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Working the net

By Kevin Kenyon

Customers who use Oakville Place’s Website can pick up goods at the mall’s concierge desk or have them shipped.

At a time when many developers are still formulating their Internet strategies, one Canadian-based mall owner is already discovering new ways to use e-commerce to its advantage.

Perhaps the most compelling discovery is the idea that, with the help of the Internet, malls are no longer bound by the limitations of their trade areas.

Late last year, officials at Toronto-based Cambridge Shopping Centres launched an online shopping site www.oakvilleplace.com in conjunction with Oakville Place Shopping Centre, a 423,000-square-foot mall in Oakville, Ontario.

That site came too late to make a significant impact on the holiday season, but Cambridge officials say they’ve already made a surprising discovery: More than half of Oakville’s 72 product orders (as of press time in October) have originated from international addresses, including sales to Germany, the United Kingdom, Singapore, Indonesia and the United States.

That’s despite the fact that Cambridge has not used an extensive marketing campaign, preferring to wait until it could sign up more retailers, meaning those orders emanated solely from Internet searches.

“We’re picking up sales from people around the world who would never be in a position to physically visit our mall,” said Simon Pym, Cambridge’s vice president of informational services. “That’s what’s most interesting to us — the idea that your mall’s trade area is suddenly boundless.”

Surprisingly, the majority of the international orders have been sent locally, allowing gift givers in far away places to save on shipping costs. “We’ve discovered that people are finding us on search engines, and then shipping the goods to relatives or friends who live in the area,” he said. “It seems that if people can find an online mall that’s close to their relatives, all they have to do is order it with their credit cards, and we do the shipping [C$5 within Ontario and Québec] for next to nothing.”

There also appears to be a certain comfort level, Pym noted, in shopping at a mall’s Website, as opposed to shopping at a virtual mall.

“We actually had a number of international phone calls from people who just wanted to make sure we were a ‘real’ mall before they ordered the goods,” he explained, noting that many people like the idea that the goods can be returned with little trouble if need be. “We said ‘yes, we were in Oakville, Ontario, Canada, we are a real mall, we do exist.’”

Considering size and color combinations, the site now offers more than 4,000 products, ranging from a C$5,000 one carat diamond ring to a C$4.95 package of chocolate-covered espresso beans.

Web users search by store or merchandise category, and then place the desired items in a “shopping basket.” Payment is made with a major credit card, and orders are generally shipped from the shopping center within 24 hours. Shoppers also have the option of picking up the goods at the mall’s concierge desk, shipping them by regular mail, or sending them by courier service.

“We’ve found that half the time people pick the merchandise up, which is great because we also get them into the center,” he said.

Another advantage for shoppers, according to Pym, is that they can buy a number of items from different retailers in one transaction.

“They only have to check out once,” he said, noting that if they bought the items from retailers’ Websites they would have to visit three different retailers and make three different transactions.

On the surface, the availability of online shopping would seem to contradict the traditional philosophy that developers need to keep customers in their malls for long periods of time, but Pym noted that that philosophy may no longer be realistic.

Time-starved shoppers, if they choose to, could use the service to do all their shopping, and simply pick up the items at the mall, he said.

“We want to offer those consumers the ability to come online rather than driving to the mall, because we think that they’ll probably go on the Internet to make those purchases if we don’t, and we’d rather they buy it from us.”

On the other hand, with studies showing that a large percentage of shoppers are using the Internet to do product research, Pym said it could lead to visits.

“We don’t think the jewelry retailer expects to sell that C$5,000 diamond ring, but by putting it online consumers can do research and maybe come check it out in person.”

The program has been relatively inexpensive up to this point, Pym noted.

The Website for Cambridge’s Oakville Place draws customers from Europe and Asia.

“We have one Website administrator on site who maintains the Website, gets the products from the retailers, and takes all the pictures,” he said. “Beyond her salary, the technology itself is quite cost-effective, certainly less than C$500,000 in total for the entire project for the past two years.”

