By LARRY KANTER
Senior Reporter
Wareforce One Inc. started the new year with a new name: Wareforce.com.
The L.A.-based provider of computer equipment and services had spent much of 1998 enhancing its Internet presence, investing some $750,000 in its business-to-business e-commerce systems, and decided its name should reflect that drive. The fact that Wall Street currently salivates over anything with a “dot-com” in it didn’t hurt either, reasoned Orie Rechtman, the firm’s chief executive.
So early this month, the company, which is listed on the OTC Bulletin Board, issued a series of press releases about its new push into e-commerce, culminating in a Jan. 12 announcement that its name henceforth would end with the world’s trendiest suffix.
It can’t be easy sitting on the sidelines as start-ups barely out of their infancy, with no profits to speak of, score double- and even triple-digit gains on the basis of little more than a promising e-commerce strategy. So it’s no surprise that companies large and small including many with little or no prior involvement with the Internet are rushing to stake out an online presence before the competition does.
For Wareforce.com, there was an immediate payoff: Its stock doubled in the course of a few days in mid-January, going from $6 to $12 a share before dropping to about $8.50 last week.
“It’s a smart move that demonstrates our commitment to new technology,” Rechtman said. “The name ‘Wareforce’ does not mean much. The ‘dot-com’ gives the investment community the information that we are a technology company and we have an Internet-based offering.”
Wareforce is only one of many local manufacturers and retailers benefiting from their investments in the Internet and not just in terms of stock price. Retailers report that their e-commerce sites are pulling in business. And even if they aren’t, they at least provide an important marketing boost.
“There is a perception that if you are not doing something on the Web, you’re making a big mistake,” said Richard Giss, partner in the retail trade services group at Deloitte & Touche LLP. “Nobody wants to live with that stigma.”
Americans spent more than $13 billion buying goods and services on the Internet in 1998, according to Boston Consulting Group. Although that sum represents less than 2 percent of the nation’s total retail sales, it constitutes a jump of more than 200 percent over online sales in 1997.
One of the fastest-growing categories was apparel, which jumped some 230 percent over 1997, according to Adam Sullivan, vice president of information services and strategic planning at Sirena Apparel Group Inc. In an effort to capitalize on that surge, the El Monte-based swimwear and intimate apparel manufacturer is launching a new Internet store to sell products directly to consumers.
“The Web is going to be a big influence on where we’re going,” Sullivan said. “There are 80 million Internet users. It opens us up to a whole new market.”
Still, Sirena is moving slowly. The company which produces and markets swimsuits and lingerie under the labels Anne Klein, Liz Claiborne, Hang Ten, Hot Water and others initially will use the site primarily to market its products to retail clients. In an effort to avoid snatching business from traditional retailers, it is designing collections that will be sold exclusively in cyberspace.
But that’s just for now. Within three years, Sirena expects 10 percent of its sales to come via the Internet, Sullivan said.
Sirena’s stock jumped from about $5 to nearly $9 a share when the new Web site was announced during the first week of January, but it has since fallen to about $7 a fact that does not trouble Sullivan.
“There never was any intention to inflate our stock price artificially,” he said. “We’re in this for the long haul.”
Going slow is probably a good idea, said Steven Voci, executive vice president of business development for Zentropy, an L.A.-based Web development firm.
Voci’s phone is ringing off the hook these days with companies looking to create a presence on the Internet. But too many of those firms are rushing online without engaging in the kind of strategic planning that accompanies even the most basic land-based business ventures.
“There are so many questions,” Voci said. “Are you set up for fulfillment? What about marketing, advertising, linking with other sites, cutting exclusive deals with other folks? It’s not just about building a single retail outlet on Internet.”
And patience can pay off, said Richard Bergin, owner of Iron Forge, a small custom-furniture shop in Los Angeles. Bergin has been online for nearly two years and has used the site to snare customers who wouldn’t ordinarily make their way to his La Brea Avenue shop. He recently sold an $850 wrought-iron chandelier to a customer from New York who found the item online, and he plans to invest in a full-service e-commerce component this year.
In fact, the imposing iron sign in front of Bergin’s shop advertises the store’s Web address: Ironforge.com.
So with dot-com fever hotter than ever, is there an IPO on the way?
“Who knows? I have a friend who’s suggesting all sorts of things to me,” Bergin said with a laugh. “But I guess I can’t really see it.”
