3 February 2000
News Corp and Softbank's $US50 million Internet company eVentures will launch a second major US Internet brand, the discount retail site buy.com, in Australia in April.
eVentures Australia CEO Mr Andrew Isles said buy.com was the number two Internet retail site behind Amazon.com, which last week signed an Australian alliance with John Fairfax's Internet offshoot F2.
Criticising the approach to online retail taken by fledgling Australian Internet companies, Mr Isles said eVentures would build its own fulfilment and warehousing operations for the venture by partnering with traditional freight and courier companies.
``Buy.com really understands how to grow an etail business and backend infrastructure," said Mr Isles. ``Many sites in Australia are still processing orders by hand."
Buy.com, which was founded as a cut-price seller of computer hardware and software but has expanded to offer books, videos, music and airline tickets, will also be launched by eVentures inthe UK.
The company, which saw revenue grow to $US396 million ($620 million) in the nine months to September 30 on losses of $US64 million, is planning to raise $US150 million in an initial public offering in the US.
Speaking at the launch of eVentures' first Australian project, a local version of the major US mortgage site E-Loan, Mr Isles indicated a third business launch was in the pipeline.
Seeking a slice of the $120 billion Australian home loan market, Eloan.com.au will offer 140 products from 10 lenders on commission.
Other home loan broking sites already operating in Australia include eChoice and Lenders Online.
The CEO of E-Loan in the US, Mr Chris Larsen, said E-Loan would differentiate itself by an ``aggressively pro-consumer" stance, and deep pockets to fund marketing.
The company's international reach would also allow the flow of capital from Europe and Japan into Australian backyards.
``With global capital markets and the Internet platform it's so much easier to access capital sources for consumer lending from countries and companies who would never take the time to set up a branch network.
``That is part of our goal of becoming global," said Mr Larsen.
Within five years, this would be ``the way e-commerce finance will work", he said.
E-Loan spends $US40 million a year on marketing costs, exceeding its revenue.
Mr Larsen said this was needed to establish a leadership position in markets as they emerged, and the Australian venture would similarly invest heavily in TV advertising.
``This makes sense when only1 per cent of Australian home loans are online but we see a clear path of growth to 10 to 15 per cent," said Mr Larsen.
Www.consult analyst Mr Ian Webster said the Australian home loan market had demonstrated itself to be one where new brands, such as Aussie Home Loans and Wizard, could be built into substantial businesses, unlike other financial services categories. ``It tends to be driven by brand-building activity."
``[eVentures] have a lot of experience with the model in Japan and Europe and they will come to market with a really good understanding of what is needed to make this thing work," said Mr Webster. ``This is not an Internet start-up."
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