HouseHold Direct.com, Inc. Business Plan Model (overview)
HouseHold Direct.com wishes to clarify and update the business plan and the progress made in several key areas. Over the next few weeks as the Company gets ready for the launch of the completely re-designed and enhanced E-commerce portal, we will bring up several elements of the business plan. Major questions raised will be included in the shareholder-generated FAQ (announced on 12/3/99) that will be posted later this month on the 1stNetTech web site. As always please feel free to call the SmartStockAdvisor group or send us an e-mail with questions or comments. For those unaware, there is a great deal of information from the business plan at the 1stNetTech web site at 1stnettech.com.
TOPIC #1: Revenue Sources/Competitive Advantages
One of the most dynamic elements of the business plan is the many revenue sources targeted. The unique plan of the Company is intended to benefit the consumer, the manufacturer, and of course, HouseHold Direct.com and its shareholders.
a) E-Commerce web site
This will be the most significant revenue contributor to HouseHold Direct.com going forward. The enhanced E-commerce portal will be introduced in January 2000 with several sophisticated features including the planned availability of over 800,000 products, automatic generation of member buying profiles, and unique targeted marketing by manufacturers and by HouseHold Direct.com. An especially exciting capability which emulates a live TV shopping channel "sell-off", allows manufacturers to have direct access to the site and offer tremendous product specials, the quantity of which will dynamically count down as the products are sold. Membership fees are a significant source of up-front and ongoing income. Instead of the huge, often prohibitive lifetime membership fees that some other Private Clubs charge, Household Direct.com charges a very modest lifetime fee and small ongoing monthly or annual fees. The Company feels that once the consumer compares the savings involved at the HouseHold Direct.com site, that the membership fees will seem very reasonable. Special promotions involving air miles or other incentives are also included. Members will be able to purchase products at outstanding discounts since there is no "mark-up" on the product price. The Company, however, will benefit from a 10% service fee, which will add greatly to cash flow. It is a WIN-WIN for the Company, manufacturer, and especially the consumer.
One real life example of savings is as follows*:
Denon Home Theatre System - model number AVR5700
Typical Retail Price: $2,799.00 (Good Guys)*
Best price on the Web: $2,300.00*
HouseHold Direct Price: $1,897.83*
Savings to HHD Member: $ 901.17*
* this was the price at time of survey and may have changed.
b) Physical locations
Another significant revenue contributor is the "brick and mortar" facilities that the Company expects to be immediately profitable. It is anticipated that the profits from the acquired physical locations will contribute to the funding of the E-commerce operation over the first year. After that time, the E-commerce web site is expected to surpass the physical locations in terms of revenue and profit margin, due to the lower overhead and higher efficiencies. The Company expects to acquire other Clubs operating under a stable financial condition, and which support the strategic direction of the Company. Having both physical locations and an effective E-commerce model gives the consumer an outstanding choice of buying preference.
c) Advertising fees from the E-commerce site
Advertising fees will be a growing source of revenue. Special efforts are being made to increase the "stickiness", or time, that a member or potential member spends at the site. The huge catalog of 800,000 products, an on-site search engine to over 750,000 related web sites for conducting product research, as well as chat rooms, user definable profiles, and many other services like "live sell-off promos" will engage the user and keep them at the site. This "stickiness" will enable the Company to more easily sell advertising. The Company's powerful software will also enable advertisers to market to a highly targeted member profile group. For example, a children's clothing manufacturer might choose to only make special offers to households with children, and not bother those without kids.
d) Manufacturer fees
Manufacturers and vendors will not only be using the site for "live sell-offs" but will be paying for custom data supplied by HouseHold Direct.com. The manufactures will be expected to offer participation fees and other capital contributions to HouseHold Direct.com for use of the Company's software and data management toolsets that will assist the manufacturer's ability to increase their sales to the members. Like mentioned above, manufactures (i.e. advertisers) can market a promotional item or campaign to a highly targeted group. Sales analysis and "hit rates" can be then be tracked and analyzed to provide them with invaluable data to fine-tune their marketing efforts at the Company's site and elsewhere. To increase their exposure, the manufacturer can also choose to become a "Featured Manufacturer" at the site. HouseHold Direct.com perceives this to be a separate operating division within the Company as they roll the product out to more manufacturers.
e) Revenue through alliances and acquisitions
The Company plans to leverage sales by linking to other sites, for example manufacturing web sites, in order to create affinity and cross marketing alliances with sites that fit within its business model - namely shopping services at a discount. Financial and other "soft services" such as private label credit cards, consumer installment loans, and home financing and insurance products may eventually be tapped, leading to opportunities that will grow the Company. Cross marketing agreements are already underway which will lead to enhanced member services in the area of ISP and Telco services.
Another goal will be to continually acquire new technology and or sales assets, such as additional buying clubs or other membership service providers that would increase the Company's competitive advantage and profits. The Company surely won't overlook it's own ability to become a master service provider on the web regarding membership fulfillment services for other buying clubs. In this way HouseHold Direct.com can continue to grow the membership without incurring the initial marketing and acquisition costs. Several of these provider relationships are under current discussion.
f) Foreign expansion
The Company believes that foreign consumers will benefit from use of the Company's E-commerce site. The concept of brand name discount locations is in practice to a limited extent in Luxembourg, Panama, Andorra, Hong Kong, and a few other locales. However, these "brick and mortar" sites have neither tapped into the "buyer's club" nor the Internet formats. This will become an important area of emphasis in 2000. We are in current discussions with potential joint venture partners to pursue these avenues of development during our next stage of operational development.
Disclaimer: SmartStockAdvisor.com is a compensated agent of HouseHold Direct.com, Inc. SSA has
been hired to perform investor relations for the company and is being compensated as follows monthly:
$9,000 cash, 20,000 stock warrants with an exercise price of $0.10, 15,000 stock warrants with an
excise price of $0.25, and 15,000 stock warrants with an exercise price of $0.50 for a three month
period ending February 22, 2000. These warrants expire November 22, 2001. Some individuals
comprising SmartStockAdvisor.com hold individually owned unrestricted shares of
HouseHoldDirect.com, which collectively amounts to less than one half of one percent of outstanding
shares. We are not a registered investment advisor and suggest that you consult with an independent
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