Ihug video service on fast forward

By MICHAEL FOREMAN IT writer

Internet company ihug is joining forces with a Bay of Plenty-based video rental company to launch a national chain of "neighbourhood-based" online delivery services.

The joint venture, which is 51 per cent owned by ihug and 49 per cent owned by the Fermah Group, has been quietly testing internet-ordered home delivery of videos for around a year.

Known as e-mmediate, the service has been trialled at the Ponsonby branch of video rental chain The Source, and will now be extended to include merchandise from other retailers in the Auckland suburb.

Eight shops took part in the pilot scheme, including four local fast-food companies, stationer Paper Plus, liquor store Weta Wines, and the 7 Days pharmacy.

Within the next two weeks, customers within an eight-minute drive of the company's Ponsonby base will be able to order goods through its website or by phone, provided they are willing to pay a delivery charge.

Delivery will be guaranteed within one hour, using vans equipped with a mobile eftpos terminal and a satellite-based global positioning system linked to order-tracking software.

E-mmediate chief executive officer Dave Fermah said the delivery system had taken six IT staff two years to develop and had cost almost $2 million.

The company was negotiating with further fast-food outlets about their joining the Ponsonby site, and a florist and a convenience store, but had also had discussions with national chains.





The company claims it is unconcerned by the failure of similar delivery businesses overseas.

"Companies like Amazon have had to spend money developing their brands as well as building their infrastructure while they have only been selling to that 10 per cent of the population that is online and is comfortable using credit cards," said Mr Fermah.

Some of Fermah's 30 mainly franchised video-rental stores may become e-mmediate hubs, but the delivery system would not be made available to other companies in New Zealand, he said.

However, it is understood that rival video chain Video Ezy, in which ihug also holds a 51 per cent stake, is expecting to use e-mmediate's system to offer online video rental ordering at some or all of its 122 franchises later this year.

Video Ezy director Russell Clark said ihug directors Tim and Nick Wood had discussed their plans for e-mmediate when they acquired an interest in the company last year.

"We didn't have any problem with that, even though [The Source] is a competitor to Video Ezy," said Mr Clark. "All our franchisees are concerned about is getting a system that is fully functional and with all the bugs ironed out of it."

Mr Fermah said a second "neighbourhood hub" would open in Newmarket in April, followed by branches in Takapuna and Meadowbank in May.

The company expects to open a total of 40 hubs, employing 200 people and servicing around 450 retail outlets, within 2 1/2 years.

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