Web malls have generally been unsuccessful on the Web. Although they seem like a great idea—after all, they work well in local geographical areas—they have not been able to attract much attention on the Web. Therefore, I don’t see them as a significant force in ecommerce.

If you look at AOL in store (http://www.in-store.com) and MSN Shopping (http://shopping.msn.com), you will see that they are significant shopping malls. You can argue that these malls are successful. I will argue however, that considering the amount of time, energy, and effort behind those malls, they have been remarkably unsuccessful compared to eBay. Indeed, considering the huge amount of capital behind them, it is surprising that these malls have not become a dominant factor in ecommerce.

One of the problems is that online malls typically charge retailers such a high amount to participate that the retailers have to charge high prices in order to operate viable businesses. The consequence of such a policy is that online retailers must charge as much for products as they would in a bricks and mortar store. They have no advantage in competing with physical stores other than perhaps convenience for people that don’t like to go shopping. In effect, they rob ecommerce of its very essence: the capability to reduce overhead and charge lower prices. Without this capability (advantage), ecommerce is not very competitive and is less viable. That’s one of the primary reasons why eBay— with its economical fees and generally lower prices for products—has run away with all of the business.

What are malls good for? I would argue nothing. If you place a store in AOL in store or MSN Shopping, you will be sure to sell some merchandise. The real question, however, is whether such an operation will be profitable and scalable. In too many cases, it won’t.

There are hundreds of other malls around the Internet in which you can establish a storefront. Maybe thousands. Name one. I can’t name one. That leads me to believe that such malls are not worth your consideration.

Is there any reason for joining a Web mall? If a Web mall is inexpensive and provides you with everything you need for a storefront, it might be worth your consideration. The things you would look for would be storefront webpages, a catalog, a shopping cart, and a checkout process. These are essential things you need to run your own independent website, and if you can do it through a shopping mall at an inexpensive price, that might be the way to go. Keep in mind, however, that most of the auction management services—which you should be using—provide many of the digital devices that you need for ecommerce. Most capable auction management services provide templates for webpages, a catalog, a shopping cart, and a checkout mechanism. In fact, many of them provide their own Web mall too.

PayPal As an Auction Management Service

PayPal is not limited to eBay. In fact, eBay bought it in 2002 after it had already become very successful. Today it continues to serve ecommerce well beyond eBay. For that reason, PayPal has developed its own ecommerce management capabilities and even competes with eBay. One of the features of PayPal management services is the PayPal mall.

Could it come to pass that the PayPal mall will someday become a successful mall? Because of its situation, that’s entirely possible.

Specialized Malls

If you can find a specialized mall that specializes only in the kind of products and services that you sell, it may be a strategic place to locate your website retail business. By virtue of having many similar retailers in the same place, such a mall is likely to be a legitimate attraction (attractor). After all, retail sales are an attractor, and if you can get many different retail operations satisfying the same needs, you can create a major attractor.

Comsumers love choice. Thus, if you could put all of the scuba-diving shops on the Web in one mall, it would, in effect, become a huge attractor for those who enjoy scuba diving. The primary problem with doing this is that most scuba-diving shops do not want to be in the same mall with all of their competitors. As a result, they tend to follow the geographical model of one scuba-diving shop in each mall across the country. But that doesn’t work well on the Web.

The Portal as a Specialized Mall

My definition of a portal is an information center. If you put all of the information about scuba diving into a portal and added a half dozen scuba-diving stores, the scuba-diving stores would be a great additional attractor for the portal. And they would likely enjoy good sales. In fact a portal, according to my definition, should include good shopping, and therefore it’s valid to look at any specialized portal as a potential specialized mall.

On the other hand, if you were to create a specialized mall that included many Web scuba-diving shops, you would certainly want to take the time and effort to add something to such a mall. What you would add is content. That is, tutorials and other information on scuba diving would benefit customers. Thus, a specialized mall would start to look like my definition of a portal.

Let me point out, however, that in this section I’ve used the word specialized malls. These ideas are not relevant to general malls. And, in fact, these ideas do not work for general malls. Also note that you cannot find very many specialized malls on the Web.

Cost-Effectiveness Review

Web malls are not cost-effective for marketing. Some may be costeffective as an inexpensive place to establish an ecommerce storefront location on the Web, but most will not bring in business for you. The ones that will bring in business are expensive.