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GeoCities adds online shops

The online community is adding virtual shops to its neighborhoods, aiming the program at small businesses that want to get on the Net.

Online community GeoCities is adding shopping to its site, turning the site into a "community plus commerce" destination--a combination that has worked well for America Online.

But rather than opening online malls, the new GeoShops program, targeted at companies with 2 to 22 employees, will be scattered through relevant areas in GeoCities--supplementing major GeoCities e-commerce partnerships with online bookseller, software retailer Egghead Computer, and music store CDNow.

GeoCities, which was listed as the seventh most visited Web site in RelevantKnowledge figures released today, lets users set up free personal Web pages, which are grouped in areas according to individuals' interests.

The company is betting that putting small online stores in the midst of those special-interest areas will be a compelling e-commerce offering. In December, GeoCities made its first foray into bringing commerce to areas outside its MarketPlace by teaming up with to let GeoCitizens sell books relevant to their interests via the bookseller's Associates program. Before that, GeoCities members, known as "homesteaders," were forbidden from engaging in commercial activities from their GeoCities pages.

GeoCities is not the only busy Web site betting that distributing shopping throughout a site will be successful. Last year, search engine Yahoo scrapped an online mall partnership with Visa in favor of spreading it throughout Yahoo's multiple sites.

But it's still too early for anyone to demonstrate success with that strategy, or any other for online commerce plan yet.

"We have a bit of experience integrating commerce into community," said Michael Barrett, GeoCities' vice president of advertising sales. "The next logical step for commerce throughout community is to build on the metaphor of the 'homestead' to let small businesses build their stores in neighborhoods right next to the homesteaders."

GeoCities' initiative is similar to AOL's strategy of infusing shopping opportunities into as many areas as possible on both its proprietary service and its Web site.

Many other companies also are trying to beef up commerce; all are aiming to diversify and increase their revenues. GeoCities has been making changes to its advertising programs too. But when services add new sources of revenue, they risk losing some customers. Some members, for instance, were upset when GeoCities added pop-up advertisements.

Visitors to GeoCities neighborhoods will encounter both personal Web pages and shops for related interests. But the company's heavy international audience--Jupiter Communications estimated in December that 44 percent of its visitors are coming from outside the United States--could have unpredictable impacts on how successful GeoShop merchants are selling online.

GeoCities' ambitious goal is to sign up 100,000 small merchants in the next 12 months, generating revenue of $10 million for the company, which is eyeing an initial public offering.

Fees for an online store without the ability to make sales from the site will be $24.95 per month. For that price, the user gets a special listing in GeoCities neighborhoods and up to three topical areas. The user also pays $100 to register the domain name with the InterNIC.

Those wanting to make sales and accept credit card payments will have to pay $120 for setup, then $80 per month or $40 plus 5 percent of transactions, whichever is larger. Transactions will be contracted out to Internet Commerce Services. The commerce system will run on Open Market software.

For those taking transactions, the service will use TaxWare software to calculate sales tax and shipping and will offer email or fax notification of orders.

GeoCities will provide its GeoShops merchants with tools to create their own full-fledged online storefronts, including existing GeoCities tools and utilities plus a catalog-building tool. The basic storefront includes 15MB of server space, a site address, and unlimited email aliases. Additional storage space can be purchased for $2.50 per month for 5MB.

In January, GeoCities secured a $25 million investment from Softbank Holdings and a $5 million equity investment from Yahoo. Softbank of Japan and GeoCities also have a joint venture to develop an Internet-related company in Japan.

Drew Bouldin, product manager for GeoShops, expects consultants, artisans, and specialty clothing vendors to be the most popular categories.

GeoCities is emphasizing its ability to draw traffic, but it is not targeting people taking shopping sprees. "We're going to put [the vendors] smack-dab in the middle of this convergence of visitors who are interested in the topic," VP Barrett said.

The GeoShops program is being marketed to current GeoCities users this month, with an aggressive Internet ad campaign due in April to sign up new merchants.

In about three weeks, GeoCities expects to announce cobranding or joint marketing efforts with other companies, including an office supply store, a credit card company, and a tax software vendor, which will market GeoShops to their customers.