Big Retail has arrived on the local Internet

Advantage Group and Pacific Retail Group (Noel Leeming, Bond & Bond, Computer City and PRG Finance) join with Whitcoulls to create a major internet supersite, due to launch late next month

FlyingPig.co.nz, which its backers are calling New Zealand's "first Internet supersite" will launch late next month with an eye to the Christmas market.

It will initially offer a wide range of books videos, software and and stationery and later move into selling music, computers, computer peripherals, consumer electronics and insurance and financial services.

The company is being positioned as a start-up along Silicon Valley lines, with staff receiving stock options and the company raising fast capital and ploughing revenue back into growth in anticipation of a public offering of shares.

The difference is that FlyingPig is backed by companies with a substantial interest in bricks-and-mortar sales of the same products.

The key figure is investor Eric Watson, whose Pacific Retail Group (Noel Leeming, Bond & Bond, Computer City and PRG Finance) and Advantage Group (in which Watson also has a stake) will take 40% and 25% shareholdings respectively in Orion Ventures, the company which will plan, build, stock and manage FlyingPig.co.nz. Stefan Preston, former Whitcoulls general manager and current executive director of Pacific Retail, is chair of Orion and Adam Keller is CEO.

Keller is promising the site will target the "five reasons why people shop online; broader choice, on-demand availability, search and selection tools, lower costs and better value. FlyingPig.co.nz will offer them all.

"At heart this is about using a new channel to make shopping more satisfying, more personal and more rewarding. As retailers, we understand what consumers want and use Internet technology to deliver the experience.

Keller says the site will "aggregate content and information from many sources and sell a wide range of online products and services. Our initial agreement with Whitcoulls lays the basis of the site, and we will partner with other offline retailers in other categories."

Advantage's e-commerce division has carried out the development of the site, which Flying Pug says is integrated with the back office systems of key suppliers. Advantage, which developed the BNZ's Buyline real-time credit card transaction product, has acquired further Web expertise this year by buying two leading developers, Glazier Systems and Webmasters.

Whitcoull's, whose early ventures into online retailing drew decidedly mixed results, is enthusiastic about licensing its brand to the new venture, according to Mike Ferrand, CEO of Blue Star Consumer Retailing Group. "We have confidence in the people and partners involved and believe this is the optimal way to harness the power of the Internet to our brand."

"Pacific Retail is the first large bricks and mortar retailer in New Zealand to develop an online presence," says Preston. "We recognised the need to develop Internet capability. We also understood that, any way you view it, online retailing is vastly different from realspace retailing. The two represent quite different approaches to customers and compete for resources.

"Pacific Retail's response is in line with recent international trends. Business-to-consumer e-commerce is now entering a new phase, with retailers looking to capture a share of the growing volume of over-the-net purchases by developing their offline and online presences as separate and co-operating ventures.

"Offline retailers have tremendous value in their premier brands and extensive physical networks. For instance, many thousands of New Zealanders walk into a Whitcoulls store every day," says Preston. "Online retailing extends this value by offering consumers different ways of selecting, comparing and delivering goods and services, along with extremely efficient fulfilment processes.

"Pacific Retail's expertise is in retailing, not technology, so we sought the direct involvement of leading e-commerce company, Advantage Group, to develop the technology for FlyingPig.co.nz as a complementary channel for us. I doubt that any other company would be able to field a team as strong and experienced as the one Advantage has."

"The value of this venture lies in the complementary skills of the participants," says Advantage CEO Greg Cross. "Advantage's core expertise is in Internet applications, e-commerce, retail software solutions and transaction processing. Pacific Retail Group has expertise in brand management, retail finance, processes and supply chain management. Add capital and management to these and you have a recipe for a great e-commerce business."

"This investment will allow us the flexibility to leverage Advantage's position as one of the largest e-commerce companies in the Australasia region," says chairman Evan Christian. "Not only will we derive income from the development work we undertake in building the site, we will also gain significant capital appreciation as a cornerstone investor in Orion."

"By partnering with Pacific Retail we complement our own e-commerce capabilities," says Cross. "Our core expertise is in Internet applications, e-commerce, retail solutions and transaction processing. Pacific Retail Group has all of Noel Leeming, Bond & Bond and Computer City's expertise in brand management, retail finance, processes and supply chain management. Add capital and management to these and you have a recipe for a great e-commerce business. By pooling Advantage's intellectual property with Pacific Retail's we get to participate in a significant Internet start-up.

"Joint ventures like this are a superb way for traditional bricks and mortar companies to establish an on-line presence," he says. "Rather than trying to create an online business from scratch, a joint venture allows them to quickly leverage their own brand, intellectual property and market strengths alongside Advantage's e-commerce capabilities.

"Advantage is building a one-stop shop for e-commerce in Australasia," says Preston. "Our expertise is in retailing, not technology, so we desire a long-term partnership with the largest player and the strongest e-commerce team."

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