Tiny fish don’t swim in schools just because they like each other. They have learned the hard way, through brutal attrition, that single fish get snapped up by predators. Schools, however, can appear from a distance to be a single giant fish and scare predators away.

Like little fish, many small businesses have started pursuing a "schooling" strategy. Local businesses are coming together by the thousands to operate under a single brand name on-line and try to appear to be one giant business.

Corner druggists, locksmiths, booksellers, jewelers, and many other types of businesses hope to create recognizable, national brands and to offer far broader services as a group than they could on their own. The businesses will keep operating their stores and hope that they will attract customers who, frustrated by lousy service at many Web sites, want to buy something right away or just want to deal with a familiar face.

The strategy marks a significant change in thinking about small businesses. As recently as 1998, conventional wisdom had it that the Internet was virgin territory where even a local business could act like a big one and generate huge amounts of business. But, as reality has set in, small businesses have learned that, individually, they have neither the resources to put up multimillion-dollar Web sites nor the logistical expertise for lots of long-distance business. They also lack high-profile brands, which have turned out to be important because customers, confused by the welter of information on-line, often go with names they know and trust.

With little success on-line, and with giants such as Wal-Mart Stores keeping up relentless pressure in the physical world, many small businesses are trying the new schooling strategy. Make that the old schooling strategy. Small businesses have done this sort of thing for years in the physical world, with some notable successes, such as florist network FTD and hardware retailer True Value. "Rollup kings" such as Wayne Huizenga have used the strategy to build powerful national brands in everything from trash hauling to hotels. (Journalists sometimes say that there are no new stories, just new reporters. Perhaps the same is true of business models.)

It isn’t at all clear that the new groupings of small businesses will scare off any big competitors, because the world of commerce is even rougher than the dogshark-eat-dogshark world of the ocean. But, the on-line alliances at least will be better equipped to stand up to predators.

Richard Ost, a consultant on Internet pharmacy and retail issues, says "virtual rollups" could save small businesses, particularly those battling on-line giants with national reach. "It will give you a way to keep your customer," he says, "or maybe reinvent a way to get you new customers."

Clark Security Products, the largest wholesaler of locks and security products, knew that many manufacturers were trying to "Dell" their distribution channel—a reference to the fact that Dell Computer bypasses retailers and sells its computers directly to consumers over the Internet. But Marshall Merrifield, Clark’s chief executive, decided he could build a business by supporting local locksmiths rather than trying to cut them out of the loop. Clark has organized 700 of them under a new national brand, SecureRite.com, that is a division of Clark.

At the SecureRite Web site, customers can browse for hardware such as door locks and wireless home alarms, from either Clark or other makers of security hardware. Customers can then either order the items on-line or request the address of the nearest affiliated locksmith. Even if someone orders via the Web site and SecureRite ships the product directly, the local locksmith still gets the revenue, minus the wholesale cost of the product. SecureRite makes its money by collecting a percentage of that wholesale price. The locksmith, meanwhile, gets information on the customer and can approach him about additional business, such as installing the security device he ordered.

"I’m a hardware guy," Merrifield says. "I know about the Ace and True Value [hardware store] models. So I just replicated them in digital form."

Julie McCluney, president of Hills Bros. Lock & Safe in Garden Grove, Calif., says SecureRite already has brought her new business. Through the site, she sold some swimming pool alarms, motion-sensing devices that alert people if a child or pet stumbles into a pool. "I had never sold one in 25 years,’’ McCluney says.

Many of the nation’s 25,000 independent pharmacists have adopted a similar Web strategy. They have seen their ranks shrink by about 1,200 a year during the past decade and realize they face a whole new threat from on-line drug retailers such as drugstore.com and PlanetRx.com. So, some 3,800 druggists have signed up to take part in CornerDrugstore.com, which takes orders on-line on their behalf.

Customers who order through CornerDrugstore can either go to the local pharmacy to pick up their prescriptions and over-the-counter products or can have them delivered. Most member pharmacies boast same-day delivery, something other on-line pharmacies will find hard to match. Looking ahead, CornerDrugstore plans to establish "virtual shelves" so it can offer even products that aren’t ordered frequently and might not be on the shelves of member pharmacies but that can be supplied quickly by wholesalers.

The upstart venture wants to surpass No. 1 CVS, which operates 4,200 drugstores, and become the largest pharmacy network in the U.S.

Philip Richard, owner of Mountain Pharmacy in Evergreen, Colo., calls his decision to join CornerDrugstore a "pre-emptive move." The affable druggist got his start nearly 40 years ago as a soda jerk making cherry Cokes at a small-town drugstore in Virginia. Today, he says, "I joined just in case the Internet becomes bigger than life."

CornerDrugstore, for its part, charges members a monthly fee, receives $1.66 for each on-line transaction, and collects revenue from pharmaceutical companies that advertise on its site. CornerDrugstore also will receive a cut of the revenue generated by its "virtual shelves."

