INTERNET SHOPPING NETWORK

http://shop.internet.net

The Internet Shopping Network (ISN), a wholly-owned subsidiary of the Home Shopping Network, is the first large-scale enterprise to embrace the Internet as a new medium for conducting commerce worldwide. Since its initial market trials in the Spring of 1994, ISN's pioneering efforts have forever changed the way people shop not only for computer hardware and software, but for an ever increasing array of consumer-oriented products as well.

Today, the Internet Shopping Network is one of the largest retailing and mall operations on the net, offering a broad range of products -- close to 22,000 computer products from more than 600 major companies like Lotus, Symantec and Microsoft, flowers from FTD, teas from Celestial Seasonings, steak and lobster from Omaha Steak International and unique gift items from the Hammacher-Schlemmer catalog, among other merchandise -- to an audience of millions of Internet users in 120 countries around the world. But unlike traditional storefronts or mail-order catalogs, ISN can take advantage of its unique computer-based operation to create a truly personalized shopping experience.

Commerce on the Internet

Shopping on-line is still in its infancy as visionary companies like the Internet Shopping Network establish their presence on the Internet and other on-line services and begin to attract the attention of a relatively limited number of on-line customers. But market researchers are optimistic that the number of on-line users will grow steadily as computer hardware and on-line access costs decrease and the barriers to access are lowered, and that more users will turn to on-line shopping because of the unique advantages it offers over traditional shopping methods. The result, analysts believe, will be a huge increase in the volume of on-line shopping transactions and tremendous growth in total dollar sales over the next several years.

While estimates of the number of people on the Internet vary widely from survey to survey, Forrester Research puts the number of World Wide Web users in 1994 at 2 million (a subset of the estimated 10 to 20 million Internet users). According to Forrester, this number is expected to grow steadily to 7.5 million by 1997 as more companies begin to establish their presence on the Web, and then mushroom to nearly 22 million users by the year 2000, of which 14 million are expected to be individual consumers.

Today, most users of the Internet do so through the network connections established by companies they work for or schools they attend. For individuals, so far, gaining access to the Internet can be a difficult and somewhat costly experience. But this is changing quickly as the Regional Bell Operating Companies, long distance service providers such as MCI and other service providers make it easier to gain access to the Internet. Faster connection speeds will further enhance the on-line experience by enabling the increased use of attention-grabbing graphics, sound and even video, making the Internet much more attractive to a broader audience.

Technological improvements, including the establishment of secure transactions and ubiquitous access, a greater diversity of goods and services available on-line and lower hardware and connection costs will all combine to boost the sale of goods and services on the Internet (as well as other on-line services). While only an estimated $200 million in goods was sold on-line in the U.S. in 1993, according to Forrester Research, that number is expected to explode to nearly $5 billion by 1998. That number could be significantly larger, Forrester claims, if more women are attracted to on-line services, if more large-ticket items like cars are sold and if access to on-line services is made easier and less costly.

The First On-Line Superstore

Formed in June 1993 as a California corporation by Randy Adams and Bill Rollinson, the Internet Shopping Network commenced on-line operation in April 1994, marking the first appearance of mass merchandising on the Internet. ISN was acquired in September of 1994 by the Home Shopping Network, a billion dollar cable television retailer.

ISN concentrates on selling computer hardware and software directly to members -- much like direct sales catalog stores -- and on managing Internet sales activities for other companies. The early focus on computer products is an effort to match the interests of Web users, and to make the best use of the net's ability to allow software demos and distribution. Membership in ISN is free to both end users and to businesses, though business have the option of paying more for the equivalent of display advertising and other promotions.

Shoppers gain access to ISN through the multimedia World Wide Web (WWW) capabilities of the Internet, a global network of networks. Once connected to the Internet, entering ISN's Internet address, called a URL (Universal Resource Locator), into the "location" field of a web "browser" such as NetScape Navigator or Mosaic connects the shopper's computer to ISN's computers. Technically speaking, the shopper's client application (the browser) can now communicate with ISN's web server, and vice versa.

Secure Transactions

Security is a major concern at ISN, and every precaution is taken to ensure that critical credit information is kept from unauthorized access. Once a shopper registers with ISN and provides a credit card number and shipping address, either over the telephone or using ISN's secure network communication, a Membership Code is issued for all future transactions. All credit card information is kept off-line, and the shopper's Membership Code is linked to their shipping address.

ISN employs the NetScape Commerce Server to ensure the security of commerce transacted over the Internet. Highly regarded by the Internet community, the NetScape Commerce Server provides advanced security features such as server authentication, data encryption, data integrity, and user authorization. Communications are based on open standards such as HTML, HTTP, the Common Gateway Interface (CGI), and the Secure Sockets Layer (SSL) protocol. SSL employs public key cryptographic technology from RSA Data Security, an established leader in computer data security, and works with various encryption algorithms.

