High-End Clicks & Mortar?

Selling consumer-electronics gear over the Web has begun to glow white-hot in the last year, with dozens of companies turning up the competitive burners (see related story). It will likely be a tough business, with the inevitable shake-outs and mergers taking place as retailers test their strategies and brands on the public's pocketbooks.

Last week, specialty consumer-electronics retailer Tweeter Home Entertainment Group jumped into the fray by announcing the formation of a joint venture with Cyberian Outpost, an Internet-only retailer of computer hardware, software, and accessories. The two companies, as exclusive partners, say they will jointly form, market, and brand a new Internet store called Tweeter@Outpost.com. The companies claim the new store is "intended to leverage and integrate the core strengths of both parent companies" in its launch as an Internet consumer-electronics retail site in fall 1999.

In the 50-50 joint venture, Tweeter says, it will provide products, training, and marketing, with Outpost.com adding its online e-commerce experience. Additionally, Tweeter reports it has made a $1 million equity investment in Cyberian Outpost, Inc. Tweeter says that it expects its "powerful relationships with top manufacturers, and its merchandising expertise" will be instrumental in obtaining manufacturer authorization to sell higher-end consumer-electronics products over the Internet.

Tweeter's Jeffrey Stone says that "Today, consumer electronics over the Internet is characterized by gray-goods retailers who are tarnishing the price/value equation and offering little, if any, service to the customer. Through this partnership, we intend to establish some benchmarks or standards by which we think that anyone else selling consumer electronics over the Net should live. We have communicated those benchmarks to our vendor partners. Both Tweeter and Outpost.com are intent on entering the Internet consumer electronics space with full authorization from the manufacturers."

Daryl Peck, founder and chairman of Outpost.com, claims that "the long-term winners at selling on the Internet will be those companies who provide a compelling shopping experience and then back it up with pre- and post-sale services. Some of the benchmarks that we support are vendor IMAP policies, providing at least 120 hours per week of live, educated sales support and giving Internet customers the right to return their purchase within 30 days for any reason."