A shopping trip, aisle by virtual aisle

John Butler is trying to introduce true browsing to the online shopping experience, blending the innovations of Amazon founder Jeff Bezos with the old-school merchandising of R.H. Macy.

Butler is the founder and chief executive of Kinset Inc., a Marlborough start-up that plans to launch its first online stores this week. Kinset's stores combine e-commerce with the kind of visually rich, three-dimensional environment that has been made popular by the virtual world Second Life and such videogames as World of Warcraft, but that would feel familiar to a conventional department store shopper.

In November, Brookstone will launch a Kinset store that will allow shoppers to roam virtual aisles in search of the perfect holiday gift. And Canton-based Tweeter, the consumer electronics chain, could have one online in time for the Su per Bowl, when buyers tend to hunt for new TVs.

Kinset's technology could help e-commerce continue its beanstalk-like growth. While online spending passed the $100 billion mark for the first time last year, according to measurement firm comScore Inc., it represents only about 7 percent of overall retail spending.

"People who like shopping as a leisure activity like to be inside a cornucopia of products," Butler says. "They like to be moving through merchandise and noticing stuff that interests them."

That's very different from the kind of shopping that Amazon .com and eBay have popularized, where the process usually starts by typing a term such as "digital camera" into a search box and getting a long list of results.

What Kinset is trying to do - changing consumer behavior - is the hardest thing any start-up can attempt. But it also can produce the biggest hits. A decade ago, it was an uphill battle for Amazon to persuade consumers to enter their credit card numbers into a Web browser; today, the company is valued at $37 billion.

Butler is no newbie. He co-founded Applix Inc., a software company that went public in 1994 and was purchased this month for $339 million in cash. LiveVault Corp., a back-up software company that Butler co-founded, was sold to Iron Mountain Inc. in 2005. He started work on Kinset with co-founder Scott Evernden late last year.

"I didn't want to do another information technology company," Butler says. "That seemed boring."

He also didn't want to raise venture capital money at the outset, though such local venture firms as Atlas Venture and Matrix Partners, both in Waltham, had bankrolled his previous start-ups.

Shoppers who want to explore a Kinset store must download a free piece of software; once they do, the company can send regular inventory updates to their computers automatically, in much the same way that stores re-stock their shelves late at night. Initially, shoppers will find themselves in an outdoor plaza, complete with bushy trees and burbling fountains. Using the mouse to point, they will be able to enter one of two stores, 'LectroTown and BunchaBooks.

Roaming the aisles of 'LectroTown, you can see dozens of items, such as an array of digital cameras, at one time. Clicking on an item brings up a window of information, including price. And there's always the chance that, in passing a display table bearing photo printers, you might decide you need one of those as well.

Kinset is operating these first two stores as an Amazon.com affiliate, meaning Amazon will fulfill all purchases, sharing a slice of the revenue with Kinset.

Kinset's prototype Brookstone store looks surprisingly like one of the New Hampshire company's mall outlets, with burnished wood shelving and subtle lighting. While it can be hard to see what sort of products are off in the distance, signage on the walls, such as an image of a putting green, helps indicate where golf-related products can be found. (All that's missing is the chance to plop down in a massage chair for a brief Shiatsu.) An especially cool feature lets a user enter a search term and then see an empty shelf fill with products related to that term - a customized display.

Brookstone vice president Greg Sweeney says he'd considered building a store in Second Life, where such retailers as Sears have set up shop, but he was concerned that it wouldn't give him "enough control in being able to shape the experience," he says.

And the 3-D Brookstone store could target a younger audience, Sweeney says. "Our sweet spot on the Internet right now is probably age 35 to 45, and I bet this would appeal more to the 25 to 40 bracket," he says.

Mark Stearns, the director of e-commerce at Tweeter, says he also considered setting up shop in Second Life or There.com, another virtual world, but he found the purchase experience to be too clunky.

"It was like asking you to walk out of the mall and into the parking lot when you wanted to buy something," Stearns says, referring to purchases that take place on outside websites, while Kinset integrates the trip to the cash register into its environment. "I believe that this is the direction that Internet stores are going - more immersive."

Not everyone is convinced. Getting shoppers to cross the threshold from a website into the virtual store could prove difficult. And virtual stores might not be as good as websites at converting window-shoppers into buyers.

If shopping a Kinset store feels "confusing or cluttered," cautions venture capitalist Scott Raney, consumers might try it once and not return. (Raney, a partner at Redpoint Ventures, hasn't yet seen Kinset's software; he was a speaker earlier this month at the Virtual Worlds conference in San Jose.)

But Butler hasn't been focused on convincing venture capitalists that his plan will work. Instead, he has been cold-calling retailers of office supplies, sporting goods, and apparel, among other products.

He hopes to have a dozen stores online by the 2008 holiday season.

While he'll focus initially on big merchants, he says, his hope is to simplify Kinset's store-building software enough so that even individuals who sell goods on eBay might be able to design their own 3-D shops. That would give the company access to a giant pool of customers.

It'll be interesting to see whether such local venture capital firms as Matrix and Atlas get involved with Butler's new company. As he notes, "VCs around here are not into goofy stuff."

He may need to raise venture money at some point, but Butler says with a little bit of pride, "This is the first company I've gotten to revenue without bringing in large amounts of dilutive capital."

That's an achievement at least on par with taking retailing back to its real world.

Innovation Economy is a weekly column focusing on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox.com.