Online Computer Seller Seeks First-Time Buyers Through DRTV

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In an effort to make online shoppers out of those who do not yet own computers, Internet and catalog marketer Virtual Technology Corp., Minneapolis, plans to launch a direct response TV campaign that will highlight bargain-priced computer systems and will be simulcast over the company's Web site.


"What we found was that by doing our marketing on the Internet we were only reaching people who already had computers," said Kenneth Israel, chairman of Virtual Technology. "We were not reaching first-time buyers, and we thought TV would be a way to bridge that gap."


The infomercial programs, titled "Digital Discoveries," will feature two or three product packages -- including a personal computer with a monitor, printer, scanner and software -- in each 30-minute episode. About 10-15 installments are expected to air each week in various markets around the country. They feature product demonstrations, user testimonials and opinions from analysts.


"The mission or charter of the show is to go out and find good products that are a good value and present them to the public," said Israel. Packages priced as low as $599 will be used to lure first-time buyers, he said.


The programs are expected to begin airing in the third week of this month, although Israel said the company had not yet secured the date and market for the initial broadcast.


Brooks Gray, a research associate at Technology Business Research Inc., Hampton, NH, said it was the first time he had heard of a technology company using infomercials to sell computers, although he said it might be an effective strategy.


"There are a lot of people out there who watch infomercials, and if they are offering low-priced computers it might be a good way to reach first-time buyers," he said.


Recent surveys indicate that personal computers are in half of all U.S. homes, and analysts said they expect computers to have a more difficult time reaching those consumers who do not yet have computers but are interested in buying them.


In an effort to attract its past customers as well, Virtual Technology will simulcast the infomercials on the company's new-product Web site (www.virtual-world.com). Consumers will have the options of either calling a toll-free number to order products or ordering through the Web site. Viewers with Web TV will be able to order directly through their TV screens during the broadcast.


As soon as the schedule is finalized, the company will promote the broadcasts to its database of registered Web-site users. The company transmits e-mail notices to its database each week, totaling about 1 million transmissions per month, Israel said.


The company said it will handle phone orders from its Minneapolis call center, which seats about 50. Virtual Technology uses both a warehouse inventory and delivery arrangements with third-party distributors to ship products.


In order to handle the added bandwidth required for streaming video on the Internet, the company will encapsulate the video in a separate Web site that will be linked to the main sites. Israel said the company's initial cost outlay for the infomercials, including the addition of new technologies for the Web site, will be about $150,000 to $200,000.


Eventually, Israel said, the company hopes to establish chat rooms and other interactive devices for consumers.


"We think this is just the beginning," he said. "I think we want to take it in bite-sized chunks, manage it well and provide quality service. I think if you come out with too much too soon you run the risk of stubbing your toe, and on the Internet that can be devastating."


Virtual Technology, which was founded in 1996, has about $100 million in annual revenues, Israel said. The company's stock currently trades on the Nasdaq Bulletin Board, but Israel said it the company has applied for listing on the regular Nasdaq, which is more visible to investors and carries more cache than the bulletin board.


The company recently acquired Graphics Technologies Inc., a business-to-business technology supplier, and has announced several marketing initiatives, including an agreement with DVD.com to market digital video disks. The company also is marketing Virtual Technology-branded credit cards on its Web site through a program with First USA.
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