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E-commerce the frugal way
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August 6, 1998: 9:36 a.m. ET
CyberShop CEO says company is on the right track despite mounting losses
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NEW YORK (CNNfn) - Not every online venture's initial public offering translates into success story. Witness CyberShop International Inc.
The online retailer, which reported second-quarter earnings Wednesday a penny ahead of Wall Street estimates, has seen its shares tumble more than 50 percent since hitting its high in April. CyberShop (CYSP) went public in March.
Nonetheless, CyberShop Chief Executive Officer Jeffrey Tauber told CNNfn the company is on the right track.
CyberShop, which Tauber characterized as an online version of Bloomingdale's or Macy's, offers more than 50,000 items from 500 manufacturers. The company sells such items as electronics and housewares, choosing to stay away from clothing because consumers typically prefer to see clothes before they buy.
"Historically, return rates in the apparel business have been quite high in mail order," Tauber said.
Still, CyberShop losses have been mounting. The company reported a second-quarter net loss of $1.6 million, or 22 cents a share, compared with a loss of $348,000, or 10 cents a share, in the year-ago period.
Tauber, a former Bloomingdale's merchandiser, said he is comfortable with analyst estimates that CyberShop will turn profitable in 2000.
"I think we have a solid business model," he said. "We make high margins and we really do have low overhead. We're not out there handing out $25- to $30-million checks to various (Internet) portals to own distribution."
Not that CyberShop has turned its back on distribution deals. Tauber noted the company has agreements with Microsoft Corp. (MSFT), America Online Inc. (AOL) and Excite Inc. (XCIT), among others.
But Tauber hastened to point out that CyberShop is careful in conserving its cash when negotiating such agreements.
"The key to our relationships is that we don't make big payments up front," Tauber said. "We have, at the end of the second quarter, $16.5 million of the $19 million we raised still in the bank. That's the way we want to keep it."
CyberShop (CYSP) shares closed at 9-7/8, down 1/8 in Wednesday trading. 
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CyberShop
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