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CYBERCULTURE

Interweb Mall Still Trying to Sell the Public on Concept

Computers: Online shopping is growing, but not as wildly as many industry watchers had predicted.

December 23, 1996|GEORGE WHITE | TIMES STAFF WRITER

Geoff Lange expected retailers to rush for the 72 "store" sites in the world's "first three-dimensional cyberspace mall," an Internet venue his company introduced in March.

Nine months after the grand opening of the Web site, however, there are only two tenants. Consumers browsing the mall--a two-story structure with four wings and a rotunda--will find a sign labeled "vacant" on nearly every simulated storefront.

"We expected to have more merchants at our mall by this Christmas," said Lange, director of Interweb Inc., a New York-based Web site designer. "I'm disappointed."

The Interweb Mall, located at www.interwebinc.com, is just one more disappointment in an industry that has failed to meet expectations. The ranks of Internet retailers have grown from the few pioneers of 1991 to about 10,000 today. Yet, sales from cybershops amount to far less than 1% of all retail business.

There has been some growth. For example, online holiday season sales are expected to total $194 million in 1996, up from $46 million a year ago, according to Jupiter Communications, a New York-based Internet consultant.

Cybermerchants are expected to ring up sales of $478 million this year--more than twice the level of 1995. However, the 1996 total will be less than half of the $1.2 billion in sales Jupiter predicted early this year.

Although the number of Internet-connected Americans grows rapidly--from 8.2 million in 1995 to 10.4 million this year--predictions of spectacular online sales growth have been wrong year after year.

In 1984, for example, one consultant predicted Internet sales would reach $5 billion by 1990. And the industry is not even close to reaching a more restrained 1990 prediction that annual sales would be $2 billion by 1996.

Those projections were off the mark because prognosticators underestimate the lure of traditional stores, said Josh Harris, president of Pseudo Programs Inc., an online services company.

"Some get an urge to buy because they can see others making purchases at a real mall," Harris said. "The electronic mall of the future will need the kind of audio and visuals that recreate the ambience of Muzak and decor in stores. The Internet mall needs sounds and three-dimensional visuals."

The Interweb Mall doesn't have sounds, but it has visuals that approximate dimensions to some degree. There are curving halls, winding staircases and marble-like columns. In contrast, the more typical Internet mall is mostly text.

A consumer can get 273 views of the mall by clicking a computer mouse. The mouse also opens store doors, revealing merchandise selections. However, until more merchants move in, little is stirring with the click of a mouse.

Tenants abound at well-established electronic shopping venues operated by services such as America Online, Prodigy and Microsoft. Many mainstream retailers and catalog companies operate in these electronic malls and some have their own Web sites. L.L. Bean, Eddie Bauer, Lands' End and Wal-Mart are among the many big-name merchants in cyberspace.

Very few retailers, however, have had the kind of success of 1-800-Flowers, where Internet sales rose from $20,000 in 1991 to $30 million in 1996--10% of its total business.

The florist's success is due partly to consumers' ease with ordering flowers sight unseen, company President Jim McCann said. The company helped create such comfort by promoting toll-free telephone purchasing in the 1980s, he said.

Consumer unease with ordering via computer is a major reason cyberspace is not yet a major shopping venue, said Nicole Vanderbilt, an industry analyst at Jupiter Communications.

"It's more of a perception problem than reality--but people fear someone will intercept their credit card number on the Internet," she said. "It's a fear of technology."

Although some analysts say transaction security will not be a panacea, others are upbeat about the medium's prospects.

"About 25% of all retail sales will be made over the Internet by 2005," said Walter Loeb, a New York-based retail analyst.

Geoff Lange is also optimistic about the industry and his Interweb Mall. He said his company erred by trying to lease the entire Interweb site to one retailer. Talks with another retailer--a chain that wanted the right to approve and reject other possible tenants--also collapsed, he said.

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