Although the site was officially launched last December with only a handful of retailers, Pym described that as a test run, and said Cambridge officials have spent the majority of this year building up their retailer base. With that accomplished, the company is now ready to market the site to the public, he said.

“Only eight of the mall’s 96 retailers were on board at the time. Now [mid-October], it’s up to 30, and we expect more to join in time for the holiday season.”

While the majority of Canadian retailers either already have their own Websites, or are planning on launching one imminently, Cambridge officials are proving that developers can play a key role in helping local and regional merchants get involved. “For a lot of these retailers, an online Website is a very expensive proposition, but they can participate in ours for very little cost,” Pym said.

One such retailer is Capiati Men’s Wear, which began displaying selected items earlier this year.

Considering that the only cost charged by Cambridge is a C$1 transaction fee, the decision to join was a relatively easy one, according to Natasha Saria, store manager.

“From our perspective, we get our products out there for free, and people online can see what we’re all about,” she said. “It wouldn’t be cost-effective to set up our own Website with all the overhead costs, because we only have three locations.”

Although selling apparel online can be difficult, Saria said her customers know they can return the items if necessary.

“In the least, it gets our name out there, and people can do research and then visit the store,” she explained. “We have had some sales, but more customers have mentioned the site when they visit the store.”

With the help of the mall’s Web administrator, Capiati changes out its merchandise every two weeks, Saria said. Plans are under way for a bigger push for the holidays.

“We plan on marketing our colognes and novelty gift ideas as well, and we’re optimistic things will go well.”

Another retailer that is using the service to its advantage is Cinema 1, which sells movie videos, according to Bill Bruder, store manager.

“Last year we offered 15 videos at a sale price, and we ended up selling quite a few tapes considering so little marketing was done,” he said, noting that the store brought in more than $1,000 over the holiday season alone.

“A lot of people liked the idea that they didn’t have to fight the crowds and wait in long lines,” he said. “We’re planning a similar push this year.”

Although he just missed out on the service last year, Don Brown, owner of Second Cup, a retailer of coffees, teas, ciders and hot chocolates, is hopeful that the addition of an online sales channel can boost sales this time around.

“We’re offering about 35 of what we call our mover-and-shaker items, products we sell a lot of around Christmas time,” he said. “It’s a great idea — we just missed out on it last year and we’re hopeful that it will work this time.”

Although a number of developers have experimented with online shopping, actual live, operational sites such as the one used at Oakville Place are still a rarity.

That fact has attracted a lot of attention from other developers, and Pym is often asked to speak at industry functions. The majority of those developers, however, appear to be taking a wait-and-see attitude, wanting to see how the model works during the holiday season, he said.

As for this year, plans call for a stronger marketing push, shown by the giant banners on either end of the center which tout the mall’s Website.

“We think the content is enough now to attract even more consumers during the Christmas shopping season,” he said, noting that if all goes well, the program may eventually be expanded to other malls in Cambridge’s 39-center portfolio.

“We want to see if it works, and if it does we will consider rolling it out to our other centers, but we need to do the proving first.”

Although a handful of U.S-based developers have experimented with e-commerce, there is some question as to whether Oakville’s model could work in the States.

Jeff Green, president of The Green Group, a Troy, Mich.-based retail consultancy, said the situation appears to be different in the two countries.

“The motivation to do e-commerce in the U.S. is more focused on increasing customer awareness, while Canadian developers are more concerned with helping out the small-shop space,” he said. “In Canada there are many more small chains who can’t afford to be online than there are in the U.S., so it might be a case of it just being more relevant there at this point in time.”

Still, Green said the idea of developers linking their malls and trade areas through cyberspace is becoming more of a reality every day.

“Long term I think this is the future; what we don’t know is how fast it’s going to happen,” he said. “I would say that it will at least be tested over the next few years by a number of U.S. developers.”