Whatever Happened to SkyMall?
The beloved airline catalog actually beat Amazon to e-commerce, until things fell apart
Where Are They Now is a column that revisits once-popular companies and brands that have seemingly disappeared.
Weirder than Sharper Image, more upscale than Lillian Vernon, the loopy bazaar of SkyMall once entertained bored airplane travelers with items like pierogi Christmas ornaments, a thousand-dollar flying-saucer “Serenity Cat Pod,” and unexpected lawn statues like an extremely chill gargoyle.
At the turn of the millennium, the catalog reached millions of travelers — with airlines getting either a cut of revenues or a monthly fee to place it in seatback pockets — and totaled annual revenues over $80 million. Its first website went up in 1996, when Steve Jobs told Wired that e-commerce was two years away from being huge and Amazon was a year-old online bookstore. For a period in late 1998, it had a market cap of $400 million and was the most active stock on the Nasdaq. But the dot-com bust knocked it back to the old economy, revenues flattened, and the better digital devices got the more competition it had for distraction — another story about the death of print in the internet era.
In 1989, Bob Worsley, a Brigham Young-educated accountant and veteran of PriceWaterhouse, wanted to build something like Amazon Prime for frequent flyers. On an Alaska Airlines flight, he picked up a little merchandise catalog in the seatback pocket, noticed how clunky it was to order from — you had to mail a check and wait over a month for delivery — and thought it could be greatly improved upon. His concept: You’d order something from SkyMall on your Airphone, and it would meet you within 30 minutes when you landed. That model quickly failed: Travelers didn’t have much room for extra stuff, and the logistics were a nightmare.
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So Worsley pivoted to the lower-overhead model of drop-shipping. Vendors paid SkyMall for its captive audience, either through a fee or a percentage of revenues. Think of it as a magazine that was all advertising, reaching 500 million people annually.
For a period in late 1998, it had a market cap of $400 million and was the most active stock on the Nasdaq.
The distinctive mix of items in SkyMall emerged organically. “We originally thought we would have the best-selling merchandise from catalogs and retail,” Worsley tells Marker. But being in a plane changed habits. Because airports and air travel are so expensive, passengers assumed SkyMall was too, so they wouldn’t buy the basics. If on the other hand, it was an item they’d never seen before” — like a spy pen or Slanket — “they wouldn’t know where to find it when they got off the plane, and those items over the years became our best-selling items.”
Consumers pushed SkyMall toward an inventory befitting the place and the time. Samantha Topol, a writer whose master’s thesis from the School of the Art Institute of Chicago is about SkyMall, described its unique alchemy to Marker: “The context of reading something while you’re being jet-propultioned 30,000 feet in the air by a feat of human engineering is already a very particular experience. You’re in a very particular kind of space. There was a kind of feeling in the catalog overall of aspiration, invention, and ingenuity.”
SkyMall was able to move online early thanks to Steve Jobs’s NeXT, the company he founded after being pushed out of Apple in 1985. One of NeXT’s’s creations was a framework for developing online apps called WebObjects, which greatly simplified the programming needed by web developers and predicted how contemporary toolkits would work. SkyMall was one of the 275 companies to buy the $50,000 software, and consequently caught the first big internet boom.
In 1998 the investments paid off. “There was a rush to e-commerce with eBay, Amazon, all the shop dot-coms, etc,” Worsely says. “Our stock went from $2 to $48 between Thanksgiving and Christmas.” But SkyMall was also at a disadvantage in a new Wall Street economy. “Revenue growth was everything, profitability was not important,” Worsley says. “Our public shareholders were still expecting a P/E multiple of 20, so we were stuck behind, held to our existing institutional owners, who wanted to see profitability, while Amazon didn’t have to make a profit.” In early 1999, for example, despite two straight years of profits and online revenues breaking $2 million annually, SkyMall’s stock fell by 30% after it announced it would lose money that year due to a $27 million investment in e-commerce.
After the bubble popped, SkyMall’s stock was down to $1.75 in 2001, but its e-commerce platform and core business was strong enough for Gemstar-TV Guide to acquire the company for $47 million. The acquisition was less about its potpourri of unexpected wares; it wanted SkyMall for something much less sexy — its billing system as the foundation for selling merchandise on its interactive TV program guide. It was known at the time — remember, this is 2001 — as “t-commerce.”
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But shopping with all the convenience of a cable-TV user interface turned out not to be the future, and by 2002 Gemstar’s new CEO was publicly shopping SkyMall to new buyers. (Worsley left soon after, got into sustainable energy and minerals, and served as an Arizona state senator from 2013 to 2018.) At that time, SkyMall’s core business was still solid, with $7 million in operating income on $56 million in revenue in 2004, and it sold for $52 million to venture-capital firm Spire Capital and ZelnickMedia. That put it under the same corporate umbrella as Time-Life Inc., whose omnipresent ads soothed insomniacs of the 1980s, and the tchotchke-heavy Lillian Vernon catalog, SkyMall’s domestic equivalent.
The data-analysis site Priceonomics estimated Skymall’s 2009 revenues to be $130 million, 60% of which came through the website. It had a bit of life left, but when the end came it was swift. First, Spire Capital sold its stake in SkyMall in 2012 to Direct Brands, a media holding company owned by a Phoenix-based investment firm called Najafi Companies. As the Los Angeles Times pieced together, Najafi sold SkyMall the next year to a company called Xhibit and became Xhibit’s controlling shareholder. Xhibit then sold SkyMall’s lucrative loyalty program, SkyMall Ventures, to pay off a loan from a lender controlled by John Najafi. Without its loyalty program, SkyMall’s revenues plummeted. Najafi Companies exited Xhibit in 2014; SkyMall went bankrupt in 2015, and sold for just $1.9 million after the bankruptcy.
A couple of products have the old SkyMall spirit, like a Singing Goldfinch Plant Pal that chirps when your plant needs water, but there’s no comparing the collection to the magic of the old SkyMall.
Its new owner, C&A Marketing, began as a merger of legacy photography companies: The company once bought Ritz Camera at a bankruptcy auction and has also released cameras licensed under the Polaroid and Kodak brand names. They’re clever little gadgets — the former a cheaper alternative to the GoPro “action cam,” the latter with a built-in instant printer — that would fit within the SkyMall oeuvre. But the SkyMall website today has a dead-mall feel to it. Wander into “Gifts for Her,” a category in the old SkyMall’s wheelhouse, and it looks like a ransacked discount store. Three products are in stock: a brush set, a Polaroid camera case, and a grimly photographed “hanging kitchen witch,” a “product of European folklore.” “Art & Decor” has 27 items, 11 of which are in stock.
A couple of products have the old SkyMall spirit, like a Singing Goldfinch Plant Pal that chirps when your plant needs water, but there’s no comparing the collection to the magic of the old SkyMall. Back in 2004, for instance, the old site featured a remote-controlled tyrannosaurus rex and a tranquility pond right next to each other. Today it would take days of scouring Alibaba Express for such a fortuitous shopping experience; back then it emerged from our collective consciousness and manifested itself in midair.
The SkyMall catalog departed seatback pockets in 2015, but Worsley believes its legacy lives on in what might be his next SkyMall: he’s the founder of ZenniHome, which sells 320- and 640-square-foot prefab homes with robotic, space-saving solutions for modern living. There’s a Cloud Bed that lifts into the ceiling to reveal a couch that transforms the bedroom into a living space; a telescoping Pocket Closet that expands when you need to get your clothes; and a Studio Suite that features a sliding room divider to expand the bedroom while shrinking the living room. It’s SkyMall reincarnate, this time down on earth.