K-tel International Inc. Launches German E-Commerce Operations; Company Seeks to Leverage Leadership in Infomercials Onto Web
Business Wire - February 26, 1999 08:45
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 26, 1999--K-tel International Inc. (Nasdaq:KTEL) Friday announced that it has launched an e-commerce Web site in Germany that will cater to the Central European market of Germany, Austria, Switzerland and German-speaking Poland.
The company has combined Dominion Vertriebs GmbH, its German direct-response marketing company that produced fiscal 1998 revenues of approximately $16 million, with the newly launched e-commerce site, to form K-tel Shopping GmbH.
Through this German subsidiary, K-tel was a developer in direct response TV marketing to German, Austrian and Swiss consumers. The company currently has a database of 1.8 million consumers and is growing this database by approximately 40,000 paying customers each month. K-tel's brand name is strongly recognized throughout Central Europe and is well known for music and fitness equipment sold through infomercials.
Leveraging the $10 million K-tel invests annually in European infomercial airtime, the company believes it can drive traffic to its Web site at no additional advertising cost. K-tel's current German operations already include a call center, warehouse and order fulfillment services. The company's infomercial marketing database continues to capture e-mail addresses, thus leveraging the database's use into e-commerce applications.
According to a study by Jupiter Communications, Germany is the European leader in e-commerce sales. With 7.5 million users, Germany has the highest online population in Europe. Fourteen percent of those users currently shop online. By 2002, the study predicts that Germany's online population will grow to 27.4 million users, 40% of whom will purchase goods online. Jupiter projects that the industries most likely to benefit from this surge of online shoppers include music, which by 2002 are expected to generate sales of more than $200 million.
Philip Kives, K-tel International chairman and CEO, commented: "Having been a pioneer in the German direct-to-consumer market since the mid-1980s, we are very excited about the prospects for K-tel Shopping GmbH given that Germany leads Europe in e-commerce. We feel that we can become one of the better known e-commerce retail sites in Central Europe."
K-tel's strategy is to drive traffic to the site by displaying, on infomercials aired throughout Central Europe, a tag line inviting customers to take advantage of the K-tel Shopping Web site. The company now has an average of 21 hours of infomercial time per week throughout Germany, Austria, Switzerland and German-speaking Poland. In addition to this, the company airs 36 hours of television time a week in France, Belgium and Holland. K-tel has proprietary e-commerce content and technology similar to such sites as Amazon.com, CDNow.com, MusicBlvd.com, Skymall.com, eBay.com, Choicemall.com and Shoppers.com.
The K-tel Shopping site has been launched with 11,000 K-tel-owned songs. In the coming months, the K-tel site will be expanded to a full line of German and English songs catering to the German, Austrian and Swiss markets and also plans to add more than 20,000 songs controlled by K-tel. The company is also in discussions with other suppliers to broaden the product base to include books, videos and fitness equipment.
K-tel International is a vertically integrated developer, marketer and distributor of entertainment and consumer products worldwide. The company markets its product lines either to retailers, wholesalers, distributors or licensees throughout the world, or directly to the consumer via television and other forms of direct response media, including its Internet Web sites in the United States (www.ktel.com) and Germany. K-tel has active operations in the United States, the United Kingdom, Germany and Finland.
The statements in this news release may contain forward-looking statements relating to future results of the company (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and performance may differ materially from expressed forward-looking statements because of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, demand for and market acceptance of new and existing products, the impact from competition for Internet content, merchandise and recorded music, dependence on strategic alliance partners, suppliers and distributors, market acceptance of the Internet for commerce and as a medium for advertising, technological changes and difficulties, economic conditions in Central Europe, consumer acceptance of the product offered by K-tel Shopping GmbH, the ability of the company to drive traffic onto its e-commerce sites, availability of financing and other risks detailed in the company's Securities and Exchange Commission filings. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements.
CONTACT: K-tel International Inc., Minneapolis
Steven Kahn, 612/559-6800
or
Coffin Communications Group, Sherman Oaks, Calif.
Dilek Mir/Bill Coffin, 818/789-0100 |
