RIGA - What will attract more people to seek Internet access at home? Apollo, a division of Lattelekom, is heading into 2004 with new management, new targets and a driving new focus to answer this question - and to further develop its broadband Internet service. As a result, Apollo is shifting its focus from e-commerce, the surprisingly least profitable market which covers the trading of goods and services online, to the more lucrative and expanding area of "content business" that provides news and entertainment.
To complete this transition, Apollo is planning to sell its online auction site, Perc.lv, as soon as possible. Two years ago Perc.lv was projected to be a huge profit generator, as similar auction sites such as eBay and Amazon.com proved to be. However, cultural market differences, an economy still in its primary stages of development and a more intimate business market in Latvia are all factors to why Perc.lv, among other e-commerce portals, has struggled to survive, according to Apollo director Ingmars Pukis.
"Everything we do these days is dedicated to the development in broadband as fast as possible," Pukis says. "Therefore, every other activity is considered - does it support the idea or not? The Latvian specifics are that there is no success story in e-commerce at all. We have nearly closed down or sold out every e-commerce start-up that we have had."
Of the few e-commerce sites that have lasted, Perc.lv has done moderately well. Despite this, Apollo is planning to sell Perc.lv to a smaller business that will gain more from it. Pukis hopes that in the future, this more flexible business will be able to build something out of the auction site. As for Lattelekom, they are planning to expand toward the more profitable Internet content businesses that include music, film and game entertainment.
"The Internet as a media is a bit more convenient," Pukis says. "In opposition to e-commerce, this thing is most likely to support the broadband audience expansion because it gives a reason for purchasing home access."
Despite Lattelekom's decision to sell Perc.lv, Pukis is optimistic that the business will continue to survive, as the market for e-commerce is projected to increase in the coming years.
Modeled after the more successful Estonian auction site, Osta.ee, Perc.lv was created in March of 2000. Like any other auction site, Perc.lv provides both businesses and individuals with the opportunity to auction off and bid for almost any product imaginable.
Although the site has sold everything from trousers worn by a popular Latvian reality show participant to used refrigerators, the most popular bidding items are second-hand Lattelekom PCs and technical goods, according to business program manager Armands Troska.
"That's the beauty of the auction site. It sells all kinds of things, whatever you can imagine," Pukis says. "I think that our most interesting idea was to sell Perc.lv itself - to make an auction for this portal within itself."
All companies and individuals who wish to auction off items on the site must be registered members. After registration, members are guaranteed honesty between bids and protection from swindlers. All financial transactions are logged and can be traced so that if fraud does occur, the Web site managers can join forces with law enforcement to intervene and solve the problem.
Last year, an average of 2,000 people per day visited the site. Although this is quite a significant number, the problem is that Apollo gains no money from these browsers. For a company the scale of Lattelekom, the auction site has no real financial value.
Pukis estimates that Latvia has about 450,000 Internet users, of which 100,000 are so-called "hard users," people who have access around the clock at home or at work. Only 6.5 percent of Latvian households are connected to the Web, and this is an optimistic estimate. Apollo's main goal right now is to increase these numbers to compete with Estonia, which boasts twice as many Internet users.
"To be honest, catching up with Estonia is our direct target," Pukis says. "Maybe somewhere later on auction sites will be popular, but right now we're just focusing on boosting broadband. This is crucial."
