December 26, 2000, 9:55 AM

CyberShop does an about-face

The Internet provides online retailers the opportunity to shift their merchandising strategies almost instantly if they discover a better way to attract and retain shoppers. And going after new customers in the online discount store category is precisely the reason Jersey City, N.J.-based CyberShop International is reinventing itself.

Shedding its identity as a high-end online retailer, CyberShop is now an off-price outlet store. The transformation began in March with the acquisition of Deal-A-Day, an online discount clothing site with annual sales of about $600,000 and 25,000 shoppers.

Before acquiring Deal-A-Day, CyberShop’s primary merchandise categories included housewares, electronics, toys, luggage, home products, jewelry and watches. CyberShop will still carry those product lines, but now merchandise will be sold at up to 80% off retail.

“Customers want more than convenience when they shop online,” says Deal-A-Day Founder Edward R. Mufson, now vice president and general merchandising manager for CyberShop. “They want price and value. This is a pretty bold switch.”

As a way to attract even more shoppers, CyberShop is also adding an auction to sell its overstocked items. “The customer retention level for online auctions is high,” says Richard D. Gilbert, director of strategic planning for CyberShop. “They come back because they’re already looking for bargains.”

It’s too soon to tell how the transformation is changing Cyber-Shop’s bottom line, but analysts like the fact that the online retailer is willing to radically change its business model to diversify into new Web selling categories. “They saw a niche and made an aggressive move to get in it,” says Craig R. Johnson, director of the e-retail practice at Marketing Corp. of America, a Westport, Conn., Web marketing company. “They are willing to take some risk to get to where they think they will find the most shoppers.”

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