Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Parabolics already had a Web site when the company signed on with BuyItOnline, but the site was informational. Levine wanted to test e-commerce elsewhere. He liked BuyItOnline because it looked professional, had quality retailers and offered a full range of services.
BuyItOnline provided shopping cart software and secure ordering behind the Parabolics Web store. The mall also handles customer support. “The whole thing is so efficient,” Levine says. “We can run reports, look at site statistics and print packing lists. And not a day goes by that I don’t get an order.”
Since then Levine linked his company’s informational Web site to BuyItOnline’s e-commerce services. Still, about 80% of his online orders come through the mall. In fact, Levine is so pleased with the response that he branched out with a second BuyItOnline store, Wackyprices, which sells discounted goods of all kinds.
Though iMall takes a different tack-charging a monthly fee for maintaining Web sites and selling ads to outside retailers-the company also has beefed up its merchant services. “It is possible now to log onto our service, build a store and within hours be taking orders,” says Daniel S. Odette, senior vice president of product marketing.
IMall now includes more than 2,000 retailers, and consumers can use a global shopping cart that travels with them from store to store. Under development is a feature that will allow shoppers to review their account histories-seeing what they’ve bought from different merchants-and create wish lists that family and friends can browse.
IMall, recently acquired by Excite@Home, finished 1998 with revenues of $1.6 million. The company is headed toward becoming its parent’s e-commerce division, says Odette, who expects more attention and traffic to come from the merger. “The idea behind iMall.com was that small to medium-size businesses, along with having a Web site, needed a way to promote themselves and drive traffic to their sites,” Odette says. “We launched an aggregation portal so that we could put any Web store we built into the mall.”
Marketing potential is one of the most promising aspects of online malls, consultants and retailers say. Malls spend a lot of time and money drawing consumers to their sites through advertising, coupons and target marketing to specific online communities. Even a few larger retailers have begun advertising within Web malls as a way to build traffic to their sites.
One Internet mall, Spree.com, takes marketing a step further. The company has developed a plan to draw shoppers, learn as much about them as possible while they shop, and then share that information with retailers, who can use it for direct, personalized sales pitches.
Spree, another mall that has overhauled its strategy and relaunched its site, previously operated its own Web stores. But executives realized that what customers liked most about Spree was a program that allows them to earn cash back on their purchases. The company made the cash-back program its focus and sought out partnerships with other retailers to create a larger online mall.
So far Spree has attracted 10 merchants in various categories. To earn cash back on their purchases, shoppers must register at the mall. That information, along with purchasing data, fills the mall’s database, which is then tapped to help retailers target specific demographics for special promotions. “Say a lot of people have been buying the new Bruce Springsteen album,” says Colin Murphy, vice president of brand services. “We can say to a retailer, ‘Why don’t we send a promotion and suggest they buy a book from you about Bruce Springsteen?’”
Draws like that make online malls a strong component of a smaller retailer’s marketing plan, says Bryan Murphy, chief operating officer at Wrenchhead.com, a Spree merchant that sells car parts and accessories. Wrenchhead will pull repeat business on name recall alone, he says, but a storefront inside Spree takes the company even further. “It is good to get in front of consumers in more than one way,” Murphy says. “Selecting good mall partners can only enhance our business.”
Even small companies like Sweetpeas have to diversify with their own marketing. At iMall, Werchan logs about 2,000 hits weekly-only half the number who visit the separate Sweetpeas site she launched after getting her start at the online shopping center. What’s more, customers who find her at iMall don’t see her URL, so she’s missing an opportunity to build her brand with repeat customers who would normally point their browsers directly to her store.
Werchan boosts her revenue prospects by advertising in national parenting magazines and listing her Web site with search engines. “If you have a Main Street store in a little town and hang a shingle outside, that’s a tremendous way for local people to know you are there,” she says. “On the Internet, you can be there for months and no one even knows it.”
MargaretAnn Cross is a business writer in Allentown, Pa.
Browsing the Internet malls
- ShopNow.com (shopnow.com): A huge listing of more than 20,000 links to retailers, big and small. Merchants can register their e-shops or use ShopNow’s store-building services. Customers register and can personalize the site to their needs and interests.
- IMall (iMall.com): Home to more than 2,000 storefronts, iMall helps retailers build, manage and maintain their Web operations. Customers get a universal shopping cart and more. IMall also has compiled a searchable database of more than 3 million products from a large range of retailers, known as stuff.com.
- BuyItOnline (buyitonline.com): Hosts more than 200 stores and handles billing, shipping and customer service for each. Customers get mall-wide coupons and a universal shopping cart.