Online Shopping Malls Scams

Myth – online shopping malls have the same benefits of real malls: Internet ScamBusters #17

Internet ScamBusters™
By Audri and Jim Lanford
Copyright © Audri and Jim Lanford
Issue #17

  Welcome to all our new subscribers! This will probably be the most controversial issue we’ve done in a *long* time. So let’s get going…

Scam: Internet malls have
the same benefits of real malls.

  You’ve no doubt heard radio ads, seen ads, watched infomercials, or gotten promotions advertising Internet malls (or cybermalls). These commercials and ads usually invite you to attend a free seminar. At that seminar, you’re pitched on attending an in-depth seminar, which often includes a business opportunity to sell mall space, and/or space on a cybermall. Some claim that you don’t even need to own a computer.

  So, the question is: are Internet malls legitimate — or are they scams?

  Some Internet malls are scams, pure and simple. They do not provide the Web space they promise — the owners simply steal your money. However, this is the exception.

  Other malls are certainly not outright scams — they do legitimately provide Internet "storefronts" where people can promote their businesses.

  However, there are a lot of false conceptions behind most Internet malls. And that’s the focus for this issue of Internet ScamBusters.

Here are seven common problems with Internet malls:

1. Internet malls do *not* have the same benefits as real malls. Prime "location" on the Internet is very different than "prime" real estate in the physical world.

  In fact, location on the Internet is an unlimited resource. It’s very different than "prime" real estate in the physical world (which is very limited).

  Here’s why: At a typical mall in the "real world," you often walk by the small shops on your way to Nordstrom’s or Sears. As you stroll by, you might see a new book by your favorite author in the window of WaldenBooks, or a great new kitchen gadget in Williams Sonoma’s window. So, you might well go into these stores, and perhaps you’ll buy these (or other) items.

  However, on an Internet mall, you don’t "walk by" other shops. In other words, the analogy of a mall really doesn’t work very well on the Internet.

2. Many mall owners sell the promise that you’ll get a lot of visitors to your Web site because you’re part of their mall. Mall owners will often tell you how many "hits" they get each day. Hits are a meaningless measure of traffic. (As someone has recently said: HITS = How Idiots Track Success.) Further, the assumption is that because there is a lot of traffic to the mall, your Web site (or "storefront") will also get a lot of traffic.

  In reality, it’s just as easy to get buried in a mall as elsewhere. Even if the mall is well promoted, there are often hundreds — even thousands — of stores in the mall. Even when your "storefront" is listed in the mall directory, it’s unlikely that this listing alone will generate a lot of visitors.
In fact, being listed in a mall directory is similar to being listed in the white pages of the phone book. This kind of listing rarely generates many new customers for your business (who don’t already know of you).

3. It’s usually the mall owner — not the businesses located in the mall — who makes money. And many of the large malls make more of their money selling seminars and business opportunities than via online transactions.

4. Internet malls are usually pricey. The additional cost for having a Web site in a mall is usually not worth the benefits — especially since most malls make you pay *extra* for every single time you want to make changes to your Web site. Further, the cost of Web space is often quite high on a mall. And, the cost of creating Web pages is usually substantially higher on a mall.

5. Since mall space is so expensive, most malls talk about creating a Web "page" rather than a Web "site." Yet, we know of very few businesses that are profitable on the Internet that have just one or two Web pages. Successful businesses on the Internet are content rich — which usually means many pages.

6. Some Internet malls sell Web pages at a premium, and claim that the value of these Web pages will go up. They even use the analogy that these pages are like stock that will appreciate in value. (At least one mall actually gives out certificates that look like stock certificates!)

  There are definitely some significant problems with this analogy.

  First, whereas the number of shares of stock in a public company is basically fixed (or at least it’s regulated), an Internet mall can simply create as many new Web pages (and certificates) as it wants — there are absolutely no limits. Second, finding buyers for your mall Web page is very different than finding buyers for stock in a publicly traded company. And third, since real estate on the Internet is an unlimited resource, there’s no reason to assume that the value of the Web page will appreciate.

7. Jim’s favorite is the cliam that you don’t need to own a computer and they will train you to be an ‘internet consultant’. Excuse me? Who in their right mind would hire (or buy anything from) an Internet consultant who does not even use the Net?

*Mall Poll Results*

  We recently did an unabashedly, unscientific poll about Internet malls, and the results were truly fascinating. They suggest you should seriously reconsider if you’re thinking about locating your Web site at an Internet mall.

  Here’s what we found: Only 20% of people who responded like to shop at Internet malls. And no one goes out of their way to visit Internet malls the same way they go to malls in the physical world (in other words, just to hang out or browse). On the other hand, 73% don’t like Internet malls or have never been. And a small group (4.5%) *intensely* dislike Internet malls.

  Our advice? Avoid Internet malls. Since many Internet malls are overpriced and don’t allow you to make changes when you want without additional fees for every change — and since visitors don’t seem to like malls much either — we believe malls are rarely worth the additional expense.

Here’s a tip: If you are set on locating your Web site in a mall, call or email at least ten current Web businesses in that mall and ask them for references. You want to know about their experiences *before* you move forward. If our experience is any indication, I think you’ll be amazed by the unflattering stories you hear from these businesses in malls, including some of the biggest malls.

  Incidentally, there is one kind of mall that is an exception to the problems we’ve described for general Internet malls. Some of the *niche* malls do provide genuine benefits. If you sell a niche product in a niche mall AND the mall is well promoted, this type of mall can be beneficial because people interested in your type of product visit that mall. (For example, we’ve heard of one discount high tech mall that has some good success stories.) However, we still recommend you check out the niche mall very carefully.