Just three years ago, electronic shopping was the online mall. Thousands of cyberplazas appeared, attempting to duplicate the mall's success across America. But consumers took one look at the near random selection of stores in each, the baffling procedures required to buy anything, and fled back to the familiarity of the real world. Over the past year, dozens of malls, including such well-funded giants as MarketplaceMCI and IBM's World Avenue, have gone under, while most others retain a ghostly presence on the Web.

In their place arose a much more promising model, the specialised online retailer. Amazon.com, a bookseller, CDNow, a music store, PC makers such as Dell, and various flower and gift stores are thriving, proving that Internet retailing can work, properly done. This was a business, the experts reckoned, where individual `best-of-breed' stores would dominate each category; only the most specialised companies would be able to out-innovate their online competitors and keep customers from clicking away.

So how to explain the startlingly impressive numbers claimed by a rather mall-like site called NetMarket, run by CUC, a big name in real-world direct marketing? This site sells anything from CDs, books and videos to travel, cars, and even kitchen appliances and home furnishings. Thanks to a vast inventory of more than a million products and services, along with deep discounts, CUC looks set to sell goods worth more than $1 billion in the next year.

NetMarket has succeeded where others have failed for the simple reason that it is not a mall at all, but one of the pioneers of a new kind of online retailing. This third wave is the online megastore, a single site that sells a mall's worth of products, but with the best specialised retailers' efficiency, discounts and streamlined buying.

CUC is not alone in establishing the online megastore. In July, Idealab, a firm that launches start-ups and is run by Bill Gross, one of the Internet's most prominent entrepreneurs, launched Shopping.com, which also offers about a million products in most of the same categories as NetMarket.

Ultimately, the online retail market seems likely to favour just two models: the best-of-breed specialists such as Amazon.com, and the good-enough-for-everything megastores. What are the odds that shoppers will let software push their trolleys? If it means finding out what they want, faster and at cheaper prices, not bad. Such desires have caused retail revolutions before.

Cliffhanger on Wall Street

The ability to sustain pain without showing it is supposed to be a British virtue. But the world crash that did not happen last week did not happen because of stiff upper lips on Wall Street.

On October 27, taking its cue from Asia and Europe, Wall Street executed a fabulous dive. The Dow Jones Industrial Average experienced its biggest points plunge ever, down by 554 points to 7,161, twice forcing the New York Stock Exchange to suspend trading. The very next day, however, the Street recovered its exuberance -- rational or not -- and the Dow recorded its biggest-ever points gain, of 337.

The resilience of the American stock markets under fire was no doubt magnificent. But so were the Charge of the Light Brigade and the Battle of the Somme. After the recovery, a fundamental question remains unanswered: Is Wall Street still dangerously overvalued?

One man who probably thinks so is Alan Greenspan, chairman of the Federal Reserve. In testimony to the US Congress on October 29, he did not repeat the warning he sounded a year ago against the irrational exuberance in America's stock markets. But even after its latest correction, Wall Street's prices are higher than they were when Greenspan uttered that warning.

It is being slowly driven home that stock markets cannot be buoyed up forever by the weight of public expectations and hopes. On the evidence of this wild week, the hopes remain alive. But at least there has been demonstration of just how quickly they are liable to collapse if the corporate earnings that underpin them somehow fail to materialise.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.