With the launch of the softNET ISP division, the Software Warehouse empire notches up another stage. The company's ubiquitous huge ads for its core mail-order business, its retail outlets, and its low, low pricing have made it a huge force in the channel. PCDN spoke to founder and managing director Steve Bennett.
PCDN: Why the move into the ISP business?
We were selling Internet kits and had lots of success getting the kit out but we weren't making much margin on it. Our feeling is that the perception of ISPs is as bad as mail-order firms. We want it to be service-oriented so we're using the Prestel Online service with a 25:1 modem ratio. 90 per cent of sales calls are answered with in 30 seconds; tech support won't be much less. Our feeling is that in the future service will be decisive and there'll be a lot less mail-order sellers and a lot less ISPs. There are a lot of switchers out there. It's like mobile phones: the only way to do it is with service. We already have very good deals and bundles. There will be ISDN bundles within one month.
I haven't done it to make shed-loads of money. It's about marketing; we can put up our offer of the day and our logo. Users will see the forklift truck logo on the screen and on their statement. We'll mail short them with special offers.. We'll have a £30-40 million turnover this year. The advantage we have is constant contact with the customer. We get more contact than our rivals put together.
Will you carry advertising?
No, we only we only harass [ISVs] for catalogues because they're expensive to produce. You can only ask for so much. We can do the ISP thing and still make a small profit. Hopefully, the monthly charge won't fall below £6 or £7.
Are you selling much software online?
It's very small, maybe six orders a day. There are two reasons for that. The first is that we haven't indexed it yet. All we have done is put strap lines on catalogues and advertisements. The other thing is that people still don't really trust online credit card transactions. We have toyed with it. Obviously, there are advantages. We can get up to the minute pricing which you can't in the magazines. By the time [the magazine] gets pulled off the shelf it's two months old.
What about actually sending the software direct to users' hard drives?
We had disk encryption way back but it didn't sell. People wanted the documentation and the disks. If I downloaded Microsoft Office I'd still want the documentation and the disks to reformat my hard drive. We've already got lots of downloadable demonstrations but that's all. In 12-18 months you could click on an application and download it. It's feasible.
How is retail going?
It's great. There will be four more stores before Christmas. It's not wildly profitable. We have a different approach. We use small stores and the catalogue drives the visits into the stores. We have gone for the CompUSA model: it's much cheaper to convert store visitors into mail-order customers.
What are your big-selling products at the moment?
Windows 95, Office 95... Corel's suites are doing incredible business. They've got their product at £67 and the cheapest you can buy Microsoft is £161.
Apart from softNET, what are your plans for expansion?
We can grow in corporate, retail. We're running 64-page ads. There's nothing else we can do in mail-order.