11/12/98 cnbc squawk box interview with Tauber...
Interview with CyberShop International (CYSP) CEO Jeffrey Tauber
CNBC/Dow Jones Business Video
Thursday, November 12, 1998 12:16PM
International (CYSP) Chairman and CEO Jeffrey Tauber sees big demand for a specialty Internet superstore - 11/12/98
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CNBC - SQUAWK BOX
CYBERSHOP CEO JEFFREY TAUBER
NOVEMBER 12, 1998
ABSTRACT: Tauber says CyberShop is about to launch an electronics site and a gift site. He says the company was ill-prepared for the amount of visitors to the site after the IPO, but can handle any influx now. Tauber comments on CyberShop's deal with America Online.
Mark: Internet mania hitting Wall Street. Online retailer, CyberShop, offers more than 500 consumer brands over its web site, ranging from fashion accessories to gourmet foods. After gaining 2 13/16 in yesterday's trading, CyberShop shares closed at 11 7/8. That's still towards the low end of its 52-week range of 2 to 28. Joining us to talk about his business: Jeffrey Taubin, CEO at CyberShop. Good morning, good to see you again.
Thanks. Thanks for having me.
Mark: CyberShop International, what is the game plan here, because you cover a lot of different categories of products, but the most successful people out there so far at least seem to be the ones who aim at killing a category.
Sure. We -- we've done our own customer research. And we're finding that a specialty superstore, supersite, philosophy makes sense. So we've launched two new sites. Something called electronics.net the largest consumer electronics and appliance site on the Internet with the guaranteed best prices. We're doing that in partnership with Topps, which is a northeast regional retailer. Bricks and mortar retailer, that has $75 million worth of inventory in their warehouse. We're also about to launch a gift site. Gifts are exciting. Jupiter Communications just came out and said that in the fourth quarter on-line shopping's expected to be $2.3 billion. And gifts will be one of the best categories. So e-gift will open in time for Christmas.
Mark: But -- and my sense is you avoided the essence of my question, which is that the -- you know, success on the web in selling anything seems to have to do with branding, marketing, customer loyalty.
Right.
Mark: Do you feel you're at a disadvantage being a generic kind of thing like CyberShop where you can do this, that or the other thing as opposed to an Amazon.com? I mean, Amazon books, CDnow, N2K records, you know? These are connections I make immediately going to their site. CyberShop -- okay.
Let's talk about e-gift.com is a site that just sells gifts. We have about 1,000 items. Most of them are housed down in Memphis next to the FedEx facility. The consumer can place an order at 9:00 at night and have the goods delivered the next morning. So there is a very clear focus on the gift category. And we think that it's a wide-open category and with focus we could possibly own a big chunk of the gift business we'll start a major advertising campaign next week. "Forbes," "Fortune," "Business Week," "People," "Entertainment Weekly," and we will get out there and brand e-gift.
Is that just to expand a little bit on e-gift, is that where your facility is, do you carry the inventory?
We have a neat arrangement with our vendors. The vendors actually consigned goods to a third-party warehouse down in Memphis. We don't own the inventory, the vendors own it. We're marketing on the Internet and get the egift.com name out there. We're spending a great deal of money, many millions of dollars this quarter to promote the e-gift brand. And with the fulfillment partner of FedEx, we think we're in a great position to do a great job with e-gifts .
What would you say would be a successful sales level in that quarter? Obviously something now you, but what would be a range in expectations for sales, because of e-gifts?
Well, I feel very comfortable with the analysts numbers. And we're predicting a huge fourth quarter for CyberShop. I don't know the number compared to other cyberretailers, but what I do know is CyberShop has a great model. We make high margins and we have very low overhead. So we're looking forward to a great --.
Do you have an expectation though, Jeff, in terms of the sales of e-gifts in the fourth quarter given --.
e-gift could be as much as 40% of CyberShop's total business in the fourth quarter.
Mark: All online retailers have to face the issue of bandwidth. And according to an article here on Dow Jones during the peak Mother's Day holiday period, which would seem to fit in with e-gifts, CyberShop's computer system had, quote, significant congestion which hurt sales.
Right, right. That was a horrible situation we were swamped. We came out of our IPO. We weren't prepared for the onslaught of customers that showed up at CyberShop. We did a lot of advertising, probably too early, but what we've done the last two quarters is spend about $2.5 million on infrastructure. So now we're prepared. We can handle 150,000 unique visitors a day now. So, we're ready.
Mark: Additionally, this article is dated June. CyberShop is experiencing slowdown in growth of orders from America Online store. Was that true and is it still true?
Yeah, it was true. I think it's improving right now. What we've done is we've created a new relationship with America Online. We are now the sole anchored ---tenant in Quick Gifts on America Online, which we think will be a great area for Christmas and e-gift.com will be the tenant. I'll very enthusiastic about the prospects for AOL now.
Mark: Thank you very much.
Thanks for having me.
Mark: Okay. Thanks for bringing us up-to-date. Jeffrey Taubin, CEO at online retailer, CyberShop.
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