EMERGE ALLIANCE - PRESS CONFERENCE BRIEFING
(FULL VERSION. IF YOU HAVE READ PART I, SCROLL DOWN AND CONTINUE WHERE YOU LEFT OFF. YOU WOULD BEGIN AT COMMENTS FROM ALEX BARROTTI - INEX CORP.)
Good evening to you all. We would like to thank all of you for your understanding as we file our report in the late evening. Please find enclosed our summary of today's press conference and all pertinent details.
EMERGE ALLIANCE REPRESENTATIVES
Edward Moffat - Vice-President Business Development - Citibank Canada
Marsha Sharf, Director - Net Merchant (Internet Division of Lasso Communications
Alex Barrotti, CEO - Inex Corporation
David Lucatch, President & CEO - Valu-net Corporation
GENERAL COMMENTS
As reported earlier, the press conference was standing room only and was attended by members of the media, financial community, Internet industry participants and other observers. The presentation went as planned and included the participation of all eMerge partners who took turns speaking about their respective interests. The presentation was then followed by a Q&A session that continued until the end of the maximum allotted time for the room. Several of those questions and answers are presented in this report.
THE PRESENTATION
DAVID LUCATCH - VALU-NET
The presentation was commenced by David Lucatch, who briefly discussed the challenges involved in E-tailing and the current state of affairs in this market. The basic premise was that Internet Service Providers (ISP's) are proficient at providing dial-up service and basic web hosting but are limited in the business marketing tools they can offer their merchant clients. Having said that, ISP's as the gateways to the Internet, have the potential to control a great deal of their customers activities and traffic if given the right set of tools.
Furthermore, this fact is especially true for merchant clients who are often forced to look beyond their ISP's for e-commerce solutions. It is important to remember that a complete e-commerce solution goes beyond building a web site and hosting it on the web. Until today, merchants have been forced to deal with extremely high start-up costs and the lack of a fully integrated solution which includes marketing, customer service and even fulfillment (the ability to handle and deliver products in jurisdictions beyond their headquarters).
Finally, due to the fact many solutions to date have concentrated on selling products internationally, there has been very little focus on the development of solutions for selling products locally. This is referred to as a "lack of localization". Thus, many small and medium sized businesses are forgotten and not able to participate in e-commerce. A simple example would be the local pizza shop that desires the ability to take orders via Internet from an individual who is ending their workday and would like their pizza to be delivered/ready as they arrive at home.
MARSHA SHARF - NET MERCHANT
In order to have a fully integrated e-commerce solution, you need the following:
Merchant AccountàCreate a StoreàSecure Credit AuthorizationàDrive Traffic to the siteàIntegrated MarketingàCustomer Service and Fulfillment.
The eMerge Alliance provides every one of these critical components.
Banking Facilities -Citibank
Store Creation -Inex
Traffic generation, Portals and payment gateway - Valu-net
Marketing -Lasso
PRICING MODELS
The eMerge Alliance pricing model is the most aggressive pricing model to date. Quite simply, there is a $500 basic set-up fee which includes all application fees, SSL certificates (security), credit facilities and search engine registration.
Where the eMerge solution differentiates itself from all others is the price per sku or item. Specifically, a merchant can list 25 different items at a cost of only $275 per month ($11 per sku) or up to 500 items at an even lower cost of $500 per month ($1 per sku). Moreover, the Alliance has removed all hidden fees, which are so prevalent in today's solutions by charging a flat fee per transaction of approximately $.70 (70 cents). Thus, transaction fees stay the same whether a product sold costs $5 or $50.
EDWARD MOFFAT - CITIBANK
Citibank Canada is a subsidiary of Citigroup and employs 7500 employees in over 100 countries. Citibank Canada first formulated it's Internet strategy in 1997 and is now aggressively undertaking an Internet strategy in order to raise revenues, attract more clients and establish it's firm position in this exploding industry. To that end, The eMerge Alliance is the best vehicle to achieve this goal.
Canada ranks 2nd in the world with respect to Internet access/capita and yet business generated out of Canadian web sites is exceedingly small. A great deal of this can be blamed on very high barriers that have forced Canadian businesses to treat their web sites more as brochures than selling tools. The Alliance solves all of these barriers including:
- Currency issues on Credit Card transactions
- Security issues
- Increased Credit Card rates which can be as high as 8% per transaction
- The elimination of Reserve Deposits required by banks for all Internet Credit Card payments. Currently, business is typically required to post a minimum $10,000 bond per card and this can go as high as $50,000. Effectively, this depletion of capital has been a very large barrier
In addition to the above, Citibank's involvement in the Alliance brings the following advantages:
- The ability for Canadian merchants to sell their products in 29 different currencies. Until today, merchants have been forced to either sell in $CDN (which makes foreign purchases difficult) or sell in a foreign currency and then find a bank in each country that will execute "payment settlement" (extremely difficult). Now, Citibank will allow sales in foreign currencies, settle the transaction in Canadian dollars and deposit the proceeds directly into the merchants account.
- ***Most important of all (to the merchant), MERCHANTS WILL NOT BE REQUIRED TO SWITCH BANKS IN ORDER TO USE THE ALLIANCE SOLUTION. In other words, Citibank will deposit the proceeds into a merchant account EVEN IF IT IS HELD IN ANOTHER BANK. This will be performed at NO EXTRA CHARGE to the merchant.
