Sofware Retailers Make Foray into Internet Shipping

Although software distributors are crowding online to hawk their wares, a few are daring to ship their software across the Internet — eliminating not just trips to retail stores but also the wait associated with mailed packages.

“At this point in time, downloading software is only a small portion of Internet commerce because of bandwidth,” said Bob Dodge, vice president of marketing at TEC Direct, Boulder, CO, which sells children's educational software. “You can download upgrades and [smaller products] like that, but I know of no company that is able to download very large CD programs.”

Dodge, noting that TEC Direct will not offer download capabilities anytime soon, advised consumers using a regular phone line to download a large software program to set aside 24 hours for the job. Even after those hours of patience, he added, they may find that the program exceeds their hard drive's storage capacity.

Nonetheless, some companies are attempting to dodge the current roadblocks to deliver software to their customers immediately and gain a competitive edge.

Mike Schinkel, president of software reseller Xtra, Atlanta, is capitalizing on the industry's hesitancy to ship software online. He's about to allow his customers to download the software off his site at

“A lot of our software can fit on two or three diskettes, so we are selling small products that you can bring down pretty fast,” Schinkel said. “It also depends on who your customer is.”

Recognizing that not all members of his audience are big-name companies with access to the most up-to-date technology, Schinkel is mailing catalogs with a disk containing an array of software products.

A customer can flip through the catalog, pop in the disk and browse through the product selection. Instead of downloading the software over the Internet, the buyer can access a “locked” program on the disk through his or her browser. Entering a credit-card number “unlocks” the software and copies it to the hard drive, ready for installation.

Schinkel said copying the software off the CD is much faster than downloading the software from the Internet and much more proactive.

“The Web site is reactive, we wait for someone to come to us,” Schinkel said. “The catalog and CD drops in their mailbox and says look at me.”

He also defended his decision to send a catalog with the disk, although the two contain similar information.

“How many CDs have you received that you have never put into you machine?” Schinkel asked. “If they get our catalog and they say, 'Wow, look at all this stuff in here,' then they are ready to go to the CD and unlock and buy the software.”

Although Xtras' costs will rise dramatically with the addition of the CD in the direct mail package, Schinkel hopes to counteract the increase with an increase in sales.

Other companies are relying solely on the Internet to offer their customers instant access to software.

“It's a growing phenomenon. There are more and more downloads occurring on the Web today,” said Bill Holtzman, vice president of marketing at Cyber-Source, Menlo Park, CA, which facilitates downloading software over the Internet.

“It does have its market niche. It's people who need software in a hurry. There is a growing amount of business in that area, and it's people who say, 'I want software now and I don't need the box,' ” he said.

Holtzman admits smaller programs such as virus-detection or tax software can be downloaded relatively smoothly today, but larger software programs still take more time than customers can afford.

And frustrations run high. Sometimes customers who are more than an hour into a two-hour download suddenly lose their phone connection and have to start from scratch. Many software companies “wrap” or encrypt their software in preparation for travel over the Internet, then require customers to enter a password before being able to access the program, according to Holtzman.

To address those issues, Cyber-Source has designed a tool that allows software to be downloaded without encryption and picks up where the customers left off should their phone line disconnect.

But Holtzman still advises software distributors to take their venture into the Internet one step at a time.

“I think transacting on the Web, but not necessarily shipping on the Web, is a very logical thing to do, and the incremental costs are not prohibitive,” Holtzman said. “In terms of downloading the software, maybe it's a two-step process. Maybe they want to get their feet wet first.”

The necessary technology that would allow glitch-free and speedy downloading even of large programs, may not be available for a few years, according to Maria LaTour Kadison, a senior analyst at Forrester Research, Cambridge, MA. Although some companies are offering download capabilities, she believes that that option is secondary to giving them a comprehensive online catalog.

“Downloading is something that is interesting right now, but it's something that I don't think is as important as having a huge selection of products on the Web,” Kadison said.

“Downloading is for a time when bandwidth expands wildly, but even then you have the questions of 'Yeah, but how do I get the manual?' “

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