1 month ago
Business DescriptionIn 1998, there were well over 300 active virtual malls on the Internet. In 2000, they were frequented by 46 million shoppers, who shopped in them for goods and services.
The virtual mall is an Internet "space" (pages) wherein "shops" are located. These shops offer their wares using visual, audio and textual means. The visitor passes through a virtual "gate" or storefront and examines the merchandise on offer, until he reaches a buying decision. Then he engages in a feedback process: he pays (with a credit card), buys the product, and waits for it to arrive by mail (or downloads it).
The manufacturers of digital products (intellectual property such as e-books or software) have begun selling their merchandise on-line, as file downloads. Yet, slow communications speeds, competing file formats and reader standards, and limited bandwidth - constrain the growth potential of this mode of sale. Once resolved - intellectual property will be sold directly from the Net, on-line. Until such time, the mediation of the Post Office is still required. As long as this is the state of the art, the virtual mall is nothing but a glorified computerized mail catalogue or Buying Channel, the only difference being the exceptionally varied inventory.
Websites which started as "specialty stores" are fast transforming themselves into multi-purpose virtual malls. Amazon.com, for instance, has bought into a virtual pharmacy and into other virtual businesses. It is now selling music, video, electronics and many other products. It started as a bookstore.
This contrasts with a much more creative idea: the virtual catalogue. It is a form of narrowcasting (as opposed to broadcasting): a surgically accurate targeting of potential consumer audiences. Each group of profiled consumers (no matter how small) is fitted with their own - digitally generated - catalogue. This is updated daily: the variety of wares on offer (adjusted to reflect inventory levels, consumer preferences, and goods in transit) - and prices (sales, discounts, package deals) change in real time. Amazon has incorporated many of these features on its web site. The user enters its web site and there delineates his consumption profile and his preferences. A customized catalogue is immediately generated for him including specific recommendations. The history of his purchases, preferences and responses to feedback questionnaires is accumulated in a database. This intellectual property may well be Amazon's main asset.
There is no technological obstacles to implementing this vision today - only administrative and legal (patent) ones. Big brick and mortar retail stores are not up to processing the flood of data expected to result. They also remain highly sceptical regarding the feasibility of the new medium. And privacy issues prevent data mining or the effective collection and usage of personal data (remember the case of Amazon's "Readers' Circles").
The virtual catalogue is a private case of a new internet off-shoot: the "smart (shopping) agents". These are AI applications with "long memories".
They draw detailed profiles of consumers and users and then suggest purchases and refer to the appropriate sites, catalogues, or virtual malls.