Cyberian Outpost and Tweeter Join Forces: Execs Talk About Venture

Cyberian Outpost, Inc., an online e-marketeer of computer products, and chain store Tweeter Home Entertainment Group, Inc. announced Monday that they have joined forces to sell consumer electronics via the Internet.

Darryl Peck, chief executive officer of Cyberian Outpost, told the E-Commerce Times in an interview yesterday that the joint venture would give the Kent, Connecticut-based company “a leg up on Amazon.com.” He also said the new jointly operated Web site called [email protected] will be up and running by fall — just in time for the Christmas e-shopping season.

Mr. Peck added that Cyberian Outpost had been toying with the idea of forging a partnership with a brick-and-mortar electronics chain for some time, after receiving countless e-mails from its customers wanting to buy such merchandise.

“We needed a terrestrial partner because no consumer electronics manufacturer is interested in selling its products through an Internet site alone,” Peck said.

A Perfect Fit

Joseph McGuire, chief financial officer for Tweeter, told the E-Commerce Times that while the Canton, Massachusetts consumer electronic chain had recently made the decision to expand its presence to the Internet, it decided against building a site from scratch. McGuire estimated it would have cost the company millions to ramp up its own Web site and man a distribution center. But with Cyberian Outpost’s infrastructure already in place, the partnership seemed a perfect fit.

“It made a lot of sense because of the return on investment and the managing of the risk,” he added.

Meeting With Vendors

Since coming to an agreement on the joint venture, Mr. McGuire said Tweeter met with 20 of the consumer electronic vendors doing business with its 73 stores. The vendors promised to come back with a prompt answer regarding the Internet venture. Mr. McGuire hopes they’ll support the project that he says is long overdue.

“The consumer electronics industry has been slow to get on the Internet,” he said.

In addition, Mr. McGuire said the new site is needed because “grey-goods retailers, who corrupt the price/value equation and don’t deliver service,” are currently selling consumer electronics via the Internet.

“We need to take a leadership position,” he said.

To signal the vendors that Tweeter is serious about the e-commerce, Mr. McGuire said the retailer pumped $1 million into Cyberian Outpost.

About The Companies

Founded in 1995, publicly held Cyberian Outpost (Nasdaq: COOL) operates a 24-hour-a-day e-commerce site that offers 160,000 computer hardware, software and accessory offerings. In fiscal 1999, it lost $25.2 million on revenue of $85.2 million.

Also publicly held, Tweeter (Nasdaq: TWTR) is a specialty retailer of mid to high-end audio and video consumer electronic products. The company operates 73 stores under the Tweeter, Bryn Mawr Stereo & Video and HiFi Buys. It earned $5.3 million on revenue of $232.3 million in 1998.