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AOL to Launch Shopping Service

September 20, 2004|Chris Gaither | Times Staff Writer

In a bid to expand its audience beyond its shrinking subscriber base, Time Warner Inc.'s America Online today is expected to introduce an online shopping service available to surfers across the Web.

With InStore, AOL joins a crowded field. Yahoo Inc., Google Inc., Microsoft Corp. and dozens of smaller companies already offer similar services that let shoppers search for products and bargains among many online retailers.

But it highlights AOL's efforts to become a broader Internet portal. Most of AOL is accessible only to the 23.4 million subscribers who pay the company a monthly fee of $4.95 to $23.90.

Reaching out to the Web "is quite a step forward for us," said Bob Hayes, vice president and general manager of AOL's e-commerce group. "We're now playing like the rest of the guys."

That's important for AOL's prospects. Although the Dulles, Va.-based company posted operating income of $663 million last year on sales of $8.6 billion, it has lost 3.3 million U.S. subscribers since September 2002.

Hayes doesn't expect the shopping service, at www.in-store.com, to contribute significantly to AOL's revenue for years. But it could allow the company to reduce its reliance on standard advertising revenue. AOL will charge retailers a fee when InStore visitors click on their products and take a cut of every item sold.

InStore also could help AOL recruit new members, said Patti Freeman Evans, an analyst with JupiterResearch. "If you like this environment, you might want to become a subscriber."

Such shopping services have yet to catch on with consumers. AOL said 10% to 13% of Web surfers use comparison shopping sites. But a JupiterResearch survey conducted in May found that only 1% of respondents initiated their most recent online purchase at a comparison shopping site. The highest number, 25%, headed straight to an online store like Amazon.com Inc.

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