from a subscription to a sponsorship business model as the market dictated.
Ms. Kropp's designer is her stepson, Matthew Kropp, who wrote a program called Nucleo combining the site's registration database with cookie files on users' browsers to deliver personal content.
Once a registered user hits the site, Nucleo identifies the exact age of the child (or length of the pregnancy) and delivers a custom home page and e-mail newsletter. Cookies also help the site link parents in the same situation to one another and each registered user can have an e-mail address linked to the site.
By late 1997, Stork Site had 40,000 registered users. They call themselves Storkies and spend an average of 40 minutes per visit on the site, says Ms. Kropp.
"We're 95% women. These women come because they made friends. It's an enormously powerful way to replace the telephone. We're seeing 2,500 posts every 24 hours on our bulletin boards."
In addition to placing banners on the site, advertisers such as Carnation and Fisher-Price also offer minisites -- editorial sections that are co-produced by Stork Site's editorial staff and the advertiser. Ms. Kropp says, "We did sponsored content for Fisher-Price on teaching your child through toys."
Commerce is add-on
To Ms. Kropp, commerce is an add-on. The site launched a commerce section called Stork Shoppe in early 1998, mainly offering "baby gift items, maternity things and convenience items -- boutique things, not car seats." Stork Shoppe also has links to other commerce sites specializing in "anything that makes life with a new baby easier."
The site's goals are to keep creating a greater sense of community and create more interactive tools for users.
BabyCenter -- a store
BabyCenter was launched in late 1997 under CEO (and new father) Matt Glickman, a former Intuit executive. While Stork Site's business model evolved, Mr. Glickman took the ideas of community his rival had already and added a layer of commerce.
His goal: To build an online baby superstore based on credible content.
Unlike Ms. Kropp, who started her company because she couldn't find anyone online devoted to new parents, Mr. Glickman knew he'd have plenty of competition. Before his site launched, the Walt Disney Co. had already started Family.Com, while iVillage, a well-respected New York Web developer, had launched ParentSoup and the American Online Greenhouse had Moms Online.
Mr. Glickman liked what Ms. Kropp had and replicated her major features, including a registration database linked to e-mail newsletters and discussion boards. Credible content, he says, is how he stands out. He created a Medical Advisory Board to approve each feature before it goes online. He hired former members of Parenting magazine's staff to write those stories after the publication moved its offices to New York.
Mr. Glickman also lined up a roster of baby marketing heavyweights as charter advertisers. The list includes Procter & Gamble Co. (and its flagship diaper brand, Pampers), Johnson & Johnson, Charles Schwab & Co., SmithKline Beecham and Clorox Co.
More important, the registration database and BabyCenter's product database mesh, he says. An article about exercise during pregnancy, for instance, has links to a reader's local fitness clubs (based on the registration database).
Also, BabyCenter sells everything a parent would need at what Mr. Glickman calls "warehouse prices."
It's unclear whether BabyCenter's current lead in this market will hold up. Mr. Glickman knows his rivals, including magazines like Parenting and Parents, whose sites are still relatively small, have financial means.