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Bantam Expands Portfolio, Targets Retail Distribution

4/21/2003 02:00:00 AM Eastern

Bantam Interactive, the online marketer of compressed-music portables, is expanding into new product categories and into brick-and-mortar retail distribution.

The company, which launched its first portable in mid-2001, will launch its first home-theater-in-a-box system and first DVD recorder in the coming months while knocking on major retailers' doors, said president Santosh Patel.

Bantam is owned by Netherlands-based Hagemeyer, the $9 billion company that owns GPX Inc. Hagemeyer's core business is value-added business-to-business distribution of products used by factories in the manufacturing process. The company, however, generates about 10 percent of its volume in marketing consumer items such as consumer electronics, sport and leisure goods and fashion, according to company reports. In the United States, its consumer product portfolio consists of GPX-brand electronics, which generate about $200 million in annual sales, GPX said.

Margin focus: Bantam, Patel said, is positioned as a margin-driven, not volume-driven, supplier of competitively priced products with a 90-day design-to-shipment turnaround time. "We are not the cheapest," he said. "There's always someone from northern China who will be cheaper. We offer margin, the highest features, and simple-to-use design."

Bantam also plays a major role in product development, he said. Rather than design a cosmetic package to wrap around off-the-shelf mechanisms and electronics, Bantam develops its own firmware and programs it into generic chips designed in the U.S. or Taiwan, Patel explained. Bantam also creates its own industrial design. The company then ships the programmed chips to China for final assembly.

Bantam's approach makes it possible for retailers to design their own products, he added. For DVD players, for example, buyers can choose such features as MP3-CD playback, built-in 5.1-channel decoding, progressive outputs and even the industrial design, "and it can be available in 60 days because the board is done," Patel said.

Because Bantam is "more technology focused" than sister company GPX, new technologies will appear first in Bantam products, he said.

Patel is targeting most classes of retail trade except for drug chains and closeout stores. Although the company doesn't plan to ship high volumes, it is targeting national retailers interested in higher margin products. "Some retailers are just looking for price. That's not us," Patel said. Bantam is prepared to deliver margins of 20 to 25 points for DVD, compared to 5 to 8 points on opening-price models and 15 points on average, he said.

The company, which is also targeting sales in South America and Europe, has established a logistics infrastructure and customer-support staff to support its brick-and-mortar strategy, he said.

Online experience: Bantam waited until now to target retailers because it wanted to use its online-sales experience to walk before it runs, Patel said. Online sales enabled the company to get direct consumer feedback on its designs.

On college campuses, for example, Bantam sent out "gadget gurus" to promote the products, show students working samples and get feedback. The gurus went to eight large technology-oriented campuses and gave away T-shirts and keychains to students who participated.

To promote the products to the 21-to-35-year-old age group, Bantam teamed up with popular local music acts in seven metro areas and sponsored giveaways and raffles when they performed in clubs.

Bantam also got the word out through a partnership with the manufacturer of NordicTrack fitness equipment. Bantam portables were included with the purchase of NordicTrack gear. Bantam also is currently developing a product for a motorcycle manufacturer, Patel said.

New categories: To offer retailers something else besides portables, the company plans July availability in the U.S. of its first HTiB and first stand-alone DVD component, a DVD+RW recorder.

The slimline HTiB will be equipped with DVD-Video player that plays CDs encoded with MP3 music, images and compressed DiVX-format video downloaded by PC from the Web. Patel expects an everyday retail of about $299. The DVD+RW player/recorder with TV tuner will offer 4x rewritable recording speed at a tentative everyday retail of $449 or $499.

In September, the company might offer a universal DVD-Audio/SACD player if it sees enough demand.

Current products include 128MB and 256MB flash-memory music portables and two hard-drive portables. The hard-drive models retail for $229 for the 2GB model and $329 for the 5GB version. Both feature USB 2.0, built-in MP3 encoder, playback of MP3 and WMA files, FM radio and voice recorder.

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