news / press room

Online future looks bright

by Jeannine Relly
Arizona Daily Star

What works in bricks and mortar may not work in cyberspace, e-commerce experts say.

The customer base is gigantic but elusive. Competition is daunting. Potential buyers are guarded and skeptical.

"You're dealing with a world market," says Eugene Fram, a senior professor of marketing at Rochester Institute of Technology in New York. "The result is often competitive pricing and negative returns."

But while it can be difficult to find success on the Web, some local companies believe they are poised for success. Both Alan's Shoes and have been purchased by larger companies that were attracted, in part, by the Tucson firms' online ventures.

Alan's Shoes, which targets hard-to-fit customers, still has two local stores. And the founders of Fitrex, which offers personalized online fitness training, still run two local health clubs.

But both companies are focusing more on their online operations.

"I couldn't feel any better about the potential and future of it," says Marc Jablonski, a former corporate video producer who co-founded Fitrex. "The company that acquired us is moving ahead full-steam."

Backed by research

Jablonski and Dan Wirth, former strength and conditioning director at the University of Arizona, were undaunted about their leap into cyberspace in July 1999.

Their market research indicated their interactive fitness training program had an edge over more generic models.

The entrepreneurs and their investment partner - Buffalo Bills offensive tackle John Fina - had amassed hundreds of clients at their health clubs. And Wirth and Jablonski had developed dozens of customized exercise programs for a strength-training machine business in the 1990s.

So when Wirth and Jablonski went live with their cyber-fitness Web site, they expected streams of clients.

Instead, limped along for nearly two months with only a few hits a day to the Web site.

And the customers who did visit the site seemed more skeptical than the CEOs and well-heeled clients they were used to. Cyber-clients could enter individual fitness goals and measurements, and the Web site would spit out a tailored plan for them. But the product wasn't selling.

"We had no profits to speak of," says Jablonski. "We were too new and unknown."

So they hired ephibian, a 4-year-old Internet services and technology firm, to help bridge the gap. The Tucson company's advice: Drop the online fee for customized programs.

"People are not used to paying" for virtual services, ephibian spokesman Christian LesStrang says.

"Rule number one: Give it away, give it away, give it away," he says. Then find a way to make money off the traffic.

Rapid growth

The strategy worked.

Within a year, grew from a nominal membership to 22,000 registered members. The site was generating some revenues selling nutritional supplements at up to 40 percent below retail prices.

But there was still no profit.

Working as an incubator for the fledgling effort, ephibian's programmers and engineers coded the massive database and absorbed the bills for the office rent, telephones and secretary. Industry experts say a similar project could cost as much as $3 million.

Ephibian marketed the online product to Redwood City, Calif.-based Asimba, an online fitness company with 700,000 registered members.

Last month, the privately owned Asimba closed its acquisition of in a stock transaction. Terms of the deal were not disclosed.

The sale of after one year was not unusual for an online firm. Unlike brick-and-mortar businesses that take about three to five years to become viable, e-commerce companies often sell in less than a year, says Mohamed Latib, founder of an e-commerce program at Allentown College of St. Francis de Sales in Center Valley, Pa.

Domain name was a key motivator for The Walking Co., a Chatworth, Calif., company that bought Alan's Shoes last September.

The Walking Co. snagged Alan's Shoes' prime Internet real estate - - in the merger of the two shoe companies for an undisclosed amount of cash and stock. The domain name is prized because online shoppers tend to begin with keyword searches rather than the names of specific stores.

"We have the best name," says Alan Miklofsky, CEO of Alan's Shoes and

While already has some 500 items for sale on its Web site with thousands more to be added, the company is still in the soft launch phase, Miklofsky says.

The Walking Co. doesn't expect to see a profit for up to four years. But its 90 stores and two wholesale divisions offer plenty of profit, which makes it easy for it to support in the interim.

Despite the high hopes, however, experts say the race to success in cyberspace will be a tough one.

Not long after automobiles first hit the market, for example, there were hundreds of American car makers, says Professor Fram of the Rochester Institute of Technology. Now there's only a handful.

"In the long run, only the strong will survive," Fram says. "The general consensus in Silicon Valley is in each classification of goods, there's only going to be two or three survivors."