- ***Most important of all (to The Alliance) the eMerge Alliance solution is portable into THE GLOBAL MARKET
ALEX BARROTTI - INEX CORPORATION
Inex Corp has built and managed web sites since it's inception but has always found traffic generation to be a challenge, especially for those merchants that did not have large marketing budgets. The actual cost of building a web site was also a barrier for many merchants. The eMerge Alliance solves this problem for many of the reasons listed above.
Specific traffic generation problems are solved by the success of Valu-net's Web This Week program, which has been a great success with ISP's. The eMerge Alliance e-commerce solution will take that success to another level as ISP's ARE GIVEN THE ABILITY TO CREATE, HOST AND MAINTAIN TURNKEY ELECTRONIC STORES. More importantly, this is a revenue-based solution for ISP's and not a cost based solution. In other words, they do not have to pay one penny to either host a secure server or use a remote server. Their only function is to direct all of their merchants to the eMerge Alliance, from which they will generate residual revenues.
Thus, ISP's for the first time will now be able to offer their merchant clients a completely integrated (and superior) e-commerce solution at no cost to themselves. The result will be added participation and promotion of the Web This Week program and other portal programs, which serves to generate additional traffic to merchant sites, as well as, control of their dial-up subscriber destinations which are currently being lost to existing portal sites. In turn, the additional traffic serves to increase the success of merchant sites which then leads to increasing ISP revenues. You can see the enclosed financial circle which is created and continues to grow at a rapid pace. The key is that ISP's are no longer losing the traffic potential of dial-up customers and the revenue potential of merchant customers. As such, there is an unequivocal incentive to promote eMerge/Valu-net portals and The Alliance solution, especially when it comes at no cost to the ISP.
On a side note, Valu-net also announced the launch or pending launch of portal initiatives. Specifically, their new entertainment portal can be found at:
e2day.com
The company also announced a soon to be released travel portal, as well as, other portals within the next 60 days. In the meantime, go take a look at the entertainment portal at your convenience.
Specific web site construction issues are solved by the fact merchants can build a fully functioning store, with all the necessary features, DIRECTLY FROM the eMerge Alliance web site. Upon completion, merchants are immediately given the opportunity to select which eMerge portals and marketing programs they would like to utilize.
ADDITIONAL INFO PRIOR TO Q&A
Lasso is an international affiliate of the Grey Worldwide Network of Companies which has 278 offices in 76 countries. Traditionally, Lasso develops end to end business solutions and has now created Net Merchant as its Internet arm. As such, Lasso will provide a great deal of strength in the marketing arm of The eMerge Alliance.
Q&A
1] Is this an equal partnership?
The companies are all working together towards the success of the Alliance. From a revenue point of view, Valu-net stands in the strongest position, followed by Lasso, Inex and Citibank. It is important to note that Citibank will receive a great deal of benefit from the capture of new accounts.
2] How big is the market and how much revenue do you expect to create?
This is difficult to measure at this time. Suffice to say the market is very large. Specifically, the 10 largest ISP's in the program have targeted 120,000 commercial clients. We expect to capture a significant share of merchants who decide to go on-line, from which we expect to generate on average of $6000/merchant per year.
The natural growth of the Internet also means our target market will continue to grow at an exponential rate. Thus, there will be more than enough revenue opportunities to capitalize upon.
3] How can you be sure the ISP's will actually like the program as much as you think?
We have presented The eMerge Alliance solution to 45 of the largest ISP's in Canada and they have overwhelmingly accepted the program. They want it now.
4] How long until we see the program rolled out to the ISP's?
We are commencing with a 60-day pilot program to make sure we have any and all wrinkles worked out. We are very focused on ensuring quality is second to none before the nation wide roll out.
5] When will merchants begin using the system?
We have merchants using the system right now.
6] Mr. Moffat stated "the solution is portable into the global market". How soon can we expect a global rollout?
At this time, we are not at liberty to comment but we expect you will be hearing about expansion in the next 60 days.
In the meantime, we are rolling out this program in Canada and believe the opportunities are very big considering 95% of all operating storefronts are US based. Now that we have removed all the barriers to entry, we expect to see many more Canadian merchants selling their products and services on the net.
7] Who's idea was it to form The eMerge Alliance?
We found ourselves constantly referring customers to each other and then decided we should either all move into the same building together or form some kind of an alliance. Given the past demands on each individual component, there is no doubt The eMerge Alliance will be a success now that we have actually combined all our services into one solution.
CONCLUSION
Given the information presented above, there is very little we can add. We first discovered Valu-net in October of 1997 when it was a relative unknown. After what we have seen today, we have no doubt The eMerge Alliance has every opportunity to become the powerhouse in the Canadian and global e-commerce solution field.
That is all for now. Have a great night.
Regards,
Agora Internet Relations Corp.
agoracorp.com
DISCLOSURE STATEMENT
AGORA INTERNET RELATIONS CORP. receives a monthly monetary fee from Valu-net Corporation. for the purposes of communicating with Internet shareholders - both current and prospective - to increase awareness of and interest in Valu-net Corporation. AGORA INTERNET RELATIONS CORP activities are aimed purely at keeping their clients' shareholders and prospective shareholders informed about their company. These activities consist of providing investors with previously disclosed factual information concerning the company, comments from company principals, copies of material that has been filed with regulatory authorities, comments prepared by registered brokers or investment dealers and material published in newspapers, magazines or journals.
AGORA INTERNET RELATIONS CORP does not participate in the maintenance of an orderly market in their client's securities, nor is required, or receives an incentive for, the maintenance or achievement of a price or trading volume for their client's securities at a certain level, for a specified period of time or by a certain date. AGORA INTERNET RELATIONS CORP. may, at any time, own shares in the company.
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