Smart Answers

Q : My startup E-commerce company wants to establish a virtual shopping mall with a group of local retailers. Can we compete online with Gap, Macy's, and Nordstrom? -- C.L., Los Angeles

A : Many local retailers' hopes were stunted by a recent study predicting their online market share would shrink from 9% to about 6% by 2003. Face it: Most small retailers lack brand recognition and they can't fund fancy, interactive sites.

However, E-malls can help small retailers get their products on the Web by charging a monthly rental fee or a percentage of online revenues. Collectively, they gain marketing power and increased Web traffic.

Make sure your collaborators share a common vision, commit for a specified duration, and make equal funding contributions or pay the same "rent," says Karen Glotzer, strategic alliance manager for in New York, an online resource for entrepreneurs serving the small-office market.

You'll need to find a marketing niche appealing to a segment such as teens or working moms. Online malls lose customers if they don't provide technical support and don't give consumers reasons to return, says Evie Black Dykema, an analyst at technology research firm Forrester Research Inc. Perhaps you can negotiate online discounts or let shoppers purchase everything in one transaction.

"You may have to be innovative and contemplative--but you can still compete," says Jonathan B. Spira, founder of Basex Group, Inc., a new technology research firm in New York. In other words, you may not be, but you don't have to let the E-giants get you down.

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