No More Blue-Sky Buys?

SYDNEY (05/04/2000) - As electronic retailers continue to take flack from disgruntled customers, Buy.com Inc., which launched locally today, believes it is bringing the first "real e-tail" model to Australia.

"Buy.com's new generation real e-tail is not about more bells and whistles, but about properly addressing the fundamentals of retail, which are choice, competitive pricing, customer service and fulfilment," says Buy.com chief executive Richard Baillie. "It's the first end-to-end e-commerce, multi-category retail business dedicated to Australian consumers."

Based on its parent company's US$650 million sales success in the highly competitive U.S. market last year, Buy.com is initially offering Australian customers seven stores and 20,000 products including computers, software, office supplies, digital imaging, electronics, communications and a range of discounted clearance items.

While Baillie emphasizes that the site has been adapted to suit the Australian retail market, he believes the local operation's ability to leverage off its U.S. parent and its strong local management team from the traditional sector are likely to be its greatest success factors.

Promising "genuine fulfilment", Baillie says Buy.com has not only refined its back-end technology, but has already crossed bridges that many newer startups have yet to tackle.

"Underestimating the need to properly manage third-party suppliers, for example, was arguably the greatest mistake Buy.com in the U.S. made," says Baillie. "But it's still one many local players have yet to conquer as they struggle to ensure delivery."

The company has also guaranteed that Buy.com prices will be between 10 and 20 percent below those for the same goods in the local or regional shopping centers.

"While it was thought that the Internet would be a key driver of cheaper goods for online shoppers, in the main, this potential has not been realized," says Baillie. "But, we can do it, because we are harnessing true Internet efficiencies to pass savings on to customers. Our model carries no inventory, will never own warehouses and is easily scalable to actual growth rates as they occur."

Buy.com is, however, still aware that it needs to win the confidence of online shoppers. And, to this end, in addition to offering an easy-to-navigate site for both savvy and first-time users, it also provides a human interface in the guise of a 24-hour-a-day call center.

Andrew Isles, CEO of eVentures Holdings, Buy.com's local partner, says he's not too worried about recent volatility in tech stocks or warnings that cash is about to dry up for many hopefuls.

"We have needed relatively little start-up capital, compared with others in the space who have opted to build huge warehouses," he says. "And, whether one accepts the more conservative or the more optimistic analyst forecasts for online retail growth, the opportunity for those who establish sustainable business models now is clearly significant, especially in a country like Australia.

"(Research company) www.consult predicts that 2000 will see 3.8 million Australians buying online and generating revenue of A$2.9 billion (US$1.72 billion), up from 7 percent buying online and generating almost A$1 billion in 1999. So, we are confident about growing our revenue. Our U.S. site boasts 69 percent annual growth in customers buying online and already has more than two and a half million."

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