Competition
CSI will be competing in two primary arenas:
- Competing for Consumer Purchase Dollars.
- Competing for Retailer Distribution Dollars.
Consumer Purchase Dollars
The Point 'n Click Shopping Center is a hybrid: both a store and a non-store that will be competing with other "stores" and "non-stores." Stores include any retail location that sells goods and/or services. "Non-Store" covers all other forms of retail sales including catalog, direct mail, direct sales, broadcast sales and telemarketing. The benefit of a store, in the case of merchandise, is the ability to "kick the tires" or "touch the merchandise." In fact, many types of stores shipping experiences involve "seeing" only. Touching the merchandise does not take place until the customer is at home and opens the box. Video communications can simulate, and in the case of information intensive products, surpass the "touch the merchandise" experience. A far greater choice of merchandise can be stored in CD-ROM files or recordable optical disks for visual display and manipulation than can be stored on a shelf. Seeing and touching consumer electronic products in a no service, discount warehouse may ultimately be less satisfying than "seeing" consumer electronic products, accompanied by a live consumer electronics expert's detailed explanation of the benefits and features of competing models and brands.
The growth in non-store sales has been fueled by the 13.6 billion catalogs that were mailed in 1990 compared with 5.8 billion in 1980. Over 98.6 million adults (54.4% of the adult population) made a "non-store" purchase in 1990. The non-store purchasing experience through catalog stores or direct sales provides a combination of quality, price, service and convenience. To capture sales from store retailers, non-store marketers generally emphasize one or more of these benefits. With catalog and telemarketing sales the consumer is usually limited to a single product image and brief description. When the customer calls for more information he or she must trust a disembodied voice to answer questions and paint verbal pictures that describe additional features and product benefits.
The Point 'n Click Booth monitors allow the customer to "see" all sides of a product and "see" the selling agent. More critically, the selling agent "sees" the client. The ability of the selling agent and client to see each other is vital. According to a recent study, only 7% of what we communicate in face-to-face conversations in conveyed by the meaning of the words themselves. Another 38% of our communiation is based on how we say words – the intonation we use. The remaining 55% of our communication is based on non-verbal messages. The selling agent's reliance on visual clues helps make the sale. Using the PCB, a client receives the best a store and non-store can offer…personal service, expert information, visual product presentation, shopping entertainment, and convenience at the most competitive price.
Retailer Distribution Dollars
The above discussion dealt with the consumer benefits associated with the PCSC and PCB. There is a strong case to be made that consumers will be drawn to this retailing environment because of the "best of both worlds" benefits. Retailers, however, must make decisions regrading the allocation of limited resourxes to accomplish their goals. CSI believes that the PCB provides an extremely attractive alternative distribution outlet when compared to its competition.
The PCB offers a cost efficient means for marketing and distributing retail productions and services, much like most non-store techniques, including reduced real estate costs, reduced inventory carrying costs, and reduced labor costs due to better efficiency of sales personnel (centralized sales force with approximately 67% of time spent interacting with customers). Because using the PCB will create a cost advantage over its competitors, tenants can price more aggressively and still maintain higher margins. Notwithstanding the above, the one major difference (benefit) between the PCB and other non-store distribution outlets is the high level of customer service and the sales agent's ability to "close" the sale. The 1990s consumer demands low prices and high service. The PCB has finally given retailers a means to deliver on both of those demands.
With one exception, CSI is currently unaware of any other companies attempting to create a Point 'n Click Booth, Retailer's Point 'n Click Desktop or to use video conferencing in a busines to consumer application to retail goods and/or services. The only exception is in the banking industry where two companies, have begun to solicit banks to use videoconverencing technology with their customers. CSI significantly differentiates itself from those firms in two distinct ways: 1) Neither of the two banking companies have developed the systems necessary to use this technology in a virtual mall concept with multiple retailers, and 2) CSI built is products from the ground up with the consumer sales presentation in mind. Our Patent Pending Software gives the retailer a significant advantage over simply using desktop video systems to interact with their customers. Moreover, our software is designed to overlay the retailers existing system which creates a one screen interface and is extremely user friendly.
CSI believes that being' 'first" in this market will provide a competitive advantage over future entrants. The company believes that it has an approximate eighteen month lead over potential future competitors. The time involved in determining exactly what equipment is necessary and the development of the essential software to tie it together has given CSI a commanding lead in this arena. The ability to continue to sign major companies as tenants and to secure high profile locations as PCB sites will insure CSI's preeminent position as the leader in this industry. Furthermore, when the eventuality arrives that the "electronic superhighway" is feeding 500 channels into every American home, the Retailer's Point 'n Click Desktop will grant CSI a virtual franchise on the "turn key" business of providing America's retailers with the capabilities to market their products and services interactively.
