TWEETER SELECTS GLOBAL SPORTS TO RUN E-COMMERCE SITE

Tweeter spokeswoman said she couldn’t be more specific about when e-commerce capabilities would be offered at site, which already is up and running exclusively as information destination. But she told us site “definitely” would be offering e-commerce capabilities for consumers throughout U.S. in time for holiday season. It also wasn’t clear whether Tweeter already had authorizations from all of its vendors, including Sony, to sell products company also sells at its stores online, but spokeswoman told us: “All of our vendors are behind us on this announcement and they are pretty excited that we are to be back on line.” She added: “We are reviewing our vendor contracts and meeting with vendors on a one-to-one basis to discuss online business.” Tweeter operates 161 stores in U.S. under Tweeter, HiFi Buys, Sound Advice, Bang & Olufsen, Electronic Interiors, Showcase Home Entertainment and Hillcrest High Fidelity names in New England, Tex., San Diego, Mid-Atlantic, Chicago, Southeast, Fla. and Phoenix. Like company’s brick-and-mortar locations, new online store will feature selection of mid-to-high end audiovideo technology for home and car, Tweeter said.

Tweeter Mdsg. Vp Bernie Sapienza told us earlier this year company was “in negotiations for a new Internet partner” (CED Jan 31 p2). Tweeter had sold its electronics products exclusively via Cyberian’s Outpost.com Web site since 1999. Tweeter Pres. Jeff Stone said Tues.: “When we began to look for a new e- commerce partner, it was very important to us to find a company with a leading technology platform, extensive e-commerce experience and a strong foundation.”

Global announced in Feb. it planned to change its corporate name to GSI Commerce in May if shareholders approved, reflecting company’s evolution from providing outsourced e-commerce solutions exclusively for sporting good companies, including Modell’s and Sports Authority, to serving variety of other categories, including general merchandise retailers and media companies. Companies for which Global has provided e-commerce solutions include Buy.com, Kmart’s Bluelight.com, Toys “R” Us, Nickelodeon, TV Land.

With solo e-commerce site, Tweeter faces what could be uphill battle to compete against already-established online CE retailers Best Buy (BB), Circuit City (CC), Amazon.com. In one significant way, Global deal seemed to mark at least partial change in attitude of Tweeter executives, who one year ago had said they weren’t looking to go their own way online. Although Global will be handling bulk of e-commerce functions for Tweeter, latter still will be in position of having to go up against CE competitors online without help of established e-commerce retailer such as Cyberian to provide built-in online customer base. Tweeter also now must foot potentially expensive bill for marketing and branding efforts online. Stone and Tweeter CFO Joseph McGuire had told us last June they had no desire to go own way in e-commerce sales arena. At that point, they told us they were happy about PC Connection proposal to buy struggling Cyberian. That deal, of course, later fell through. McGuire and Stone also said they were happy with way Cyberian relationship was going for their company. Stone told us then: “One of the reasons I'm glad that [Cyberian Outpost is] going to survive is because they are really, really good at what they do. That ability to run that Web site, fulfill the next day and so forth is very powerful and really it would cost us tens of millions of dollars to have to try to duplicate that quickly… We would just burn through millions and millions of dollars to do that and I'd much rather put it into stores.” He also said Tweeter didn’t have sort of large marketing budget that competitors such as CC and BB had for independent Web site to make sense. He said CC and BB had “hundreds of millions of dollars in a marketing budget so they can go talk to the American public and drive them into their site… We don’t have that type of clout. Cyberian Outpost had hundreds of thousands of customers and tons of eyeballs going to their site every day. The reality is that if we stopped tomorrow and started going on our own site, our [online] business would be reduced by probably 60% or 70% because the traffic that is coming into the Outpost site and flipping into the Tweeter site once they visit are people who are buying the product from us.” McGuire agreed, saying “60% of the sales that happen on the Net still [come from] states where we have no store.” One potential challenge for Tweeter now will be figuring out way to attract online customers in markets that have no Tweeter stores. For example, there are no Tweeter stores in N.Y. metro area.