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Saturday November 28 7:56 AM ET
Alternative Shopping Sites Vie For Internet Trade
By Reshma Kapadia
NEW YORK (Reuters) - With online sales expected to double this holiday season, some Internet
sites are letting shoppers to haggle over prices, bid at auctions or get deep discounts on name brands
-- part of a drive by retailers to stand out in an increasingly crowded field.
All told, shoppers are expected to spend $2.3 billion online during the 1998 holiday shopping season,
up from $1.1 billion in 1997, according to Jupiter Communications, an Internet market research group.
''It will shave a bit off from the brick-and-mortar retailers that have poor selection, bad customer
service and are not competitive in their own world,'' said Maria LaTour Kadison, a senior analyst at
Forrester.
Something for everyone is the name of the game. In addition to well-known retailers such as Macy's,
JCrew and the Gap, a host of merchants that are not exactly household names are now online, hoping
to gain attention this holiday season.
Some are offering deep discounts on designer clothes, furniture and electronics, while others are
sponsoring sites where customers can bid on hard-to-get items -- such as Hasbro Inc. (AMEX:HAS
- news)'s Furby, the season's hot toy phenomenon. Other sites allow shoppers to haggle for the
cheapest price possible on everyday products.
Cendant Corp. (NYSE:CD - news)'s Netmark, for instance, offers the Haggle Zone for shoppers
who are looking for the chance to fight for the best price on popular toys over the computer, rather
than paying the going rate at the traditional stores. The site has a patent pending on the haggling
feature.
Netmarket, which also has auction and flea market options, offers 1,700 brands and derives its
revenue primarily from membership fees. Although anyone can buy products from the site, members
get a larger discount, expanded warranties and a lowest-price guarantee, said Kerry O'Neil, vice
president of interactive services at Cendant.
Searching for discounts is a mission for many shoppers, and many Internet retailers are hoping to
grab market share by appealing to those looking to buy on the cheap. Many of these players are able
to undercut the prices of traditional retailers because they have lower costs.
Deal-a-Day, based in Norwood, Mass., guarantees that all of its prices on its designer clothing are 30
percent lower than anyone else's.
Bluefly Inc., whose site was launched in September, is a discount retailer that offers designer apparel
-- everything from Prada to Calvin Klein -- and ships purchases within 24 hours. At the moment, it
considers the department stores as its primary competition, Chief Executive Ken Seiff said.
Earlier this month, Lycos Inc. (Nasdaq:LCOS - news) chose Bluefly as its ''premiere commerce
vendor,'' meaning that the discount retailer was deeply integrated into the Internet gateway's site with
advertising and search words. The deal sent Bluefly's stock soaring. It closed Friday at $13.75, up
$3.44 on the day.
''We consider this a critical season even though it is our first, because time is so compressed on the
Internet,'' he said.
Many of these emerging retailers have quickly shot into the hot-stock realm, at a time when many
Internet-related issues are soaring.
eBay Inc., which sponsors an online auction site, is a good example. Its stock closed Friday at $218,
up $13.50 on the day. That compares to its opening price of $53.50 on the day of its initial public
offering in late September.
Santa Monica, Calif.-based eToys Inc. offers popular toys such as Beanie Babies and Furbys without
the hassle of pushing and tugging for them at the shopping mall. Some analysts think it may be the
next Amazon.com Inc. -- the Internet's biggest book retailer -- even though Toys 'R' Us Inc. -- the
largest U.S. toy retailer -- recently made a move online.
''eToy is only a year old, but they have been spending tons of money on advertising to create brand
and awareness within everyday lives of people, not just when they are online,'' Forrester's Kadison
said, adding that it was important to target customers at all times, just not via the Internet.
''Their benefit is that they have Toys 'R' Us, which has tons of problems off line, coming in after
them. It would take a lot for Toys 'R' Us to beat them. This holiday season may push eToys into the
next stratosphere.''
Toys R Us, which has been hurt by heightened competition from discount retailers and warehouse
clubs, has recently closed stores and cut back on its purchasing.
Fri Nov 27 | Thu Nov 26 | Wed Nov 25 | Tue Nov 24 | Mon Nov 23 | Sun Nov 22 | Sat Nov 21
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