Like CornerDrugstore, Designer Jewelry On Line thinks customers want to put a face with a "click." Born in January, Designer Jewelry On Line initially is combining 10 independent jewelry retailers and six makers of brand-name jewelry. The company will collect a commission on all products sold through the Web site, which will debut this summer. The site will promote all of the companies’ products, such as pearls, diamonds, and wedding bands. The twist is that the on-line venture will give customers on-the-ground support—so a customer can, perhaps, quickly get a ring resized.

Retailers aren’t the only ones taking to the Internet. Service providers, such as plumbers and electricians, are also combining forces on-line. ServiceMagic, a start-up, has rounded up more than 3,000 independent home-improvement contractors. Through the Web site, it links them with consumers wanting, say, a new floor or bathroom.

Customers fill out questionnaires at the site to explain what work they want to have done. ServiceMagic supplies a list of local contractors that could do the work. The contractors are ranked on quality of service, based on customer comments. Customers can choose to have their information sent to multiple contractors, who can then call and try to win the job.

Tom Kessler, a ServiceMagic vice president, says contractors "spend a significant amount of time chasing new business, which they often don’t get. ServiceMagic saves them time."

Contractors pay ServiceMagic a commission of 2% to 3% for referrals, depending on the job size. They also pay a monthly fee of $20. In return, each contractor gets his own Web site, hosted by ServiceMagic, and receives such other benefits as discounted workers’ compensation and liability insurance.

Rodney Rice, ServiceMagic’s co-founder, says: "The Internet allows hundreds and thousands of small businesses to band together and go to the marketplace as a unified buying force."

All the schooling ideas sound good in theory, but small businesses in cyberspace face significant obstacles, too. Even rolled up together, small businesses lack the deep pockets and head start of established Internet retailers, says Forrester Research analyst Charlene Li. "I have a hard time believing they’re going to get a lot of traction,’’ Li says of the mom-and-pops. She points to the many millions of dollars the big players have at their disposal for marketing campaigns and new technology. "I hate to say that big is beautiful," she says. "But big does offer a lot of benefits."

Li projects that by 2003 small and medium-size retailers will capture just 6% of on-line retail sales, down from the 9% they had last year.

One of the biggest obstacles is technology. It is no small feat to hook up a master Web site—one carrying the main e-commerce logo—with thousands of individual Web sites representing local businesses. The total network of sites must cooperate smoothly, processing electronic transactions without a hitch.

"We’re building something that’s very daunting. This isn’t the same as building one nice site," says Todd Dankmyer, senior vice president for communications at the National Community Pharmacists Association. The trade group, which represents independent pharmacies, is a strategic partner in CornerDrugstore.

The American Booksellers Association learned just how daunting the technology can be. It had planned to launch BookSense.com late last year to let its members, mostly small bookstores, boast a virtual inventory of more than one million titles and better withstand the onslaught of Amazon.com. The association’s membership had shrunk more than a third since 1991, to about 3,200, largely because so many neighborhood bookstores have gone out of business. But the BookSense launch had to be delayed because of the difficulty of integrating the main site with individual bookshops’ Web sites. For instance, BookSense had trouble giving stores the ability to specify their own discounts on-line.

So far, the on-line rollups don’t exactly have leaders of e-commerce looking nervously over their shoulders. "At Amazon," spokeswoman Kay Dangaard says, "we focus on the customer. We don’t focus on competition."

Despite the problems, proponents of virtual rollups point to the successes of the formula in the nonvirtual world. In attempting to create a national brand, there are great advantages in numbers: Advertising can be done by the group, for instance. CornerDrugstore plans to supply its pharmacists with CD-ROMs that allow them to place cable-television and radio spots. The on-line company also plans to distribute circulars, bag-stuffers, and other printed material, and rely on regional ad campaigns.

"We can put BookSense on our bags. On our bookmarks. In our windows. And on our receipts,’’ says Richard Howorth, owner of Square Books in Oxford, Miss., and president of the American Booksellers Association.

Similarly, SecureRite began running banner ads and smaller blurbs in the summer of 1999 on Internet portals, including Yahoo!, Excite, and AltaVista, as well as on America Online. The company is distributing SecureRite signs, posters, and brochures that member locksmiths can use in marketing.

The rollups also provide a far cheaper way for small firms to get sophisticated Web sites. The National Community Pharmacists Association says it would cost a druggist anywhere from $500 to $2,000 to build a basic informational Web site—one that displays information on employees, business hours, and products that are available. It would cost upward of $100,000 to build a full-blown, e-commerce site that houses an extensive health database and processes prescription refills and over-the-counter drug purchases. Through CornerDrugstore, local pharmacies can become part of a very sophisticated site for a $900 start-up fee and monthly maintenance fee of $60 to $75.

It remains to be seen whether any of these rollups will gain the stature of a True Value or Ace Hardware. Even that sort of success would leave them well behind the giants of e-commerce, much as True Value and Ace pale in comparison to Home Depot in the physical world. Still, the rollups finally give small businesses an entrée into the world of e-commerce. With clicks-and-mortar strategies seeming like the way to go, who knows what enterprising local businessmen will be able to do once they get into that world?

Fillion is a free-lance writer based in Evergreen, Colo. He can be reached at rfillion@mindspring.com.