E4L Forms Links With Snap, Xoom
The company and its joint venture partner, BuyItNow Inc., entered into a marketing agreement with Internet portal Snap.com and its sister company, Xoom.com, an online community and e-commerce site. NBC Interactive is the parent company of both Snap.com and Xoom.
The agreement means that whenever Web users visit the shopping area of Snap.com, they will see a link to BuyItNow.com, a joint venture between E4L and BuyItNow, based in Tulsa, OK.
"BuyItNow.com will be prominently displayed in the shopping area and Web users will be encouraged to click on the BuyItNow Web site," said Robert Silverman, senior director for Snap.com.
Snap.com has a similar relationship with Guthy-Renker Corp., an infomercial marketer in Palm Desert, CA, that lists its Choice Mall site in Snap.com's shopping area.
"As a portal, it is in our best interest to get as many people as we can listed on our search engine," Silverman said. "It is also in our clients' best interest to have as much exposure as they can get too. So none of these agreements are exclusive."
As part of the agreement, Xoom.com will become a direct partner of BuyItNow.com and receive 1.8 percent of the company's profits. Snap.com will receive 3.6 percent of BuyItNow.com's profits.
E4L promotes the BuyItNow.com Web site in 15-second promotions that appear at the end of its infomercials.
"It is like having a commercial inside of a commercial," said Stephen Lehman, chairman and CEO of E4L. "E4L is a DRTV company focusing on two specific areas of growth, e-commerce and membership services. The advantage of aligning with Snap.com is that it creates an anchor tenancy for driving our own initiatives."
E4L is the exclusive infomercial marketer on BuyItNow.com's section of "As Seen on TV" products, although a recent visit to the site found that half the products included the notice "Temporary Shipping Delay."
If the stock market remains strong in the fourth quarter of this year or the first quarter of next year, then E4L and BuyItNow plan to take BuyItNow.com public.
E4L reported a loss of $43.6 million on revenues of $327.9 million for the year ended March 31. About $11.3 million of that loss was attributed to writedowns of goodwill on prior acquisitions and another $20.2 million was attributed to restructuring charges.
"We took over the company eight months ago and we are paying for the sins of the last company," Lehman said. "We had $48 million in write downs and the restructuring as a whole is based on returning E4L to profitability this year."
Analysts said that because E4L is restructuring its infrastructure toward Internet marketing, it is understandable that the company is again not profitable this year.
"They are going through what every Internet company is going through," said Joseph Besecker, an equity analyst for Emerald Research, Lancaster, PA. "They need to invest in this to get land share. It took longer than some people thought to grow the company."
Besecker added that some analysts were overoptimistic in setting a target price for E4L's stock of $24 a share, while the price has fallen to the $6 a share range.
Part of E4L's restructuring plan involved terminating its relationship with Cendant Corp., Parsippany, NJ, which managed the company's back-end operations and fulfillment.
"[The relationship with] Cendant was a private-labeled membership initiative that was not e-commerce-based," said Lehman. "Since E4L is expanding, the decision was made to bring it all in house, so now the membership services are wholly owned by E4L. The company is evolving into a much more comprehensive membership services entity with on- and off-line shopping."
Its membership services allows members who pay about $5 a month to purchase name-brand products at reduced prices and also book discounted travel services. The site offers "as seen on TV" products that are sold in E4L infomercials.
While some observers say that E4L's strategy of promoting the BuyItNow.com address in the infomercial discourages viewers from responding to the infomercial, Lehman said the opposite is true.
"We have seen no decline in response to our infomercials and have seen an increase in Web traffic," he said. "With the e-commerce, we have eliminated the need for live sales operators and it gives consumers the ability to track their orders. As online shopping grows, this will become more viable in the direct response ordering and fulfillment process."