In Internet commerce as well as in downtown shopping malls, establishing an easily-identifiable brand is everything.
IBM's World Avenue online storefront, announced exactly a year ago and launched with much fanfare two months later, will shut its doors July 9 because the merchants inside it were not getting enough bang for their marketing buck, company officials said today.
"It was started as a way to get our customers online quickly, but we found that most customers wanted a way to bring their own brand names forward more directly," said Trink Guarino, a spokeswoman for IBM's Internet division, in Armonk, N.Y. For customers such as Omaha Steaks, a mail-order food supplier, "an online mall sponsored by somebody else wasn't going to work," she said.
"Our numbers [from World Avenue] really weren't that great," said Stephanie Healy, interactive sales manager at Omaha Steaks, adding the company now plans to focus its efforts on its own site at www.omahasteaks.com/.
The 75-year-old food retailer and restaurant supplier, based in Omaha, Neb., sells "well into seven figures" each year from online sales off its own site and off America Online Inc.'s online commerce sites. But last year only a small portion of those sales came from World Avenue, Healy said. The company garners even more from catalog sales, she added, although she declined to provide specific earnings figures.
The site, at www.worldavenue.com/ , showcases the IBM brand, but visitors must go a bit further inside to find individual merchants' storefronts. World Avenue failed to draw significant numbers of shoppers, disappointing IBM officials who had hoped to profit from the venture by grabbing a five percent commission on each sale off the site.
Guarino described the venture as "a learning experience" for IBM, saying the company will continue to license its online commerce technologies, including the Net.Commerce electronic sales software, to its World Avenue customers.
"A year ago we were way out front" in offering the online mall concept and providing a proving ground for technologies such as Net.Commerce, she said.
Guarino dismissed the idea that consumers' privacy concerns dampened interest in World Avenue, saying the growing acceptance of the Secure Electronic Commerce standard by banks and retailers is proof that electronic commerce is on its way to becoming mainstream.
"This was mainly a marketing issue," she said.
Consumers are likely to look to major retailers when they're shopping on the Internet, so for now the online mall concept is a tough sell, said Erica Rugullies, an electronic commerce analyst at Giga Information Group in Cambridge, Mass. "When I want to buy sneakers, I think Nike or Reebok," Rugullies said. "This shows how critically important branding is."
However, IBM didn't market World Avenue as effectively as it could have, she said.