Kmart (KM) has never been cool. But with its spinoff BlueLight.com, the 39-year-old retailer has proved that it may be getting hip to the Net.

The company's original Web site barely made an impression on e-commerce watchers - or customers - after its debut in 1995. Rather than renovate the struggling Kmart.com, however, the company started fresh late in 1999, designing and building a new site from scratch, and in true dot-com fashion: getting outside funding, working like crazy to meet an unrealistic deadline and then turning it on and tweaking.

The new BlueLight.com (dossier)has become one of the few positive e-commerce stories, drawing more than 3 million visitors this holiday season. There are lessons in how Kmart got its groove back that can help any organization designing a new site.

LESSON 1: DESIGNING A MAJOR-LEAGUE WEB SITE TAKES SERIOUS CASH.
Kmart executives created a separate interactive division to secure venture funding, and after shopping around they partnered with Softbank. They were taken with the ideas of Softbank entrepreneur-in-residence Mark Goldstein, who, after arranging the $62.5 million deal, jumped over to BlueLight as CEO. "I'm a big fan of the traditional startup environment," he says. Which is why he pushed everyone to have the site up and running within six months.

LESSON 2: GET EXPERIENCED HELP - ESPECIALLY IF THE DEADLINE IS TIGHT.
Goldstein began running his plans for BlueLight by potential hires in December 1999. His first recruit was Brian Sugar, who as VP of interactive built J.Crew's award-winning Web store. Goldstein then brought in 40 design consultants from Fort Point Partners (dossier) to set up procedures, select technology providers and integrate systems. Fort Point, in turn, brought in design firm Addwater to develop design concepts. Goldstein soon signed on Mark Danzig as VP of design - another J.Crew expatriate who'd also done a one-year stint at L.L.Bean. Not long after, Goldstein dumped Addwater, preferring to develop the design in-house. Goldstein explains that he wanted a design that would invoke Kmart's brand, including the company's love of primary colors. "We don't speak fuchsia here," he quips.

LESSON 3: DO YOUR HOMEWORK.
In a dark, dingy San Francisco office above a Brooks Brothers (dossier) outlet, Goldstein spent hours in front of a whiteboard brainstorming with his staff and consultants about what the site's look and feel should be. Using Adobe Illustrator, they mapped out all the possible pathways through the site, what would appear on every page, the sequence of links, options within pull-down menus, interactive features and transactions.

"We spent a lot of time on things like checkout, navigation and search," recalls Danzig. These issues were complicated by the sheer variety of BlueLight's planned inventory. "You need to know size and color for apparel, but not for CDs," says Danzig. "It's a big challenge to design something that's a coherent experience while using the navigation style that's optimal for each type of product."