Online Malls Dig Out From Under Amazon Avalanche

Less than a week after Amazon.com muscled into the online shopping mall market with its new zShops feature, other online portals have begun to fight back with a variety of creative strategies.

One established shopping portal reacted immediately by lowering the price of its hosting contracts. Shortly after Amazon’s announcement, Malls.Com declared that it will roughly match Amazon’s introductory listing fee and will beat its setup fee. Amazon is initially charging a flat monthly rate of $9.99 (US$) to list up to 3,000 products. Customers must also pay a one-time $10 set-up fee.

The Costs and the Cut

Malls.com will charge $9.95 per month for a single product listing, but charges no set-up fee. It also does not charge a fee upon completion of the sale, while Amazon.com has set a scale of 1.25 percent to 5 percent, based on the closing price of the item sold. On items priced up to $25, Amazon.com will take a 5 percent cut. On items from $25 to $1,000, Amazon charges $1.25 plus 2.5 percent of the price, and charges $25.63 plus 1.25 percent on items over $1,000. To list items individually, Amazon charges 10 cents per item for 14 days.

While Amazon’s sale price of $9.99 will go up in January, Malls.com has set no expiration date for its price. Amazon will move to a pricing scale that is based upon the number of items listed, with up to 500 listings available for $29.99. As many as 3,000 items can be listed for $99.99 per month when that pricing schedule takes effect.

Like Amazon, Malls.com also leases space to full e-commerce stores. Monthly rent at Malls.Com varies from $25 for a one-month commitment to $17 for a 12-month commitment. Those agreements require a $10 set-up fee, regardless of how long the lease is for.

Malls.Com spokesman Jon Wedemeyer said that his company is deliberately trying to compete with Amazon.com by offering a better deal to small merchants. “We think it’s great that the rates to get an ad on these two huge sites have gotten to this level. Amazon’s a great site, and we have the same to offer. It’s a win-win situation for everybody,” he said. Malls.Com, launched in 1995, has more than 500 product-specific shopping centers and 150 stores and products listed.

Town Power

While Malls.Com tries to take on Amazon.com on price, Town24.com and WhatToBuyfor.com, Inc. is taking different approaches to generating online mall traffic. Town24.com plans to launch today with a cartoon interface that allows visitors to select their destinations as if they were walking through a town. Online brokerages, insurance companies and other financial companies are organized on one street, as are flower shops on another. Clicking on a “news building” loads a page with daily newspaper-style news stories, and a post office will carry e-mail services.

Town24.com believes that the site is more than just colorful and creative. It is designed to take shoppers to their desired items with a maximum of three clicks of the mouse. “The compelling and enjoyable twist for consumers is the way they can visually navigate through town24 — building by building, street by street,” the company says.

Town24.com plans to open with 170 stores. As it grows, the company says, “The site’s colorful environment will be augmented with visually-based free services such as e-mail, daily jokes, and animated skits. And much like real life, you never can be quite sure what your day will be like at Town24.com.”

Occasion-Based Malls

Adding to the mix, WhatToBuyFor.com — a series of sites geared to specific gift-giving occasions — launched its third online mall last week. WhattoBuyForBirthdays.com lets online retailers give shoppers gift suggestions for birthday boys and girls of all ages. The site’s “fast and friendly environment” eases the anxiety many shoppers feel when trying to find the perfect gift, co-founder Julie Pohl says. “Our mission is to provide our visitors with the confidence that their gift will be well received.”

The company already operates WhatToBuyForChristmas.com and WhatToBuyForValentines.com. All three are linked by the main WhatToBuyFor.com site, which gives visitors access to more than 175 shops. The unique design also helps retailers, the company says. Because shoppers who visit WhatToBuyFor.com are focused upon making a good purchase quickly — not browsing — retailers providing gift ideas see a high conversion rate of visitors to purchases, the company says.

At least five other targeted shopping portals are in the works from WhatToBuyFor.com to focus on items for babies, weddings, anniversaries, Mothers’ Day and Fathers’ Day.