B2C trio turn to B2B

Three of this country's foremost e-tailers have turned their plans towards the B2B tools they had used to support their online consumer businesses.

Three of this country's foremost e-tailers have turned their plans towards the B2B tools they had used to support their online consumer businesses.

E-Force has abandoned its consumer portal and is solely operating a logistics and procurement company; E-Loan is sticking with B2C, still offering home loan comparisons online, and is also to resell its home-grown infrastructure; while eStarOnline has sold its music e-tailer CD Star and now licenses its online sales engine to retailers. But the common thread - besides the fact that all three are amongst the few internet-based publicly traded stocks in the country - is their business model remake.

Matthew Darby, the founder and chief executive of eStarOnline, listed his company on the secondary board as this country's first internet stock in late 1999 and in April 2000 entered a race with cosmetics e-tailer Beauty Direct to be the first internet company to list on the main board. Darby, however, pulled the plug on his $10 million capital raising after it became obvious to him the conditions were not right.

Part of his decision, Darby says, was that he felt eStarOnline would be undervalued because, despite his best efforts, everybody saw it as a B2C music retailer. He says his plan was always to use CD Star as the showcase to build and then on-sell a range of e-commerce products, but says the noise of the B2C hype drowned this fact out.

"We built it on the basis it had to be generic and support other products. Our intention was always to go out to other sites, whether by licensing or partnering,” he says. But in hindsight, he says he didn't realise at the time the full extent of how important this would be.

eStarOnline, cashflow positive and back on the secondary board, sold CD Star to IT Media in December. "We sold it not because we don’t believe in B2C but because it is not our core business anymore," he says.

eStarOnline has since completed several major deals licensing the hosted platform (built on Microsoft Windows 2000 servers and SQL servers) to other retailers and websites – in what could be described as an off-the-shelf package. It has also formed a partnership with Freightways' online courier site Fetch for distribution.

Its major New Zealand client is Flying Pig, now part of the IT Media fold – a project completed in six weeks. EStarOnline’s iSams, (internet sales and management system) takes over the minute a viewer clicks through into the site, handling all the personalisation, search, invoicing and transactions.

ISams has also sold to Village Roadshow Australia's entertainment website Scape, and Fleetwood Owen Emporium, a music memorabilia site run from London.

"Our focus is bricks and mortars, not pure plays because they [bricks and mortars] are the future,” Darby says.

CD Star will benefit from IT Media’s branding and marketing power, he says.

Bruce Gordon, chief executive of eVentures company eLoan, also knows the power of marketing – done right.

"Originally the models deployed followed the US one – that being a high retail marketing spend to create strong brand awareness and momentum to move customers online."

But, as Gordon says, this proved to suck up a lot of investment over a long period of time. He says that luckily, E-Loan has the backing of the eVentures incubator structure, has won a new cornerstone investor, The Warehouse, and always "had a keen eye on the economics”.

E-Loan will continue to advertise online and says its B2C financial services service will survive because it suits telephone and internet fulfillment. But it has also moved to create further revenues by licensing its homegrown web tools to other businesses to offer to their customers.

"We have determined that what we have delivered to the market is a smart B2B service also," he says.

For e-Force chief executive Bill Farmer, still leading his company through a restructuring process after turning away from B2C, there is no doubt B2B is where the growth is.

"B2B makes the difference between existing retailers or new market players getting the "service" aspect right," he says. "With globalisation all products will eventually be available to anyone.

"How efficiently the processes are managed will make the difference."

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