Flat Eric quits the Web as Levi's finds ecommerce doesn't fit

At the end of last month, jeans manufacturer, Levi's, announced it was ending a year-long 'trial' of selling its clothes online.

The jeans giant claimed that "the cost of running a truly world class ecommerce business [was] unaffordable". From a company that turns over $6bn, this sounds a bit rich.

So what is going on here? Is ecommerce really too pricey? Selling over the Web is supposed to reduce costs - that's one of its major attractions. It cuts out the middleman. It dispenses with the expense of having to set up a nationwide or worldwide chain of retail outlets.

Amazon.com has a physical presence in three countries but it claims to have customers in 160. Setting up a chain of physical retail outlets with access to customers in 160 countries in the time it's taken Amazon to achieve this online is quite well-nigh impossible. In these terms, ecommerce is clearly not just cheaper, but gives businesses access to markets which were previously out of reach.

So why did Levi's online venture fail? And why is it that the the big successes of consumer ecommerce so far have been new companies, and not the established players?

For a start, the 'legacy' issues of real world commerce are hard to escape. A spokeswoman for Levi's commented: "It is no secret that Levi's has been losing it a bit recently. We are in the middle of restructuring, and going back to focusing on products. Traditionally, we have been a wholesaler, not a retailer, and that is what we are going back to."

The cost of selling might well be too high for Levi's - but it's also not part of its traditional business. Levi's has a very established, and highly restricted, distribution policy, and works with a massive number of retailers. This network is how the manufacturer has paid the rent for almost 150 years, and those relationships were always going to be at risk if Levi's itself started selling direct.

But the Levi's spokeswoman added that the experience of selling over the Web had given Levi's great access to customers. "We still get it now - people emailing us and asking about certain styles and where they can still buy them. That is something we have never had before - direct access to customers."

Philip Blackwell, director of CRM at Cap Gemini, said: "Levi's is like Coca Cola - a global brand with good distribution. Levi's is not hard to find in the bricks-and-mortar world. You need to give the consumer something extra online - better price, better choice or easier access."

So although Levi's appeared the perfect online fit with a young customer profile and a product which can be distributed easily, it actually fails one ecommerce test: why buy online when I can easily, and for the same price, buy on the High Street?

It's easy to say that Levi's has failed - but maybe it's done the right thing by cutting its losses. Blackwell said: "Perhaps this is a sign of a new reality on the Web. Being unprofitable hasn't stopped anyone being online before."

Blackwell finally observed that the move was symptomatic of a wider malaise for jeans and their increasingly jaded image among youths - a process he blamed on Jeremy Clarkson, the terminally uncool former presenter of BBC TV's Top Gear.