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Corporategear.com Brings Internet to a Traditional Industry

Every kitchen in America has a drawer stuffed with pens, pencils, key chains and matchbooks touting some business or special occasion. Most of these gizmos and gee-gaws got there by way of an ossified three-tiered, geographically limited sales and distribution system that corporategear.com wants to blow out of the water.

Based in New York, Corporategear.com has developed an Internet site with branded promotional merchandise of every kind available to anyone who has online access. The site provides a wide range of products that can be custom printed with a logo or other information. Prices and products range from a 2-cent matchbook to a whopping $300 Italian leather driving jacket. The site is simple to navigate and easy to understand. When an order is completed, the buyer can set up her own artwork library on the Corporategear.com server. Once in the library, artwork can be accessed whenever the client wants a new order completed. Just point, click and the order is zapped with the artwork to the supplier who fulfills and drop ships the product. The site has a cool "flash tour" which shows the customer how to place an order. Personal library files are password protected for privacy.

Of itself, Corporategear.com is not very different from many B2B sites on the Web. Competition in the promotional product field includeseCompanyStore.com, Promonium.com, Branders.comand Starbelly.com. What makes Corporategear.com unique is that they are now licensing their site to suppliers and distributors.

"We will maintain and host the site for the client," says David Verchere, chief executive officer of Corporategrear.com. "We will do it all, soup to nuts. It will be our site structure with their colors, logo and products. No one else is providing this service to the promotional products industry."

The licensing adds considerably to Corporategear's bottom line. A purchase on their website brings them about 5 percent of the transaction price. Licensing and site maintenance brings in between 25% and 40% of the each transaction.

"The Internet is very new to our industry," said Steve Slagel, president of Promotional Products Association International.

"It has really scared a lot of people. Traditionally it has been taboo for suppliers to sell direct. The Internet is seen by many as a threat to distributors as the mediators in the transaction process."

He also notes that the Web allows distributors access to geographical areas previously worked by only local distribution companies. Since most distributors are small businesses which have been very slow to embrace new ideas and technology, Corporategear.com may have its work cut out trying to encourage distributors to participate in Internet commerce. Suppliers may also be hesitant to develop websites for fear of alienating their traditional distributors.

The market for branded and custom decorated merchandise is surprisingly large. In 1998, sales were over $13 billion in the United States with over $75 billion in sales worldwide. That's a lot of matchbooks and T-shirts.

Corporategear.com began in 1996 as the Verchere Group, a sales promotion agency. It was folded into Corporategrear.com and the site went live in August 1999. Revenues for 1999 were $1 million. The company obtained $1.5 million in venture funding from Regency Ventures in Bermuda in October 1999. At that time the company was valued at $25 million. An IPO is planned for Spring 2001 when the company anticipate revenues will be over $6 million.

They have some support for anticipating a successful venture. Starbelly.com, a B2B site in the promotional products field, which went live in March 1999, was purchased by HA-LO Industries (HMK) in early January for $240 million. HA-LO Industries is the second largest distributor of promotional items in the world. The acquisition of Starbelly.com now gives them an Internet presents.

"We see great potential for the industry, indicates Slagel of PPAI. "We anticipate that in the next five years revenues in the promotional products industry will double. The Internet will be a part of this growth. We are encouraging everyone to participate." Whether they jump on the new bandwagon or adhere to the traditional structures will ultimately affect the success of the online mavericks like Corporategear.com.

IN A NUTSHELL

Company Name: Corporategear.com
Address: 411 W. 14th St., Second Floor, New York, N.Y. 10014
Phone: (212) 462-2500
Fax: (212) 462-4279
Contact e-mail address: verchere@corporategear.com
Web address: http://www.corporategear.com
Employees: 20
Total Funding: $1.5 million
Investors: Regency Ventures

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