Tiger or Pussycat?

Are price, technology and delivery enough? A Miami-based computer-maker tries to go international on the cheap with the Internet.

ALL OVER THE WORLD THESE DAYS, people forsake name brand computers to buy computers parts and assemble them to get good machines at low prices. "We know that if people can get computers and parts locally, they will," says Bruce Matthews, vice president of business development for computer-maker TigerDirect.com. "But they often don't have the latest technology, so we offer things they can't get."

That technological edge installed in made-to-order machines backs the Tiger brand's online bid to become a force in the Latin American computer market from Miami. It is part a growing number of companies that are using the Internet to seek new international business with minimal investment.

According to statistics compiled by Internet analyst Forrester Research company, more than half of the world's 259 million Internet users are in countries outside the United States and more than half bought goods online in 1999. A part of the New York state-based Systemax, TigerDirect.com's international sales are currently less than 5% of the company's total US$1 million a month. However, its executives expect revenues from abroad--especially Latin America--to increase dramatically thanks to the Internet.

In the past, making a go of a regional shipping-to-order business in Latin America has been difficult because of red tape and high customs' duties and shipping costs depending on the package size and mode of transportation.

That's where TigerDirect.com's partner, From2.com, a company of international cargo veterans, comes in.

The Miami-based freight company has developed a software package that pinpoints shipping costs--including duties, taxes and any other added cost of each requested item. With a few clicks, a customer in Buenos Aires can see exactly how much it will cost to receive a product direct from the Miami warehouse to his or her front door or office. From2.com assumes 100% liability for the accuracy of its estimated cost and date of arrival. In most cases, TigerDirect.com says it can offer a cheaper price than local stores even after tacking on customs and duty fees.

But selling computers over the Net may not be that simple. To date, many Latin Americans don't use credit cards and many of those who do don't have cards that are valid for cross-border purchases. Moreover, many consumers are used to touching what they buy and balk at purchasing a product after looking at a picture of it on a monitor, according to Dataquest Gartner Group, a research company.

Strong physical presence. And then there's the competition. Dell Computers, for example, offers international Internet computer sales and the company is developing a regional assembly and distribution center in Porto Alegre, Brazil, a country that represents one of the region's biggest potential markets.

Indeed, the largest computer seller in Brazil, Miami-based Vitech America, expects to increase its overall sales by seven-fold to about $15 billion. Key to that, says Vitech President William St. Laurent, is the company's strong physical presence in Brazil. "My guess is that it's more complicated than what Tiger thinks it will be," he adds about TigerDirect's plans for the region.

"Without a local presence, you really don't have the ability to make a truly competitive product here," says St. Laurent, whose company owns plants, trucks, warehouses and stores throughout Brazil. The company also offers Internet sales and door-to-door delivery. U.S. computer sales company Gateway recently invested about $31 million in Vitech, which plans to offer its product throughout South America.

But St. Laurent acknowledges that a company like TigerDirect, with its less costly products, can give Vitech and the other computer sales companies a tough time. "I think there's a niche for a company like TigerDirect for all of these markets," he says. "They can make things even more competitive."

TigerDirect.com certainly believes that it can weather the transition to increased e-commerce acceptance with its low-cost strategy. The Miami firm is targeting businesses in Latin America for orders over the Net. It is counting on price, technology and execution to draw customers and beat out its Web competitors. "The problem with new dot-coms is they don't understand logistics and warehousing," says Tiger's Internet marketing chief Nestor Su[acute{a}]rez. "They don't know how to get an order and ship it out that day or the next day. We do."