buy.com fuels e-tail competition

As bemused shoppers watched actors dressed completely in white pretend to queue at checkouts in the corridors of Broadway's retail shopping centre, the glittering picture upstairs represented something of a who's who of e-tail. buy.com's official launch last week, culminating in a lavish party in a marquee on top of the shopping centre, illustrates the amount of commitment - and money - needed to make a splash in Australia's fledgling e-tail market.

Dripping with expense, the glitzy launch had everything you would expect from a cashed-up e-tailer boasting over 20,000 products including printers, electronics, mobile phones and office supplies. buy.com's CEO, Richard Baillie boasted amid the fanfare last week that the portal is chasing a market estimated by analyst www.consult to be worth $3 billion this year, with 3.8 million people buying over the Internet.

"The next generation of e-tail, real e-tail, is open for business," Baillie announced.

Despite the problems facing the US e-tail market, Baillie reported buy.com US achieved revenue growth of 225 per cent this year, with 690 per cent growth in customers numbers.

The company also lays claim to the "Best of the Web" title in the computer and electronics section from Forbes magazine in the US (Spring 2000 issue).buy.com's Australian operation is hoping that success will translate here. In true "virtual" style, the temporary but chic marquee came complete with a huge sound and lights display, lounges, a bar, stage and outdoor entertaining area.

The evening launch party was by all accounts "very Manhattan", as Brioney Buchan, business development manager at buy.com partner RentSmart observed. The Sydney skyline served as the perfect backdrop to an event aimed at bringing us the best of the US and more.

However, one troublesome issue lurks on the horizon. Baillie is surprisingly reticent to name his local IT distributor. "I'm not releasing that information," he asserted. buy.com uses Ingram Micro in the US, but Tech Pacific got the gong in Australia. David Henderson, Tech Pacific's categories director, told ARN: "buy.com is a customer of Tech Pacific." Henderson said buy.com is "one of our resellers". buy.com Australia is a joint venture between buy.com and the Softbank and epartners joint venture eVentures.

The company claims its unique value proposition to the e-commerce shoppers of Australia is the combination of price (up to 20 per cent off), huge product range, an information-rich site, flexible delivery (which includes an installation service) and 24-hour call centre-based customer service.

Baillie believes buy.com's advantage is not only its successful US e-tail model but the ability to be "easily scalable" to match customer growth rates. Like all e-tailers, buy.com enjoys savings in not owning warehouses or retail stores.

However, as its impressive advertising campaign unveiled last week illustrates, it must fund an expensive customer-acquisition marketing plan to compete with the likes of e-Store, dstore, and ozbuy.com.

The e-tailer also has operations in the US, UK and Canada. An ongoing legal battle with what some critics have simply labelled a local cybersquatter meant it was unable to secure the buy.com.au domain. Visitors to buy.com are directed to au.buy.com.

Ned Montarello, RentSmart's managing director, believes e-tail portals are an ideal way to take IT products to Australia's 4.5 million small businesses. "We want to be involved in that environment," he said. "I'm convinced it's only a matter of time before e-tailing and retailing merge."

RentSmart has partnered with buy.com to offer online finance or rental/leasing options to small business, using the Credit Reference Association to approve loans inside 24 hours.

On the business-to-consumer front, buy.com has partnered with e-loan to provide customers with access to loans from a variety of institutions.

"We represent the consumer in finding the best deal on the market," said e-loan CEO Andrew Moon.buy.com also unveiled its print and TV advertising campaign last week, featuring four TV ads promoting the lifestyle option of buying IT products on the Internet.

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