The online mall that thinks it can
Hoping to shake off the sluggish sales that plague the sector, iMall names a new CEO with a strategy to boost sales.
Richard Rosenblatt becomes iMall's chief executive; the company cofounder and former executive vice president replaces Tracy Scott. The company also named Mark Comer, himself a cofounder and former executive vice president, as president. Comer will lead newly unveiled international expansion efforts.
Online malls face a tough road ahead, analysts say. Though online shopping is expected to generate $2.3 billion in 1997 and rise to $7.3 billion by the year 2000, it is unclear how much of that revenue is coming directly from shopping in malls.
"Malls don't have good prospects," said Nicole Vanderbilt, an analyst with Jupiter Communications, noting that malls that are featured on AOL or other major online service providers have the best odds for survival because traffic is already flowing into the sites.
Standalone malls like IBM's (IBM) World Avenue that do not use big names to drive traffic can expect to fail, Vanderbilt said. World Avenue recently closed its doors, citing low traffic.
"IBM didn't do a good job of marketing it and driving traffic. It needed brand names and anchor merchants?IBM didn't leverage names," she said.
While IBM itself is a big brand name, it is not associated with shopping, she said.
iMall is not deterred.
Rosenblatt explained that iMall plans to lure traffic with 20 big brands such as Coca-Cola through its new Park Avenue section. And Rosenblatt also wants to create a sense of community among iMall's online stores.
"Usually stores work individually, but will iMall brings them all together. We want to coordinates sales and specials to increase buying?It will be more of a cooperative marketing program," he said. iMall's revenues are a cut of merchants' sales.
The company is also changing its payment method to allow consumers to shop at all its 1600 stores and pay only once--at the end of the shopping spree.
But allowing users to pay in one fell swoop should be the least of online malls' worries, Vanderbilt said.
"Users are accustomed to paying different merchants. The real challenge for malls is that many people are not online for shopping, but they are looking for information, or chat, or financial services," she said.
AOL's mall has been successful because AOL offers a gateway to the electronic world: content, entertainment, editorial, news, financial services, and games, Vanderbilt said.
iMall, on the other hand, hopes to succeed by offering an electronic gateway to the world, opening shopping centers focused on regions around the globe. The company will open its Korean Mall tomorrow and will generate revenue through licensing fees as well as through sales at the stores that participate in the mall.
iMall wants to tie together big merchants all over the world and offer sites in a variety of different languages. "Online shopping should be used to buy things that are not right next door to you," said Rosenblatt.