The network, set to launch in November, will be built around a central hub where promotions from all four retailers will be displayed. Each of the sites will include links to the others through the hub, and through promotions pages, order confirmations and customer newsletters. The network will be governed by a steering committee of senior executives from the four companies. Officials said they hope to add more companies in the future.
"This alliance of established e-commerce sites will make it easy for consumers to make informed buying decisions," said Cyberian Outpost CEO, Darryl Peck.
While e-commerce continues to grow -- Jupiter Communications predicts online sales to reach $5.8 billion in 1998 -- many small businesses have struggled to turn a profit. In an effort to drive sales, companies have shelled out big bucks for exclusive rights to display their wares on portal sites, and occasionally on other retail sites. For instance, CDNow Inc. (Nasdaq:CDNW), has deals with Lycos Inc. (Nasdaq:LCOS), Yahoo! Inc. (Nasdaq:YHOO), MTV and Rolling Stone.
But the market is showing some signs of consolidation. Last week, music store GoodNoise Corp. decided to acquire Nordic Entertainment and Creative Fulfillment Inc., forming Emusic. And German book giant Bertelsmann snapped up half of barnesandnoble.com, the American company's Internet division.
"It's something that everyone in the Internet has been thinking about. We all have customers and have been spending a tremendous amount of money in advertising and building our brands. The next step in the evolution is asking "how can we share that,"" said Bob Saltzman, vice president strategic business development at CDNow. Of course, the online mall is nothing new. But earlier versions, including Time Warner 's DreamShop failed miserably, scaring off many of the big name traditional retailers.
Now some of the big names have gotten back in the water, including Toys R Us and Federated Department Stores, which recently launched an online store at Macys.com.
Mall no big deal
And television shopping giant QVC recently launched the Square @iQVC, an online mall with barnesandnoble.com, N2K Inc.'s (Nasdaq:NTKI) Music Boulevard, and NetGrocer. That mall allows consumers to place goods from each of the stores in a single shopping cart for purchasing.
But Cyberian Outpost's (Nasdaq:COOL) Peck downplayed the mall angle. "There will be a page in the middle, but that's not what's exciting. Each of us will have links to the other merchants at some point. We're not creating a destination that people have to come to and then go out of to other places. This is not a massive investment for us. It's just potentially a way to acquire new customers with spending very little money," he said. "I don't think this will be predominantly the way any of us will acquire new customers."