As the thread was fairly quiet I thought I'd take a look at the Fortune article and make a few minor modifications. Re reading the article I can't help but be amazed at the buying opportunity we have here at present. If HHD is on track to complete even half their plan then we have a major player here in E Commerce and better still are in on the ground floor as shareholders. Projected revenues in year 1 $30 million and for year 2 $100 million. Even with some dilution which is to be expected, the potential here is huge. HHD expects a membership of up to 5 million consumers within 3 years. What sort of revenues could we expect from this? As a short term target the $1 discussed earlier still seems exceedingly cheap IMO. I also notice that Winning Stock Picks is this week recommending HHD as a long term buy and hold. ......Couldn't agree more!!!
The Internet is hot and 1998 is being celebrated as the Year of the Web – the first big year for Internet shopping. The next "killer app" may very well be the current offing from RDI Marketing, Inc. (symbol RDIM). Through acquisitions and consolidation HHD plans to do an extensive consolidation of a section of the 100 billion dollar membership club industry. According to Forrester Research in Cambridge, Mass., Web sales for the year may reach $7.8 billion. HHD's mission is to have a growing share of those sales through private-member wholesale clubs by adding new e-commerce and database management technology. HHD was organized to become the largest private wholesale consumer buying network in the United States. Through HHD's world class management staff, the Company is striving to transform an industry comprised of fragmented single unit operations. HHD's plans will revolutionize the existing industry. This Company takes advantage of the combined power of the Internet, demographic and psychographic customer profiling, and sophisticated database marketing to expand membership and solidify membership loyalty.
RDI Marketing is on the leading edge of online shopping, and is poised to revolutionize an existing industry - that of private wholesale consumer buying clubs. You might ask what's so new about that. Even though it's a relatively unknown entity, it's not entirely new. But HHD's focus is revolutionary in the way everyday purchases are made. Initiatives in state-of-the-art e-commerce technology applications will be the catalyst. HHD's e-commerce division is being headed by Alfred Werner. Mr. Werner's Internet development team has delivered successful financial results on behalf of such notable Internet sites as "PC Flowers and Gifts".
HHD expects to open or acquire over 100 physical locations within the next three years. . Subject to final due diligence and audits, andassuming that all current contracts close on agreed terms, the total revenuesand gross profits on a proforma basis should approximate $30 million and $4million respectively. Assets, in the form of accounts receivable approximate $7.5 million.
In addition to the nine (9) locations currently under contract, HouseHold Direct has received inquiries from many other buying club operators that have requested to be considered for consolidation. The Company is examining other
acquisitions HHD expects to reach revenues of one hundred million within two years.
HHD's private membership club offers current and new brand-name products at wholesale prices directly to its members. That's wholesale, not closeout or overstocked items that the public-buying clubs, such as Costco, BJ's and Sam's, offer. Additionally, through the HHD site members will have live links for updated and current catalogue information. For those consumers who are not computer literate, in addition to the physical locations, HHD is adopting a WEB TV type of technology to enable home-style shopping like QVC. The difference, of course, is that instead of waiting for the cubic zirconium to become available at 3 AM, you can make your own choices for products and time. The site will also offer live audio and video product presentations sponsored by the vendors
Currently within the industry, there are approximately 2.5 million members of private-style clubs representing close to $8.5 billion of annual purchases. Folger states HHD is in business "to create the most dynamic, interactive, consumer purchasing process through e-commerce." It's taking a market already in place and superimposing a faster, better market. "That market, without e-commerce, already is an $8 billion industry, says Folger. "Imagine what it can reach with all the technology now available."
Here's how it works through HHD. The Company has identified significant growth opportunity within a relatively unknown industry, that of private-member wholesale buying. Folger saw the value of focusing on existing members. His Company now is transforming a multibillion-dollar industry comprised of fragmented single-unit operations by adding new technology that is completely Internet commerce-enabled. And, it is in the acquisition stage of physical facilities (showrooms) already in place.
Management is the key to service oriented businesses. Mr. Folger has over 25 years of direct management experience in the formation, capitalization, merger and consolidation of business ventures. "My skill is in seeing through business in a way that others don't; they're too close to it," Folger states. "In this venture, I saw the incredible value in consumer down-channeling, which represents to us 20 to 30 years of individual consumption for sales in the neighborhood of $1 – 2.5 million. Historically, the management attitude was to focus on membership sales. Obviously, that alone won't cut it."
HHD serves as a purchasing agent on behalf of its members. It also serves as an e-commerce facilitator to sell anything manufacturers and distributors have to offer. The best part is that, with the acquisition of physical showrooms, the consumer can go feel and touch before buying. "This is unlike anything out there," says Folger.
The private membership concept in this case makes its money three different ways. Initial investments to join; a per-transaction service fee of 5 to 10 percent; and an annual renewal fee to remain a member. These aggregate fees represent significant annual revenue for HHD. And, everybody wins.
There are significant difference between public and private buying clubs. In private clubs, member are more forthcoming with personal information that allows the clubs to serve there needs more effect. This allows the clubs to build database profiles of their of members that vendor, supplier and manufacturer would kill for.
Public member clubs sell at discount prices below normal retail. HHD sells to its members at factory and distributor prices, thereby beating almost any competitor on a broad product range. Finally, public member clubs are supply-driven, limiting their inventory range. HHD is request-driven, so sources of supply expand to meet the demand of its membership.
Folger projects $100 – 150 million in the Company's second year of opporations. HHD's Web site for online buying is slated to be up and running by the second quarter of 1999. Within three years of that implementation, membership is planned to exceed five million. The Company will become a major player in the e-commerce market via rollups and acquisitions, further consolidating the membership marketing industry and adapting it to the Internet. It's safe to say that, within the industry, RDI Marketing definitely is poised to engage its mission statement: "Positioned on the Leading Edge of the Next Generation.".
regards
kiwi
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