How IAC/InterActive`s Barry Diller sees the future

Even though web retailing is entering its second decade and remains the fastest growing sector of the U.S. retail industry, the market is still only in an early stage of development, Barry Diller, chairman and CEO of IAC/InterActiveCorp. told attendees Wednesday during the keynote session at the Shop.org 2005 Annual Summit in Las Vegas. “We’re still in the early days,” Diller says. “Compared to other Internet segments we’re not even out of the baby stage. Unlike online travel, online retailing was a tougher nut to crack.”

In the future, web retailing market share will be won by those merchants offering their shoppers the best value proposition and not depending entirely on technology such as search engine marketing and new merchandising trends such as social networking.

“Amazon.com got where it is today because they offered online book buyers a better value proposition than anyone else,” he says. “They offered a huge amount of inventory and efficient service. They got people who wanted to buy online to come to their door.”

In the future, Diller says that IAC/InterActive will continue to look for more acquisitions such as Cornerstone Brands Inc., which it purchased in March for about $720 million. While HSN.com, the e-commerce arm of Home Shopping Network and another IAC/InterActive company, is profitable and expected to post online sales of about $380 million in 2005, Diller says the Cornerstone acquisition and other potential future deals will help IAC/InterActive build a more diversified retailing base, particularly in the business-to-consumer e-commerce market, which is growing at an annual rate of more than 25% compared to a rate of 6% to 10% for TV-based retailing.

“All of these channels are becoming symbiotic,” he says. “Our challenge is to have separate brands and go deeper into the customer experience. We will continue to fund ideas that accomplish those goals.”

Despite the fact that the Home Shopping Network began operating before arch rival QVC Corp., Diller also concedes that Home Shopping Network won’t be overtaking QVC on the TV air waves or on the Internet any time soon. “QVC is where they are because they poured all of their money into building an infrastructure early on,” he says. “The only way we can do better is to keeping making more investments, which we will.”