Ames stops selling on line - Ames Department Stores Inc. stops sales component of AmesPlace.com - Brief Article

DSN Retailing Today, March 6, 2001 by Mike Duff

Company adopts wait-and-see approach to Web

ROCKY HILL, CONN. -- For the second time in roughly two years, Ames has backed off e-commerce. Less than six months after the launch of its second-generation on-line effort, AmesPlace.com, the company has discontinued on-line sales, citing slow consumer adoption rates and high costs as contributing factors.

Last month, the broad-line retailer removed the general merchandise purchasing element from its main Web site, reverting it to an information-only operation. Although direct links are still available at AmesMeds.com, the company's on-line venture with Arrow Pharmacy, the AmesPlace site is currently inactive and cannot be accessed.

Despite Ames' retreat from a full-fledged Web site, spokeswoman Mary McCabe said Ames hasn't given up on e-commerce. Rather, it is taking a wait-and-see approach, digesting what it has learned in its first two forays on the Web.

The principle factor in closing down the business was simply a lack of consumer interest. According to McCabe, it wasn't drawing the business Ames executives felt was sufficient to warrant its investment. "It was a test to see what our customers would think," she said. As it turned out, the Ames customer wasn't clambering for Web shopping.

Ames has kept its AmesMeds program operational. Linked to the main Web site, it predates Ames' recent effort to sell basic store items on the Web. The partnership Ames and Arrow developed permits Ames customers to fill prescriptions on line, consult with pharmacists, receive health and nutritional information, and shop for certain health and beauty care items.

Roughly three years ago, Ames tried selling music on line to test its e-commerce potential; the effort was dropped about a year later.

At a time when pure-players are going out of business or barely hanging on, the attraction of on-line sales--at least to consumers--is diminishing. Even clicks-and-mortar players who are seen as having a distinct advantage are scaling back. Walmart.com, for example, is laying off 10% of its Internet staff, while BlueLight has scaled back the free access it offers as an ISP. As Ames' competitors on line, they are not living up to expectations despite being better established.

In developing its e-commerce business, Ames had to compete with these national discounters without the advantages it usually enjoys--small convenient stores, a heavily emphasized service component and Tuesday senior discounts under its 55-Plus Gold initiative.

With a slow economy impacting sales, Ames may have felt it could invest money more wisely in its core business. "It's a tough market, and there is a huge learning process. E-commerce mostly appeals to the high-end customer, which isn't Ames' customer," noted Eric Beder, analyst with Ladenburg Thalmann.