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THE END (of shopping as you know it) IS NEAR!

Internet Malls and the Whole Shabang!

by Don Hamilton

Copyright © 1998 Don Hamilton. All rights reserved.

Bob Wood and Ray Falkner have teamed up to provide the world with another online shopping mall, but is it just another mall or is there something new here? Well, let me tell you a little about this project and then you can help me decide.

The Players

Bob Wood is chairman, chief technology officer and co-founder of Shabang!. Wood is the techno-nerd, but by "techno" I don't mean he's a computer nerd; he's that and more. He's a systems guy more in the management category. A lot of Fortune 500 stuff.Ray Falkner is the marketing and management side of the team, who set up the whole process with the salespeople and technos and taught them to work together. He worked for Bill (as in Gates) as regional director for Microsoft corporation, and was responsible for all product sales, marketing and consulting for 18 states. He also founded Internet Support Group, Inc. (ISG), served as president of Quality Management Solutions, and served as president and CEO of Software Productivity Research.

Shabang!'s director of marketing, Dan Benomo, rounds out the team. Dan came from Futurenet, sellers of WebTV, and his background fits nicely into the multilevel marketing scheme that they have hatched to sell business onto the Shabang! site.

Creating this project required some money, so Bob put up half a million dollars of his own for the proof of principle. This allowed the company to conduct some focus group studies and test out some ideas. After they passed that hurdle, they collected $1.5 million from what they call "the friends and family," which is made up of (big surprise) friends and family, as well as a few accredited investors. Shabang! is now sitting on $5 million of a $10 million pot that they need, and they're in a good position to make the next jump.

The Game Plan

The plan is to run a store that carries products and services for almost every need - the whole shabang. (Get it?) Instead of keeping a narrow focus like, which sells books and is finally starting to branch out, they are going to sell everything from the start. Their goal is to be the seller of products from merchants and service providers all over the world. Each merchant will pay $300 a month to be on the Shabang! system, and the company will handle all sales processing and product tracking. Each merchant will simply provide the product or service, and help supply inventory descriptions and images, and Shabang! will do the rest. That includes setting up and maintaining chat rooms to facilitate discussion of everything from quality of service to how-to advice or suggestions on what and how to purchase. Shabang! is hoping people will chat with each other and that some will become advocates and advisors. Seeing as this is the way things work on the rest of the Web, I'd say this is a pretty good bet.

So how does Shabang! sign up enough stores to make this work? They aim to have as many as 10,000 salespeople within the next few years. According to Ray, Shabang! expects "to have 1,000 salespeople by the end of this calendar year. We expect to have 4,000-5,000 salespeople by the year 2001 and, by 2003, as many as 10,000. By 2001 we expect to be generating $100 million in sales…[and] in five years we expect to be at the $500 million mark."

The plan must be working pretty well so far. On opening day (October 21), Shabang! will have 100 stores including CompUSA, Neiman Marcus, Fossile and an art gallery in New Orleans. By Christmas they will have 300 stores signed up, and buyers will be able to search for or purchase items or services based on price, store preference or other criteria.

Incidentally, Shabang! will not put cookies on your computer. Instead, the company is using a sign-up method with an individual code for each person. Names, addresses and other information about users will not be sold by any of the companies that provide products and services on the site. All the information collected by Shabang! will remain with the company, according to Ray.

Shabang!'s ultimate strategy is to build a multilevel marketing empire of thousands of people who will go out and sell the Shabang! concept to the local dentist or to Nordstrom. The service provider or store will then be required to pony up $300 dollars a month to maintain a presence on Shabang!, but they won't have to achieve a very high level of sales to return their $300. Of course, all of this remains to be seen because, as always, it comes back to how many users of the service will come the first time, and then what percent of those will return again and again.

All stores and service managers on the Shabang! site will be able to update and change products online, easily modifying their listings from any computer with Internet access. "All they have to do is point and click," Ray says. This feature gives merchants the ability to present immediate online changes and special promotions. They can also include full-motion video, sound, animations and, of course, pictures.

From a buyer's standpoint, Shabang! will allow shoppers to build their own personalized shopping malls from the list of stores contracted. Shoppers also will be able to communicate with other shoppers about the products and services that Shabang! offers. They will be notified of sales or specials, and they can even customize a product search and let Shabang! do their shopping for them 24 hours a day.

Looking Ahead

How serious are these guys? Well, they have a 45,000-square-foot building in Richardson, Texas, and they intend to fill it with 180 or more service, support and technical people. According to Ray, "It should take to the end of next year to fill the building. We will be hiring support and service people in the quantities required to support our customers." A large percentage of the employees will be technical people, among them Mike Wiesnewski (formerly of EDS), technical wizard for the entire system. Shabang! will be running a very large computer and network organization, and they are constantly working on new features that will provide state-of-the-art products for their customers.

Will business owners pay $300 dollars to be part of Shabang!'s system? Some will for sure. Others will wait and see if they deliver what they say they will. From what I have seen, it looks like they have a good chance of success with their model, although I think at first it will be a little confusing that they are a .net (as opposed to .com) Web site. Nevertheless, there is some critical mass number of both sellers and buyers that must be hit for a site like this to be successful, and Shabang! doesn't have to make money if it can just grow like mad. Look at, for example, or eBay, which has just gone public and made millionaires of people who just a year ago were nothing special. This is the market, and Ray and Bob may be just the guys to make this work.


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