IBM is to pull the shutters over its Internet shopping mall, World Avenue, next month, just a year after it was opened. The IT giant blames lack of customers and the trend for retailers to open their own sites, raising question marks over the future of other virtual malls.
An IBM spokesperson said customers preferred to go direct to the retailers rather than look for them in cybermalls, in which one operator provides the technology for many outlets to sell online, taking a commission on each sale - in IBM's case about five per cent.
The closure of World Avenue comes a few months after MCI terminated MarketplaceMCI, a virtual mall housing big name department stores. The shutdown of two of the industry?s most trumpeted malls has put the viability of others in the limelight. Two-year old BarclaySquare is one of the UK?s best known, and boasts merchants such as Sainsbury, Argos, ToysRUs and Sun Alliance. But it has not escaped teething problems. After 18 months in operation, it was reported to have sold only #10,000 worth of goods, with Blackwell Books and Interflora being the best performers.
A BarclaySquare spokesperson said retailers have since changed their stock to include articles best sold over the Internet. Argos, for instance, replaced sofabeds with gift items such as novelty clocks.
The spokeperson agreed it may be attractive for some retailers to go it alone, but said BarclaySquare can create and manage a secure environment and run the payment services, so the merchants can concentrate on selling their products.
?What needs to happen is for more people to have access to the Internet, and for retailers to sell products that are much more suited to the Internet. Over the next few months we will be recruiting more high street names and creating regional malls for regional businesses as well as high street names,? said Barclaysquare. By changing stock sales last Christmas increased five times.
Chris Champion, Internet and interactive services analyst at the Yankee Group, said malls will survive if they link up with Internet search engines or Internet service providers, and if they boast a strong brand name themselves or among their retailers. ?The second stage for malls after being innovative in the first stage, is to set themselves up to make money. To do this they will need to refocus and get critical mass by either linking up with an ISP or search engines that provide news and email facilities,? said Champion.
A recent example is CUC International?s link-up with America Online (AOL). CUC is a membership-based consumer services company and online retailer. It has signed a deal with AOL to ensure its shopping and travel services gain prominent placement throughout the AOL network of eight million subscribers.
World Avenue showcased two department stores as well as individual shops selling goods ranging from computers to food and beauty products.
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