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On the highways, speed can kill. But on broadband networks, speed can pay off big time, if the early results from broadband e-commerce pan out.
Logic dictates that faster broadband connections should boost online shopping. Consumers can shop much more quickly with broadband connections and vendors can add sparkling graphics and full-motion video to help sell products.
If the experience of cable modem ISP Excite@Home and others are any indication, broadband deployment should help boost the fortunes of Internet e-commerce. "This is the most monetizable form of content," says Kris Carpenter, vice president and general manager of commerce, Excite@Home.
Last October Excite@Home released survey results indicating narrowband users spend $209 online a year shopping for merchandise, compared to $400 for the average Excite@Home user.
Forrester Research predicts online spending would surpass $50 billion last year. Because most of that will be through narrowband connections, the Excite experience would indicate e-commerce revenues will jump strongly once broadband is more ubiquitous.
One of the early video-laden broadband e-commerce experiences kicked off several months ago between Excite@Home, which serves 2.3 million subscribers, and television's Home Shopping Network. HSNi, the company's interactive division, launched a thrice weekly shopping program on Excite@Home last fall, and "the early results are pretty promising," says Jack Kirby, president of HSNi.
HSN offers three 2-hour programs on Excite Wednesday, Friday and Sunday. The first hour is a pure simulcast of what appears on TV with several interactive features added to the Webcast.
The program has two hosts, a traditional TV host and a second online host who participates by answering questions in a chat room. Some 300 to 400 people are in the chat rooms during the broadband content broadcasts, Kirby says.
For Excite@Home users, one portion of the screen carries the videostreamed content. Other parts of the screen are dedicated to chat functions or additional products related to what's showing on Excite's video window.
The second Web-only video hour includes more streaming and broadband functionality, Kirby says, plus products geared more towards the broadband audience. The second hour will soon include an auction function as well, Kirby adds. "We look at the demos of who is visiting Excite and who the broadband customer is and look at products that appeal to both," Kirby says.
"The broadband audience participates and buys," Kirby says. Revenue is small today, but Kirby believes it will grow as HSN continues to match products and the audience profile together. For instance, prime time broadband users tend to be male, Kirby says, so HSN carries products that appeal to that demographic. But the weekday programs run over the lunch hour, which is prime time in broadband, Kirby says, and "many more of them (viewers) are women than in the evening hours."
HSN also is launching a second service within Excite: three- to four-minute video clips of specific products. "That will potentially be the biggest part of the broadband experience," Kirby says, which allows for more complete product demonstrations. "We can have a personality and we'll definitely have a higher response rate."
Carpenter concurs. "The evidence is we will have a very substantial adoption rate," she says, based on Excite's experience with its current how-to information video service. "They are incredibly popular," she says. "The next step is to add purchasing opportunities" to the how-to videos, she says, using a range of products and price points.
The chats also help propel sales, Kirby says. "It's about information and its added value content." Carpenter equates ecommerce chat to the shopping mall experience, where "there's a social aspect to the purchasing experience. You have opportunities for real-time interaction." Excite's also looking at adding voice capability to the chat functions, Carpenter says.
For HSN, online initiatives also help it drive business to its cable networks. "We're getting Web buyers over to the TV platform," Kirby says. HSN.com generated $50 million in revenue last year and looks to double that in 2001. About half the buyers on HSN.com have never bought from HSN's cable network.
HSN.com recently launched a broadband section on its Web site, as it further tests the market. Although HSN likes the early Excite results, it's not jumping at other broadband platforms, yet. "We won't roll out broadly until we have the appropriate platform perfected," Kirby says.
The company is pouring $40 million into online marketing to bring other Web users to HSN.com and, by extension, HSN television. Banner ads will appear on Excite and other main Internet portals, Kirby says. "We're marketing across the web to bring new eyeballs to the web and the TV."
Excite's Carpenter says broadband shopping is no different from most traditional shopping. "You have to give a customer a compelling reason to come. The fundamentals are the same. People are trying to maximize their time ... you need to make transactions simple and easy."
At the same time, broadband goes beyond the catalog experience. "You can watch a toy, and hear how it sounds. You can't do that in a catalog or talking to someone on the phone."
Another area Excite's looking at is broadband downloads of computer software, Carpenter says, basically anything that's sold in a typical CompUSA store.
Road Runner has taken a slightly different tack with its e-commerce strategy, yet it's posting similar usage results to what Excite finds, according to Bob Benya, senior vice president, sales and marketing.
Shopping is one of 10 major "channels" featured on Road Runner. "It's one of the more popular areas," Benya says, rivaling news and gaming. "We've got good traffic levels."
Merchant Networks and Commission Junction serve as intermediaries, Benya says, negotiating contracts with the more than 1,000 merchants Road Runner carries online. Inktomi software pulls the shopping experience together "with a robust database," Benya says.
Subscribers type in a keyword and information pops up by item, manufacturer, price points and geography, Benya said. Merchandising also is sprinkled through the news sites. If a subscriber is viewing the NBA news section, small windows on the page will carry sales information on NBA replica jerseys, for instance.
Road Runner also created direct marketing relationships with 30 e-commerce companies, many of who have anchor tenancy positions on the service. Barnesandnoble.com is one example.
Anchor tenants pay extra fees, Benya says, but they receive offline marketing, such as direct mail to 15 million homes, coupon offers and promotion on Road Runner's home page.
Road Runner also divides the shopping experience into "departments," and "counters." "We have shopping assistant like Bergdorf Goodman," Benya says.
Many of the 30 anchor-type companies have begun using video to sell products, including barnesandnoble.com and the financial services firm Dreyfus Fund.
As Road Runner climbs past the 1.2 million subscriber mark, Benya foresees a greater emphasis on pushing subscribers deeper into the service. Broadband e-commerce, he believes, will grow as more subscribers sign up and spend more time with the service. "(Broadband e-commerce) is at the tip of the iceberg," he says. "Its potential is massive."
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