Hewlett Packard is turning its Shopping Village consumer salesed out on online sales. Website into a wholly-owned subsidiary, in a bid to establish internet-based sales alongside its traditional channel.
Called HP Direct, the unit will co-ordinate the vendor's direct e-commerce sales strategy that will compete head-on with the online start-ups of rivals Compaq and Dell - Compaq.com and Gigabuys.com, respectively.
The spin-off occurs amid the vendor's preparations to launch a pilot of Shopping Village in the UK on 3 June (PC Dealer,19 May). It follows on from company-wide restructuring plans, in which the manufacturer will split itself into two, separating the medical and testing instrument business from its computer-related operations.
However, a representative at HP told PC Dealer that the direct unit would not be operational in the UK 'in the foreseeable future'.
According to HP, the Shopping Village Website is being launched in the UK in anticipation of online sales worth $400 million to the vendor by 2002.
IDC has projected European online sales to reach $30 billion by 2001, and Forrester Research has forecast $69 billion. At the moment, $2.8 billion is spent annually on e-commerce in Europe.
Analysts have pointed out that HP's entry is a relatively late foray into direct sales over the internet. The vendor intends to expand into Sweden in July and Germany thereafter.
HP itself has admitted it had been 'missing out' on online sales opportunities in Europe by not having a consumer Website, particularly at a time when confidence in buying online is on the rise.
But analysts also observed that the vendor had been more sensitive to channel conflict than its rivals and had been working on ways to develop an internet strategy that would avoid encroaching on channel territory.
A senior analyst at Dataquest said HP had a strong history with the channel and had been cautious not to tread on resellers' toes.
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