InformationWeek

December 8, 1997

NetMarket Set To Grow

Acquisitions of Web startups fuel surge

ou usually don't hear CUC International Inc. mentioned up there with Dell, Cisco Systems, and Amazon.com as poster children for selling on the Web. But CUC has quietly brought its NetMarket Web site to the top of the business-to-consumer cyber-heap by combining its traditional direct-marketing muscle with well-targeted acquisitions of consumer-focused Web startups. NetMarket, which now sells about $100 million of consumer goods and services a month, is poised to get a lot bigger.

Later this month, CUC plans to complete an $11 billion stock acquisition of HFS Inc., a travel and real estate conglomerate that owns Avis, Ramada, Resort Condominiums International, Coldwell Banker, Century 21, and a global database of 100 million consumers. CUC is expected to leverage HFS's businesses to expand related sections of NetMark et. The combined muscle of CUC and HFS has the Web consumer market on notice. "All significant commerce players should have CUC on their radar screen," says Vern Keenan, an E-commerce analyst at Zona Research in Redwood City, Calif.

In some ways, NetMarket's Web business model is that of a new intermediary in consumer E-commerce. NetMarket essentially aggregates content in the form of discounted products and services, sells it to its more than 400,000 members, then handles online transactions. "We want NetMarket to be the wholesale club of the Web, a place where you can get a great deal," says Scot Melland, a VP of business development at CUC in Stamford, Conn.

NetMarket members pay $69 a year on the Web or $59 a year on CompuServe and America Online, giving CUC more than $25 million in membership fees alone. The company won't disclose its Web revenue.

Earlier this year, NetMarket sought to raise its branding profile by combining three discrete services-ShoppersAdvantage, TravelersAdvantage , and AutoAdvantage-under the NetMarket brand. And even with the HFS merger in the works, CUC has been on an acquisition binge. In the past three months, it has bought Web classified-ad provider Match.Com, French classified-ad publisher Hebdo Mag, real estate listing service Rent.Net, and a 25% stake in NetGrocer. Says Keenan, "CUC has translated its real-world direct-marketing presence to the Web by buying the products and technologies it needs."

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