Step back from the buzz around Virtual Vineyards, one of the pioneering retailers on the Internet, and it doesn't seem all that different from the wine merchant on Main Street. It has identified a market of wine connoisseurs, stocks a warehouse accordingly, and delivers the goods upon request, at a fair price and profit margin.

The big difference, of course, is that the storefront is virtual - on computer screens. Foot traffic has been replaced by surfers on the World Wide Web. Store visits, or "hits," are nice, but sales are better. And despite all the talk about Internet commerce during the last two to three years, the Web payment system is still aborning.

Like any retailer, Robert Olson of Virtual Vineyards puts payment considerations in simple terms. As he has told bankers privately and in public forums, "We just want to be paid."

Virtual Vineyards has been getting paid ever since its Web site went up in January 1995, a testament to the company's creativity and its bankers' willingness to make the new concept work.

This hardly typical merchant-bank relationship involves not only a fortuitous confluence of professional and business ties between Virtual Vineyards and Wells Fargo Bank. It has Mr. Olson singing his bankers' praises in terms rarely heard in the credit card merchant community.

"They understand what we mean when we say we just want to be paid," Mr. Olson said in a recent interview.

"I'm happy with my bank. We owe them a lot," Mr. Olson said, though musing about how he'd feel even better "if I could cut the discount (the bank's 2% cut on sales) in half."

In that sense, Mr. Olson sounds like any retailer concerned with the margin on sales. But in many other ways, beginning at its roots, Virtual Vineyards points in a radically new commercial direction.

It started as a family enterprise in 1994 when Mr. Olson - he is the chief operating officer but his business-card title is "propeller head" - was looking to make a career shift out of Silicon Valley. His employers there included Hewlett-Packard and Silicon Graphics, where he peddled leading-edge technologies and rubbed shoulders with many of the industry's leading lights.

Weary of the cultural divide between marketing and engineering, he "knew I wanted to run something that took advantage of my skills and used interactive multimedia," Mr. Olson, 46, recalled.

An early version of Mosaic, the Net-browsing software that gave rise to Netscape Communications Corp. and its popular Navigator, was Mr. Olson's epiphany. "I decided I wanted to build software for interactive stores," he said.

He resigned from Silicon Graphics in February 1994, a few days before the company's chairman, James Clark, left to found Netscape.

"I didn't want to sell software - I wanted to sell something tangible," Mr. Olson said, on the theory that "information wants to be free" while goods produce profit margins. But "I talked to a bunch of retailers, and they didn't get it."

Continuing with his research and development, Mr. Olson concluded that the best on-line product would be an "impulse buy" influenced by the presence and quality of information at the point of sale.

"I wanted to solve a distribution problem, not compete on price," he said, which explains Virtual Vineyards' selection of wines off the mass- market track. "Margins are important, and if the product is scarce, people will pay for it and producers would be willing to play."

"I looked at games, self-help books, and other things," said the propeller head. But it turned out that wine-selling "fit the profile perfectly." Conveniently, Mr. Olson's wife's brother, Peter Granoff, 41, was "at the pinnacle of that business."

Mr. Granoff, the titular head of Virtual Vineyards, the master sommelier known to associates and on the Web site (www.virtualvin.com) as "cork dork," started the firm with Mr. Olson in Los Altos, Calif., in the spring of 1994. Mr. Olson, then the only full-timer, spent several months on legal and organizational groundwork that included a hunt for venture capital and for a payment processor.

When Mr. Granoff described the unusual business model to William Zuendt, a personal friend who was then vice chairman and is now president of Wells Fargo & Co., Mr. Zuendt said he wanted Wells to be in on its ground floor. The banker hooked Mr. Granoff and Mr. Olson up with senior vice president Debra Rossi and her electronic payments team.

"Bill (Zuendt) seemed to say, 'Let's make it work,' and it was so," Mr. Olson said. But not until Ms. Rossi brought all her department's creativity to bear on what was then the new idea of combining Web merchandising with electronic - mostly credit card - consumer payments.

"They were definitely not the typical merchant," Ms. Rossi recalled. "They explained their strategy to us, showed us their business plan and marketing plan, and their vision of the wine business, which was unique. They wanted to be electronic and efficient, taking credit cards over the Internet and making sure they are secure."

In the same mid-1994 time frame, Ms. Rossi had been visited by William Melton, then forming his Internet payments company, Cybercash Inc. The two had met in the early 1980s, when Ms. Rossi was beginning to build her reputation as a credit card executive and Mr. Melton's Verifone Inc. virtually cornered the market for card authorization terminals.

"He said Cybercash would be doing the same thing as Verifone, but on the Internet," Ms. Rossi said. "We took 60 to 90 days to understand and test Cybercash, and it was a great concept. We told them we could pilot the first merchant - Virtual Vineyards - and we've been processing for them ever since."

Because of that connection, Wells is one of the first - if not the first - banks that new Web merchants turn to for card processing.

"We worked with a pioneer, and now everybody calls us," Ms. Rossi said. "I haven't been able to do much Internet-related marketing because we can barely keep up with the volume of business we already have."

But she said agility and flexibility are Wells Fargo hallmarks. In the same vein, it became a debit card processor for the Carl's Jr. restaurant chain in 1984, before other banks grasped what was to become a big transaction-processing specialty.

Mr. Olson said Wells "got it" about Internet commerce ahead of its competitors and is reaping the rewards.

Because he "just wants to get paid," Mr. Olson would consider other methods if buyers embrace them. He is comfortable with the Cybercash-credit card approach, but wonders if entrepreneurial ventures like Digicash Corp. or First Virtual Holdings are misguidedly trying "to reinvent the banking industry."

He acknowledges there are data security hazards and sees "pieces missing," such as electronic authentication, "but 99% of the problem is in the fact that we just haven't done these things before. This is where ATMs were 10 years ago. It's going to become commonplace."

Meanwhile, Mr. Olson has set his sights on building what is now a 13- employee enterprise to "a couple of hundred million in sales, not just a couple of million," following the computer industry R&D model of pouring profits back into the company, keeping overhead down and margins high.

"We've blown past our Web competition," he said. "We are up against mail-order and (conventional) retailers. Now is the time for us to be building a competitive advantage - just like Wells is building competitive advantage by getting there before anybody else did."

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