More than Shopping

Recent studies show that Americans are increasingly dissatisfied with the traditional retail shopping experience. Fear of crime and concerns over personal safety are keeping people away from urban retail centers as well as suburban malls. Declining service is also frustrating shoppers who can't find what they are looking for, and who find they have less time to shop or can't shop when stores are open.

Because ISN exists completely within a computer connected to the Internet, it can take advantage of all the power and convenience a computer can bring to bear on the shopping experience. ISN operates 24 hours a day, 7 days a week. Shoppers can find what they want when they want it. They don't have to buck traffic, find a place to park or walk through endless department store isles.

Not only can shoppers browse through ISN's on-line catalogs of products, they also can search for specific products, ask questions about products or services and receive answers via email and read product reviews and articles to help them make more informed buying decisions. Soon, shoppers will be able to sample their favorite artists' music on-line from Intouch and download the selections they like.

Once "inside" ISN, shoppers are presented with a graphical menu from which they can choose among a number of "doors" leading to ISN's product offerings. In addition to a variety of computer hardware and software products areas, shoppers can order flowers through FTD, choose selected items from the Hammacher-Schlemmer catalog, check out the latest "Hot Deals" and "Demos" and even download complete software products.

Shoppers who know what they're looking for can use the power of ISN's Power Searching feature to enter the names of products and manufacturers, as well as price range, to be taken directly to these items.

ISN also offers a number of value added services. Members can search through the past 12 months of InfoWorld and Computer Currents magazine articles and product reviews, read about the latest new products in "Arthur's Corner," get help with their problems from "Ask Dave" and learn more about the Internet and other resources available on it from "Bob's Bazaar."

ISN has several advantages over traditional retail operations that combine to allow ISN to offer extremely competitive prices on all its merchandise. First, it doesn't need to lease expensive storefront or warehouse space. All the computer equipment necessary to operate ISN fits into a small office. It has no inventory. All orders are processed within 15 minutes of receipt and electronically transmitted to one of 12 distribution centers around the U.S. for prompt shipment.

Management

Randy Adams -- founder and President of the Internet Shopping Network. A 20-year veteran of the software industry, Randy has held positions as director of engineering at Adobe Systems; president of Appsoft, Inc.; founder, president and chairman of Emerald City Software, Inc.; system designer at Next, Inc.; CEO and chairman of IIAT, a publicly held international education and training VAR; Senior Associate at Booz, Allen & Hamilton; special consultant to the National Cancer Institute; MIS director of the Jackson Laboratory in Bar Harbor, Maine; and the original designer and developer of PFS First Publisher for T/Maker Company and Software Publishing Corporation.

Randy has designed, managed and/or written eleven commercial software packages. In addition to PFS First Publisher, Randy was involved with LaserTalk, Smart Art I, II, III and TypeAlign for Emerald City Software, Adobe Illustrator and Adobe PhotoShop for Adobe Systems, early work on the NeXTStep operating system for NeXT Inc. and the creation of Appsoft Draw, Image and Write for Appsoft Corporation.

Randy graduated the Massachusetts Institute of Technology with degrees in Computer Science.

Bill Rollinson -- Vice President of Marketing and a founder of the Internet Shopping Network. An entrepreneur and software industry executive, Bill has held positions as general manager of a multimedia division at T/Maker Co., founder and president of Storybook Software, director of marketing services at Macromedia, and founder and president of Rollinson Design, Inc.

In 1984, after working as an intern in the Industrial Design Department at Digital Equipment Corporation, Bill combined his computer experience and design expertise to establish one of the first graphic design firms to use the computer as a design and production tool. His clients included Apple Computer, Inc., Intuit, Digidesign, Paracomp, Cisco Systems, Software Publishing, Radius, Symantec, T/Maker, Lotus West, Emerald City Software, Digital Equipment Corporation and Beckman Instruments.

Bill's work at Paracomp and Macromedia led to the creation of Storybook Software, a company to produce interactive software for children. This company was sold to T/Maker in 1993.

Bill has a design degree from UCLA.

Boris Putanec -- Network Manager. An experienced programmer and network manager, Boris has held systems software engineering positions with several pioneering Silicon Valley companies.

Most recently, Boris was a software engineer in the Interactive Network Services department at Kaleida Labs, Inc., where he took the lead role in architecting and developing Distributed ScriptX and worked on a number of interactive TV-related projects. Boris also worked at Apple Computer's Advanced Technology Group with their Vanguard object-oriented, fully distributed environment.

Boris holds Bachelor of Science and Master of Science degrees in computer science from Brown University.

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