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Prodigy's Computerized Shopping Service Seeks Viable Customer Base : Technology: Despite the marketing muscle supplied by Sears and IBM, the PC-based operation may be ahead of its time.

December 19, 1989|STUART SILVERSTEIN | TIMES STAFF WRITER

Maybe your favorite jeans finally have passed the point of no return. Trouble is, the thought of going to an overcrowded shopping mall gives you the willies, your mail-order catalogues have vanished and the television shopping channel isn't hawking pants today.

What's a busy consumer to do? Try shopping by computer from the convenience of your own home.

At least that's what Prodigy Services Co. is suggesting. The firm--a partnership between retailing giant Sears, Roebuck & Co. and computer heavyweight International Business Machines Corp.--is making an unprecedented bid to hook a broad cross-section of America on computerized shopping.

It's an uphill struggle. Prodigy must deal with, among other things, a lack of consumer awareness, technical shortcomings in its system, the prospect of competing technologies and the increasing financial pressures on its owners.

Some analysts, citing costly failures by other companies that experimented with electronic publishing, liken computerized shopping to the "paperless society" theory: a nice-sounding futuristic concept, but nothing that is likely to make a big splash any time soon.

"They're trying to create a marketplace that's probably 10 years away from becoming a reality," said Neil Harris, manager of product marketing for the Genie electronic information service.

But Prodigy is out to prove the skeptics wrong. It is trying to cajole its way into many of the upwards of 20 million American homes estimated to have computers by using a three-pronged approach: a relatively easy-to-use format, a flat subscription fee of $10 a month and a blitz of television advertising.

The company has sold more than 60,000 of its $50 subscription start-up kits in the past two months alone, amid its first big Christmas ad campaign.

Unlike older competitors that cater mainly to computer buffs and devote most of their capacity to other electronic information services, the Prodigy service was set up mainly as "a merchandising medium" from the start, said Gary Arlen, a consultant in Bethesda, Md. It is aimed at harried but affluent two-income families who don't want to squander their precious time waiting in lines or parking lots.

The long-term market for Prodigy consists of people "who don't really want to use a computer," said Scott Corzine, Prodigy's director of merchandise marketing. "They want a utility that lets them run their lives more easily."

Besides computerized shopping with 70 retailers, Prodigy provides such features as news briefs, Consumer Reports summaries, educational games, banking, stock trading, flight reservations and electronic mail, which allows subscribers across the country to send messages to each other.

(Electronic mail is one of the most popular services, but it can be a headache for Prodigy. The company recently scrapped an electronic mail "bulletin board" on health that became a forum for a heated debate between homosexuals and religious fundamentalists. Prodigy said it eliminated the board because it was lightly used and denied charges that the company was trying to avoid controversy.)

Linda Mott, a housewife in the Midway City area of Orange County, is in many ways typical of the customers that Prodigy is pursuing. Until Mott and her family signed up for Prodigy in June, she used their home computer mainly to write occasional letters.

Now, Mott uses the PC to shop at J. C. Penney and at R.E.I., a sporting goods store. One time when she didn't know where to find a water bottle that would fit on her bike, she messaged R.E.I. on the electronic mail system for help. The next day, R.E.I. replied that it had found a bottle for her. The result: Mott now is a computerized shopping enthusiast.

"As the freeways get more crowded and as malls get more crowded, it (computerized shopping) will attract more and more people," she predicted.

There are some promising early signs for Prodigy as a business venture. Available to the public since October, 1988, the Prodigy system already reaches an estimated 170,000 homes in 21 markets across the country. That makes it the nation's fastest-growing "on-line" service for the home and the second or third largest.

Retailers report that their sales of clothing, fragrances and other goods to Prodigy users, though tiny, are better than they expected for this holiday shopping season.

Analysts praise Prodigy's business strategy, and some say Prodigy could be the first big success among electronic publishers that transmit both graphics and text data. Besides reaching out to a broad audience, the Prodigy service is the only one that displays product advertisements--they appear on the bottom one-fifth of the subscriber's computer screen. The company's plan is to make most of its money from fees paid by advertisers and retailers, and to avoid the standard practice of charging customers for each minute that they are signed on.

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