PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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With new leaders and more aggressive strategies, all that could change. BlueLight is already drawing a crowd of both newcomers and AOL defectors to its Internet service. So far, 40% of the 500,000 who signed up for its ISP are new to the Web, and 37% switched from AOL. With numbers like that, some wonder how long the marts will need the portals. “Over time,” predicts Forrester’s Li, “these retailers will drop the portals as they establish their own online brands, just as Amazon abandoned AOL.” •
The marts at Net speed
Though Kmart and Wal-Mart are racing the Internet Express in similar directions, their recently souped-up strategies have important differences. First the similarities: For better access to the Silicon Valley talent pool, both have relocated their Internet headquarters from parent corporation hinterlands to the San Francisco Bay Area. And taking a route followed by Nordstrom, Toys “R” Us and other brick-and-mortar heavyweights, both partnerships were jump-started with heavy infusions of venture capital. Analysts estimate the BlueLight package at $62.5 million from Softbank and Yahoo!, with Wal-Mart.com getting $50 million to $100 million from Accel and the corporate kitty.
- Free cobranded Internet access powered by Spinway.com and supported by Cisco Systems. Customers can pick up the free software disk at Kmart’s 2,177 stores. Those already online can phone in or e-mail requests for the service.
- Cobranded content and services from Yahoo! such as personalized news, sports and weather, plus e-mail and instant messaging.
- Introductory products and special promotions from Kmart, with Web store functionality to expand through the year.
- Cross-promotions with Yahoo! The Bluelight.com service will be distributed and promoted on Yahoo! shopping and also marketed to Kmart customers through offline in-store promotions and circulars.
- TV-quality video advertising on the site using Spinway’s compression technology instead of banner ads. Kmart products and those of third-party advertisers will be featured in the 30-second spots.
- Discount cobranded Internet access provided by AOL Along with the ISP software, Wal-Mart will distribute a version of AOL 5.0 software with a toolbar link to Wal-Mart.com.
- Expansion of dial-up Internet access to rural areas where the only current option is long-distance.
- Cobranded content like that offered by AOL’s value-priced Compuserve service, with personalization features and parental control options.
- Cross promotions: Wal-Mart will promote the ISP and AOL through a multi media print, radio, TV and in-store campaign, while Wal-Mart.com will be promoted on the Shop@ areas of AOL brands.