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Strathmore going 'Kachingo' with Global Online

Friday 8th December 2000

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JINGLE: Mary Vance and Kachingo
By Nicholas Bryant

Like all listed technology investors, Strathmore Group and Eric Watson need some good news.

Strathmore's share price is languishing well off its year high at about 14c, while many of Mr Watson's stocks have fallen.

But since the April "tech wreck," one of the five companies Strathmore has invested in, Global Online Promotions, has been toiling to release a product it believes will create huge foreign revenues. It is forecasting a 2001-year forecast of $US24 million and analysts estimated a fair value would be about $US25 million.

Strathmore Group owns 33% of Global Online, while Mr Watson owns 52% via his personal investment vehicle, Cullen Investments.

The remaining 15% of the company is owned by management.

The company's main product successfully launched this week through 108 nationwide Super Liquor outlets.

Kachingo <www.kachingo.co.nz>, a name the company researched to represent the sound of a cash register mixed with the word jingo, is an internet-enabled instant rewards programme the firm believes will eventually out-gun the established Fly Buys and other point-accumulation schemes.

Kachingo recognises what analysts call "a growing global market for real time point-of-sale and customer-relationship-management programmes to increase sales and market share for major retail chains."

To beat Fly Buys it will need a strategically aligned network of partner retailers - a petroleum company, supermarket and fast food franchise, for example.

All those sectors and others are in close talks with Global Online according to general manager Mary Vance, who is confident they will sign up for Kachingo once they see it in action.

"While being able to reward customers with cash, goods and other prizes is not unique, being able to do so instantly at point of sale, with the immediate link of flexible rewards to the goods bought, makes Global Online technology truly leading edge," Ms Vance said.

Unlike Fly Buys, Kachingo does not operate on a basis of cumulative points.

Purchases entitle customers to cash draw entries when they spend a qualifying amount or buy a product on promotion.

Instant rewards of goods are also issued at point of sale in the form of a voucher which can be redeemed in-store or at partner stores.

Ms Vance said by allowing retailers to provide customer rewards instantly, Kachingo cost about 50% of comparable programmes.

The technology is the culmination of a three-year, $5 million development programme.

But despite being designed by locals, developed by locals and now launched here, it nearly didn't happen that way.

"We wanted to launch here because we were proud to show off technology that could be applied worldwide but it has been hard, because local companies are very lean right now.

0"The US retailers love the concept and want it but we had to prove to them the technology worked," Ms Vance said.

Or as Strathmore's analyst report says: "From a strategic perspective, due to its small size and competitive nature, Global Online regards New Zealand as primarily a valuable market to prove its technology and concepts and to develop further innovation.

"To build the business model and platform internationally Global Online developed a strategic technology relationship with IBM and will leverage that giant's supermarket application which is used by 80% of US and 70% of European groceries."

With US appetites whetted Global Online's chief executive Chris Aiken is now ensconced in the country that buys more goods than any other.

In the US last year retailers spent an estimated $US170 billion on sales promotions, rewards and coupon schemes.

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