At first glance, it might seem that Marina del Rey-based 3Dshopping.com would have a hard time making it in cyberspace.
The three year-old firm joined a crowded field last spring when it began marketing the technology it developed to create three-dimensional computer images of “high touch” products like clothing and jewelry offered over the Web.
While thus far generating negligible revenue and failing to show a profit, it’s getting respect from one fussy bunch investors. Last week, its stock was trading at around $13 a share more than double the 52-week low of $5.88 last Nov. 8.
David Thompson, a partner in charge of the e-business unit at Deloitte & Touche, attributes the interest to the competitive rush by retailers to get an edge in the online market. (Sales of regular-sized clothing are expected to jump from $726 million in 1999 to $10.8 billion in 2003.)
“The name of the game is to attract people to your site and stay at your site as long as possible and learn about your products,” Thompson said. “If the presentation is more enticing and works well to sell your product, it’s more likely people will buy.”
Through 3D’s technology, online shoppers can move images of things like apparel, furniture and jewelry in a 360-degree rotation to see how narrow the back of that bikini bottom is or check out the size of that diamond.
For retail clients, 3D is a one-stop shop, providing models and photography while also creating Web stores complete with ordering and processing capabilities. If retailers wish, 3D will host the site. The company takes a percentage of sales transacted on sites it operates.
Deals in the pipeline
Analysts said much of the Wall Street interest is driven by several recent deals, including a co-marketing effort with catalog creator Communications PLC to introduce the technology in the United Kingdom.
In addition, 3D is recruiting small boutiques to appear on its aggregate Web site. Thus far it has about 40 clients, including Mix Studio and Venus Swimwear. It’s also partnering with larger firms such as K-Swiss Inc., Nordstrom and Cobra Golf to enhance their Web sites.
“We combined their technology with our ad campaign using a number of athletes to showcase our apparel,” said David Nichols, director of new business ventures at Westlake Village-based K-Swiss. “The response from our customers has been quite favorable. It makes it easier for them to decide what to buy.”
Mike Maxfield, an analyst at Paulson Investment Co. in Portland, Ore., which has an equity stake in 3D, thinks those developments could drive the stock as high as $20 in the next six months.
“We’re bullish about it,” he said. “We think their technology is nicely ramping up, and they have attractive deals in the pipeline that will make them a competitive player in the marketplace, and maybe down the road set them up for other partnerships or an acquisition.”
But there is lots of competition.
Using competing technology, Land’s End customers can build their own personal model with specific data, including hip, waist and bust measurements. But the models aren’t three-dimensional.
Meanwhile, software giant Broderbund has teamed up with Macy’s to offer a CD-ROM for $50 that allows users to build their virtual image and “try on” clothes at Macy’s Web site.
Still, such technology has its challenges. London-based Boo.com, an online sportswear retailer, has been besieged by troubles since its splashy debut last November. Its highly touted Web site has been bugged by slow downloads, freezing screens and orders that weren’t processed.
Despite the competition, company founder and Chief Executive Lawrence Weisdorn thinks 3D is on the verge of profitability (even though it reported a net loss of $1.7 million for the quarter ended Dec. 31, compared with a net loss of $2.5 million for the like period a year earlier). Revenue was $216,924 vs. $11,948.
3D has expanded its headquarters, moving from a 1,600-square-foot office to a 25,000-square-foot facility. Since its inception, the company has grown from eight employees to 42.
“Our technology is catching on,” said Weisdorn, who founded the firm after selling his graphics business in 1996. “We think that is the last hurdle when it comes to buying apparel on the Net, and this technology provides a better visual navigation and authentic atmosphere for consumers to examine and buy clothes.”
But critics point out that customers are only seeing one body-type and only one type of apparel, because models don’t change the color or size of the items they wear.
“Does it really represent how well apparel hangs on a person when they’re using one shapely person to demonstrate the item?” said Jeremy Schwartz, an analyst at Forrester Research. “You want to see how it looks on you, not someone else.”
Weisdorn counters that traditional ads or catalogs don’t provide a look at different sizes, either.
“We’ve offered the customized body model approach to our customers but they have preferred this model,” he said. “You don’t see 400-pound people modeling products in the retail world. We want to show the product in the best light.”
Weisdorn also points out that 3D’s images provide an actual person wearing the clothes rather than a cyber-mannequin.
“You lose the reality when you don’t use a real person,” he said. “Things like how someone’s hair falls or their coloring is more evident on a real body.”