CUC International (CU)
, a membership-based consumer buying service, has combined its online consumer, travel, and auto services into a single Web superstore called netMarket
"We are trying to establish the wholesale club to the Internet," said Scot Melland, CUC's vice president of business development. "[The earlier sites] were test sites to see if people were interested in membership
services. We are really applying that for this larger site."
NetMarket offers more than 1 million items, including consumer electronics, travel packages, auto accessories, music, books, computers, home furnishings, kitchen appliances, luggage, travel gear, office products, sporting goods, toys, and video games.
Last month, CUC announced a deal with America Online under which CUC will pay $50 million over three years for the
right to market to AOL members. At the time, some analysts thought CUC was deemphasizing the Web in favor of its online service.
The new Web site, which generates profits from memberships, is offering a promotional $1 membership for three months. After the trial period, annual memberships cost $69. Nonmembers can use the site, but members get better prices, special discounts, and other privileges.
"If we succeed, we'll probably take traffic from vertical retailers built in single categories," Melland said. "Since our membership is fee-based, we can price better than they can."
In its two years on the Internet with category-specific sites, CUC is creating a megasite because it sees an opportunity to cross-promote its discount offerings.
"What we learned is that the Web and online distribution is a pretty effective direct marketing tool," Melland said, noting that CUC's background is in direct marketing to consumers. The company will continue
with storefronts on CompuServe, Prodigy, and America Online. CUC currently has more than
350,000 online members.
NetMarket services include a gift finder to suggest appropriate gift ideas, reminders of important dates, a bargain finder that notifies consumers of upcoming deals by email, and alerts for the site's auction, flea market, and travel features. But don't call it a mall.
"One big reason for malls to fail is that they just collect third-party retailers together," Melland said. "There are too many middlemen between product and customer."
CUC hopes netMarket will attract Web users who are currently not shopping on the Internet. "The expectation on the Web is, 'If I'm going to shop this way, I'm going to get a great deal," said Melland. "Sites that are not offering great deals are not getting traffic."