Video rental stores will still exist because many people will still want to walk out to choose one but more

Video rental stores will still exist because many people will still want to walk out to choose one, but more and more people will order it down the wire.If goods can be delivered easily by post or courier, there is a simple rule to ensure success. As more and more homes have high-speed Internet access, the range of products that can be delivered this way will surge. As the legendary management guru, Peter Drucker, puts it in an article in The Economist's The World in 2000: "Delivery will become the one area in which a business can truly distinguish itself."Not all delivery. It is easiest to divide retail e-commerce into four main areas: where the product or service can be delivered electronically, such as software or online information; where it is relatively easy to deliver, say, books; where physical delivery is inevitably quite clunky (a new car?); and where delivery is a complex interaction between buyer and seller, not just a one-shot sale.More of the last in a moment Consider the first three. If companies are prepared to make the necessary investment, they will provide an efficient, seamless service. But if some aspect of a service is easy, it is also impossible to gain a competitive advantage. That comes in the tough areas, and in e-commerce the tough area is delivery.

But, given time, that will be fixed, because it is just a question of buying adequate hardware and appropriate software. But while a vast amount of attention goes into organising the electronic side of things, getting the product or service to the consumer lags behind. And that is wonderful news - because it gives an opportunity for wise companies to shine The electronic side still leaves plenty to improve on. Many of us have had tried a transaction on the Internet - perhaps to book an airline seat - only to find that after 20 minutes' pecking at the keyboard to no effect you end up picking up the phone, talking to a human being and booking in two minutes. YES, BUT how do you deliver? Amid the headlong rush towards e- commercing everything from car sales to banking, the little matter of delivery looms larger and larger. In days, Mr White, an old-fashioned cost-cutter with little in the way of ideas for developing the business, had left the bank.Mr Stewart believes the transformation he has engineered at the Woolwich has given it a genuine competitive edge. The example he wants to follow is that of Microsoft, the Seattle-based software giant which dominates the market for computer operating systems but is still spending $2bn developing a replacement for Windows."What they say in Seattle, is if you don't eat your children someone else will," says Mr Stewart "That is the lesson the banks should be learning.".

Fast forward to this year, when Mr Stewart sensed Mr White's star was on the wane after his botched attempt to steer Alliance & Leicester into a merger with the Bank of Ireland, so he contacted John Windeler, A&L's American chairman, last month and suggested it was time to talk.This approach appears to have shocked the Alliance & Leicester board and made them realise how far they behind they were in the e-commerce game. A year ago, Peter White the chief executive of Alliance & Leicester, another of the crop of 1997 converters, thought he was pushing at an open Woolwich door Not so. Mr Stewart says one of the senior managers decided to test the power of the system and ran off a list of mortgage customers whose behaviour suggested they were dissatisfied enough about their present mortgage to move within the next two months. The colleague was sidetracked and did not check the list until several months later. By that time 80 per cent of those in the list had moved.The City now sees Woolwich more as potential predator than prey. They can look at who has written cheques to Egg and see if they can offer something to win them back.