America Online, the world’s largest Internet service provider on Monday launched an overhauled online shopping center it hopes will help it keep pace with competitive offerings by Yahoo Inc. , Google Inc. and Shopping.com, executives said.
The new inStore service was 18 months in the making and replaces and older, more cluttered storefront.
InStore will be available to AOL’s 24 million subscribers and to the public on the Internet for the first time, reflecting a new strategy to broaden previously proprietary services to nonsubscribers.
“It expands their audience and you don’t have to be an AOL member to shop there anymore,” Charlene Li, retail analyst at Forrester Research said.
The new shopping service will let consumers sift through a trove of products and compare them side by side.
AOL, whose members already account for about 25 percent of Internet spending, is aiming to rake in a larger percentage of online retail sales. Online sales are expected to reach about $316 billion by 2010, from $65 billion this year, according to some analyst estimates.
AOL executives admitted they are late to the game. “AOL has not fully capitalized on the opportunity for consumers, partners or the business until now,” said Bob Hayes, vice president and general manager of AOL eCommerce.
The timing was in part due to existing long-term advertising deals that expired in September.
“I think it’s a great step forward for AOL,” said Patti Freeman Evans, retail analyst at technology research firm Jupiter Research. “AOL needed to get up to speed.”
Pinning down sales
Unlike some product comparison sites, shoppers will be able to narrow down on particular products through its “Pinpoint Shopping” box that culls through 48,000 merchants offering about 25 million products.
BizRate.com built the Pinpoint Shopping function for AOL will also provide the products database.
The section will also let shoppers save items for future reference, in addition to provide links to its instant messenger program.
In later updates of the service, AOL said it plans to enable two instant messenger users stroll through online stores simultaneously on the same screen.
But perhaps the biggest change to its service is how it now plans to collect revenue. Unlike its past retail advertising deals, where AOL was paid by the number of times subscribers view an ad, AOL will now receive a fee in most cases after consumers click on a vendor’s ad.
It has also made strides in understanding retailers’ needs, and now makes it easier for them to promote different products much quicker, Hayes said.
AOL is “changing their calendar to accommodate how retail happens,” Evans said. “I think they will see a lot more happy advertisers.”
Executives declined to elaborate on how the new business model will affect advertising revenue. An AOL executive said it is likely to remain a small percentage of advertising revenue for this year, but declined to break out anticipated revenue targets.
AOL, a unit of New York media conglomerate Time Warner Inc, is in the midst of an online advertising turnaround. In the second quarter advertising sales rose 23 percent, its first gain in three years.