Thursday, March 16, 2006

Why Online Shopping Mall's are a bad idea

One of the projects that I have never been keen on and has kept raising its head on so many occasions is the idea of the online Mall.

These sites were probably most famously personified by the seemingly deceased Berkeley Square Online Shopping Mall (and nothing to do with the original companies with the same name).

Now to my mind it was a losing idea from the beginning and here is why I think that.

Back in the days before Mass media, superstores and out of town shopping cities, there was a guy who made stuff. He stood outside his shop and announced to everyone that he had stuff, and as people came into his shop he looked after them and gave them a very personal service. People travelled to his shop in particular because he had the best stuff and he remembered their names, what they bought and made good receommendations to them. He was very specialised in what he had and didn't try to make other things because someone else already had other stuff and did a very good job of selling it.

As time went on, the concept of the town centre develoepd where people congregated in the middle of town and brought their stuff to a market. It made sense because customers could buy more stuff in a shorter space of time and didn't have to travel from one remote shop to another to buy all the stuff they needed. Consequently all the people who made stuff could also sell more stuff at the market because that was where all their customers were. Obviosuly there were still stars of the market and they made a lot more money than people who didn't have quite so much stuff. It is after all one of the laws of competition that someone wins and someone doesn't.

Fast forward again and the winners needed bigger premesis to sell all the stuff they had, which first became the town shopping centre and most recently the out of town shopping centre. The out of town shopping centre developed because people needed somewhere to park their cars whilst they bought all the stuff they needed.

The problem was that as the shops grew bigger and sold more stuff the service got more and more impersonal, but that didn't really matter because lots of stuff was being sold.

Ok Freeze!

Now comes the web where anybody can browse at leisure over the stuff they want. They don't need a car for it, they are looking for good quality stuff at good prices, and some online stores are offering very personal buying experiences. The sites remember who they are, they remember what was bought, they suggest alternatives and give all the help a person could want. In other words they go back to the original shopkeeper who knew his customers.

All the advantages that super malls and out of town Hypermarkets had don't apply online. Instead its all about the personal service and the individual brand recognition. Why then would you first go to an online super mall brand and then choose your favourite brand to buy from? Results have proved that people won't. Instead they will go directly to Amazon, to EBay, to Ocado, and to your favourite niche brand who sells that fantastic thing you cannot do without.

The issue with Online Malls is that they are not the first page a user sees when they open the browser, and to succeed, they need to be. The first page is going to be MSN, Google, Yahoo etc.

An online Shopping Mall also just became the worst business proposal in the world now that Google have announced that they will create an eCommerce specific Search engine.

So throw away those ideas guys.... it didn't work, was never going to work, and never will now.

Edit 17th March

Ef points out that are currently running a bunch of radio ads about how you can access a 'virtual shopping mall' (my words not theirs) from their directory service 118… so not only can you find 'whatever you’re looking for in one place' but you can also buy some of it online from Yell…

Strange take on the idea that rather than having it all online you’ve actually got a 'shop itinerary' (my words again) for where to go to get stuff – is this new or just a new advertising slant on the old “how do I advertise directory services?” question.

I think there is going to be some interesting developments here as Google and others turn their attention to the concept of Local Search - "Help, I'm in Peckham and I need a plumber quickly. In that arena, Yell would seem to be well placed to answer that question, but a bigger qwuestion for them is whether they have the thinkers to come up with a remarkable solution to accomplish this before Google march in and take their marketplace. Yahoo would also do well turning their attention to this issue rather than trying to bribe users to search on their site


At 12:36 pm, Anonymous Nick dw said...

I know what you are saying but there are two exceptions to this that can be seen today.

Amazon and ebay, granted with ebay the majority of their business is generated by the individual but there are a growing number of Small business using it as an outlet.

just a thought.

At 4:25 pm, Blogger Aaron Savage said...

Your comments are interesting because in the terms that I was using, both eBay and Amazon are actual shops rather than Malls.

What I mean by a mall is it is a portal which lists the various online shops but doens't actually have any eCommerce abillity in and of itself.

There have been lots of variants on this including multi shop shopping baskets (so you can purchase from Amazon, eBay, Tescos and Next and use the same shopping basket to opay for all your goods) which do give some convenience advantages but these advantages tend to be negated by the price at the end of it and are only of real value to high disposable income brackets.

The problem is that people won't go to the SHopping Mall's portal website and then click thorugh to the Amazon site. They will go directly to Amazon and then to eBay etc.

So in those terms Im making a distinction, and Google's new search engine for retailers will kill off the concept once and for all.

At 9:32 pm, Anonymous Anonymous said...

Interesting but I wonder what your thoughts would be for companies like Quixtar who have an online mall and the personal service of actual persons.

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