Walter Forbes is taking telemarketer CUC International back to the future.Forbes and his entrepreneur colleagues thought they had a surefire [...]
October 1 1993 by Judith Rehak
Walter Forbes is taking telemarketer CUC International back to the future.
Forbes and his entrepreneur colleagues thought they had a surefire idea when they founded CUC in 1973: Charging customers to shop via computer. But the idea was ahead of its time, and the company nearly went under. A shift to telephone sales when Forbes took over as chairman and CEO in 1976 averted disaster. Today, CUC offers more than 250,000 brand-name products, plus services such as travel and insurance, all at a discount, to 28 million members by phone, mail, and computer. Last year, sales of the Stamford, CT-based company jumped 15.2 percent to $742 million. Net income for the first quarter ended April 30 rose 53 percent to $19.1 million.
But the best may be yet to come: Forbes, 50, is scoring a variation on his original theme with a major move into high-tech shopping that relies on interactive television. He’s betting he can convince CUC’s subscribers and others that shopping at home with a TV remote control beats a trip to the mall. “Financially, if the interactive thing works, our numbers just become obscene,” Forbes says. New York-based media research firm Jupiter Communications estimates that interactive sales may approach $10 billion by 2001. Forbes says it may take five-to-seven years before the technology becomes available, but adds major players will have to ante up and gain expertise far more quickly.
Bolting from the starting blocks, Forbes has launched six interactive projects in little more than a year, pairing with giant telecom and cable companies such as AT&T, GTE, BellSouth, and U.S. West.
On the downside, Forbes is far from alone in smelling a bonanza. Barry Diller is pushing multimedia innovation at QVC, which recently announced its merger with archrival Home Shopping Network. Combined, the two concerns control 99 percent of the home-shopping market. Elite department stores such as
Major players, they note, are pouring billions into interactive technology without knowing which products will generate sufficient consumer demand to turn a profit.
But this is where Forbes maintains CUC has a unique edge: its huge data base of consumer goods, and more important, a customer data base segmented according to buying habits.
Forbes emphasizes that CUC makes its money as a membership club, not a retailer. Members are charged $49 a year to find out how and where they can get discounted prices through the service, generally offered under the names of partners such as Sears and Citibank. Recently, for example, CUC was quoting a price of $649 for a Canon 8mm Camcorder that lists for $1,499. Another popular item is travel services. “If you buy travel at American Express, you just don’t care about money,” Forbes says. “You get the same thing from us at the lowest price, and we rebate 5 percent in cash.”