How Valuable Is a Mall to the Merchant?

The term "mall" is an analogy to a physical shopping mall, which offers access to scores of shops, and the promise of walk-by traffic lured by the presence of several anchor stores. Malls tend to charge high rent as well as a percentage of the gross revenue, but usually provide an attractive all-weather, air conditioned, shopping environment, with security patrols, maintenance, and clean "streets". Stores in a physical mall sometimes advertise together, though each store handles transactions on its own.

How well does the analogy hold up on the Web? I'm not convinced that traffic to a mall-based shop is increased substantially over a stand-alone store which does its own active promoting. You don't find "anchor stores" in Web malls, nor have I seen a banner ad promoting shopping in a particular mall.

Some Internet malls do provide shopping basket services for stores, but usually charge a percentage of the transaction for the privilege, and might not divulge e-mail addresses of purchasers. Because of the shopping basket technology used, some malls do not allow shopowners to advertise the Web address of their store independently, but require all shoppers to enter the mall's "front door." Malls might be more secure than independent shops, but they also might pose a higher profile target for hackers.

From the merchant's standpoint, malls aren't too attractive except to complete novices who don't know where else to turn for help in getting onto the Internet. From the Internet Service Provider's standpoint, however, malls (actually collections of retail stores on a single server or Web farm) make lots of sense, since there is a great economy of scale for them. In short, the mall analogy fails: Web malls usually work better for ISPs than for the merchants they purport to serve.

Beware of the seminar hucksters who want to take money from net-naive businesspeople in exchange for a spot in their glorious Internet mall. Beware the newly "trained" Internet "consultants" who have had little first-hand experience on the Web. The malls they promote are much more likely to benefit their bank account than yours.

If you're in a mall already, what should you do? Make the most of it, but consider building another standalone store on the Web, and see if that doesn't bring in just as much or more revenue. Keep both stores open if it's cost-effective or close one if it fails to deliver after receiving adequate marketing energy and budget.

Of course, there are many free malls you can be linked to. Don't avoid them, but don't expect too much either. Yahoo may be the biggest and best mall of all, offering free links to hundreds of thousands of businesses searchable by category and keyword, with more traffic than any mall on the planet. Hang out your shingle on that grand shopping avenue -- for free.