Both Saks.com and Saks' catalog operations will be "fully integrated" within the Saks Fifth Avenue stores organization.
"We clearly recognize now that the online market is not of a sufficient size at this time to justify the substantial investment involved in this separate structure," Brad Martin, Saks' chief executive, said in a statement.
Saks joins a group of traditional retailers that have curtailed standalone Web operations in the face of the Internet meltdown--among them are Toys "R" Us, KB Toys and Kmart.
In the latter case, Kmart last month took over much of the marketing and merchandising chores formerly overseen by BlueLight.com, Kmart's Net unit. At most of the companies, the separate units failed to generate the kind of returns that justify paying separate staffs.
Birmingham, Ala.-based Saks launched its online store in fall 2000, selling apparel, jewelry and other clothing accessories. The company created a division that oversaw the company's Web and catalog operations in August 1997.