SAN FRANCISCO (06/08/2000) - Despite the continuing e-commerce shakeout, venture capitalists are putting their faith in Beliefnet.com, providing $20 million in second-round financing for the site, which features a cast of religious characters ranging from the Dalai Lama to the punker-turned-preacher son of Jim and Tammy Faye Bakker.
Among those who pitched in when New York-based Beliefnet passed the plate are New Primus Venture Partners, Highland Capital Partners, Blue Chip Venture Company, Zero Stage and The Trump Group. The money will be used to expand Beliefnet's site, as well as its spiritual superstore and its Web development services for houses of worship. Beliefnet plans to launch the store on Friday.
It will offer some 100,000 religious products - everything from the Bible and the Kama Sutra to traditional Seder plates and rosaries.
The site's current offerings include prayer circles and a comprehensive religious encyclopedia that references all faiths, from Christianity and Catholicism to Jainism and Zoroastrianism. Later this month, the company will launch an online ad campaign with the help of advertising giant Saatchi & Saatchi, whose other clients include Proctor & Gamble and General Mills. But given the recent demise of several online retailers, will it take a modern-day miracle for Beliefnet to survive? After all, even Walt Disney had to put the brakes on its efforts to sell toys online.
"Because of their audience, it may be promoted more easily by word of mouth," Robert Labatt, research director of Internet retail business models, strategy and marketing at Gartner Group, says of Beliefnet. "If Beliefnet provides good services and timely, factual information and so forth, and it's a positive experience, then it's possible in those weekly meetings - prayer groups at synagogues or at church or temple - the word-of-mouth networking effect may be a lot more powerful than it is for other Web sites.'' But without more information about the company's business model, Labatt says he could not comment on whether Beliefnet will be successful, or why a consumer would choose to visit its multidenominational site over a faith-specific competitor. "They're covering a lot of bases,'' says Labatt, who says he was impressed by the number of products Beliefnet plans to sell. "The question is, can they cover them all well and to a depth everyone would appreciate?'' Tony Uphoff, president and CEO of Beliefnet, would not disclose traffic or revenue figures for the site, which to date have come solely from advertising.
He says that page views since the site's Jan. 4 launch number are in the millions, and that visitors to prayer circles and online commemorations have boosted stickiness metrics. The site also has about 65 contributing columnists (including The Standard columnist James Fallows). Uphoff, a former president of CMP Media's business technology group and before that publisher of Information Week, expects about 45 percent of Beliefnet's revenue will come from e-commerce, about 40 percent will come from advertising and 15 percent will come from Web site services for other entities.
This week a banner ad offering death-and-destruction game Quake II for free hovered over headlines such as, "Cell Phones in Church" and "What's Your Spiritual Type?" Beliefnet and its investors point to a growing sense of spirituality in society and the proliferation of interfaith marriages as two forces that will work in the company's favor. According to company's statistics, 60 percent of U.S. marriages are interfaith, while 88 percent of people say they pray and 76 percent say they take spirituality seriously. But whether spirituality will translate into sales of age-old items in the most modern of marketplaces is another question.
Jo Tango, general partner of Highland Capital Partners, says that Beliefnet is filling a large untapped space on the Web and also benefits from the absence of a large brick-and-mortar chain-store competitor. While there are no other spiritual superstores online or off, Beliefnet's competitors may include such giants as Amazon.com, which also sells spiritual books, a category that some religion retailers report account for nearly half of all sales.
The Christian Booksellers Association counts 2,500 member retail stores in the U.S., as well as 1,000 abroad, and estimates that the Christian retail industry generates about $3 billion in sales annually. Tango, whose firm has financed such online success stories as Ask Jeeves, declines to speculate on Beliefnet's potential, but bristles at skepticism amid the growing number of e-commerce failures. "It all depends on whether you believe what the herd mentality is right now," he says.