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SMART ANSWERS
By Karen E. Klein

9.7.99  
Web Malls Can Help Small Local Retailers Look Big
They need a smart look and fresh merchandise to prosper — just as they do on Main Street

Q: My start-up E-commerce company wants to establish a virtual shopping mall working with a group of local retailers to carry their products online. Can we compete with large retailers such as the Gap, Macy's, and Nordstrom's? --C.L., Los Angeles

A: A recent Forrester research study paints a dismaying picture of local retailers' prospects for online business: It predicted their online market share would shrink to about 6% by 2003 from 9% currently. Face it: Most small retailers don't have the technical resources or personnel to run a first-rate interactive site with full E-commerce capabilities, nor do they have that "gap.com" brand recognition.

That's where E-malls come in. They provide a chance for small retailers to get their products on the Web for a monthly rental fee or a percentage of online revenues. By banding together, they gain collective marketing power and increased Web traffic.

You'll need to fill a niche, appealing to a certain market segment like teenagers or working moms. Make sure your collaborators share a common vision, commit for a specified duration to being part of the mall, and all pay the same "rent," says Karen Glotzer, strategic alliance manager for New York City-based SmallOffice.com, an online resource for entrepreneurs in the Soho market. To ease retailers' fears about being lumped in with competitors, profile each store separately. Make your site directory clear and specific, and offer participants access to the technology so they can update their product listings periodically, add new pictures, or promote specials themselves.

Your mall will lose customers if it doesn't provide technical support to keep the site working well. Like brick-and-mortar stores, retail sites need to be refreshed with new merchandise or promotions. Otherwise, customers will see little reason to return, says Evie Black Dykeman, a Forrester analyst specializing in consumer E-commerce. Perhaps you can negotiate online customer discounts. Or you can emphasize convenience so that customers can select merchandise from various stores and then purchase everything in one transaction.

Good search-engine positioning is key, so hire a Web-positioning firm or buy a program like WebPosition (www.webposition.com) and design your site to optimize its placement on search engines, says Frank Howard, owner of NH Internet Marketing Specialists (www.imspweb.com) of Manchester, N.H. To get the word out about your site, buy opt-in E-mail lists (where subscribers choose to be included, so they don't regard your message as spam) from places like postmasterdirect.com. Opt-in lists have been shown to pull 10% to 20% response rates, vs. the 1% or less that banner ads bring in. Subscribe to Internet marketing newsletters for more tips.

It takes creativity to get noticed on the Web. Clarence Wooten, founder and CEO of Web site superstore ImageCafe, suggests auctioning a product from one of your retailers on eBay.com once a week or once a month and including the URL to your site underneath the product listing. "It's a way to link into the eBay community to find buyers who are interested in what you're selling," Wooten says. How do you make your site "sticky" so your visitors will return? Foster an online community: Schedule chat sessions or moderated discussions with an expert in your niche. Offer fashion tips and news from fashion capitals if you're selling apparel, for instance.

Make sure that your mall and its stores look good -- people won't trust your retailers if their online store design is amateurish. Fortunately, attractive Web sites are becoming more affordable. Small-business owners who don't have technical skills can create one through companies like ImageCafe.com and e-BIZweb.com, which offer a selection of templates that can be customized for less than it would cost to build a site from scratch.

"If you think of yourself as local, you'll remain local. But if you think of yourself as international, you'll aspire to that and eventually get there. Don't set your sights too low," says Jonathan B. Spira, founder of Basex Group Inc., a new technology research firm based in New York. In other words, don't let the big guys get you down.


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