Just in case you missed all the TV ads, Telecom has ramped up its online shopping mall Ferrit.co.nz and is making a big push to attract online punters in the run-up to Christmas.

After its first year as an online marketing and promotional website, Ferrit was changed last month into a full-scale retail website.

Around 90 of the 98 retailers are using Ferrit's new shopping cart system. This enables visitors to buy items from several retailers and pay for them using one credit card transaction.

Previously the website was like a glorified advertising site that directed customers to retailers' own websites to make purchases. The revamp is the biggest development so far at Ferrit as Telecom spends millions in anticipation of a predicted avalanche of new online shoppers.

But as New Zealand's biggest listed company lavishes the website with resources (it is nowhere near break-even and won't be for some time), the details of its business plan remain unproven.

Some retailers - including two members of Ferrit - believe the website's strategy may be seriously flawed.

The New Zealand Retailers Association chief executive, John Albertson, has no doubt we are on the cusp of a boom for online retail that will grow as a new generation of tech-savvy teens become big earners and fuel retail spending.

But it is far from certain whether they will shop in online malls such as Ferrit or deal directly with their favoured retailers who establish an online profile.

Ferrit general manager Ralph Brayham says its business plan is not based on dominating online shopping, and it encourages retailers to use as many portals as they can. He says other telcos like BT in Britain have made similar moves into online retail sites.

Financial analysts say the investment in Ferrit is relatively small considering the telco's size. Telecom has spent about $5 million on the latest ad campaign and some believe about $30 million overall.

Jeremy Simpson, of sharebroker Forsyth Barr, says a move into e-commerce is a part of Telecom's core business.

Mark Ottaway, of AC Nielsen's NetRatings, says the website is performing relatively well, and that its concept of a self-contained retail website is unique and may well be copied overseas.

Nielsen estimates that 172,000 unique users - the hit rate minus repeat visits - logged on to Ferrit last month.

But given the publicity and resources, you would expect it to be bringing in plenty more. And it is still hard to find many people who know what Ferrit actually does.