FORT LAUDERDALE, FLORIDA (08/09/2000) - Struggling online retailer CDnow Inc. on Tuesday announced a partnership to facilitate the shipping of videos, DVDs and music CDs to Latin America and the Caribbean, a region where e-commerce holds much promise but is hampered by many barriers.
CDnow has struck a partnership with SkyBox Service Corp., a company that handles the delivery of products from U.S. vendors to Latin American buyers. By enlisting SkyBox, CDnow hopes to simplify the delivery of products to Latin America, which is often erratic because of faulty postal systems and complicated because of snarling customs regulations.
CDnow began testing the SkyBox service in April and decided to form a partnership because CDnow customers in the region gave SkyBox high marks, said Deborah Vondran, CDnow's director of corporate communications.
"Latin America is a growing market for us," she said. Vondran couldn't provide any figures for the company's Latin America revenue, because CDnow doesn't break out its international sales by region, she said.
Anything CDnow can do to fuel sales will be a welcome development for the company. Once a high-flying Internet company, CDnow fell on hard times and was bought in July by Bertelsmann AG for $117 million, or $3 per share. Its stock once traded for $35 per share, but mounting losses sent it on a slide from which it hasn't recovered.
Logistics barriers are often cited as a deterrent to the growth of retail-oriented e-commerce in Latin America, where business-to-consumer online purchases totaled less than US$200 million in 1999, according to Jupiter Communications Inc. However, industry analysts are confident that e-commerce barriers will be overcome in Latin America and that e-commerce will take off in a big way in coming years. Jupiter forecasts $8.3 billion in business-to-consumer online sales in Latin America by 2005.
Tuesday's partnership calls for CDnow to feature the SkyBox service as a shipping option in its Web site's shopping cart. SkyBox has also put the CDnow search engine on its home page to let users search the retailer's inventory database and link to the CDnow site.
When buyers choose SkyBox, CDnow would ship the products to SkyBox in Miami.
SkyBox would then handle the delivery to the buyer in Latin America, including customs clearance.
SkyBox handles about 5,000 shipments per week to Latin America and the Caribbean, and has beefed up its operation to handle as many as 50,000 weekly shipments, the companies said.
The first time a buyer uses Skybox, the company assigns the buyer a "virtual address" in Miami where products bought from U.S. vendors can be shipped. All products shipped to SkyBox "virtual addresses" are delivered to SkyBox headquarters in Miami. Getting an address from SkyBox is free; the company charges its customers for the shipments, said A.J. Hernández, the company's president and co-chief executive officer.
Although SkyBox links from its site to the Web sites of several dozen U.S. retailers, including J.C. Penney and Staples, the company's partnership with CDnow is different, because it involves a closer working relationship which involves the mutual promotion of the companies' services, Hernández said.
SkyBox has a similar relationship with Latin American portal StarMedia Network Inc. and is actively seeking to form more of this type of partnership with U.S. retailers, Hernández said.
CDnow, in Fort Washington, Pennsylvania, can be reached at 1-215-619-9900 or at http://www.cdnow.com/. SkyBox, in Miami, Florida, can be reached at 1-305-594-8755 or at http://www.skybox.net/.