Virgin is poised to take on high-profile online brands Lastminute.com and QXL with the launch of a major new Internet service.
The company is creating an online auction site to sell spare flights on Virgin planes, holidays and products such as mobile phones. The site will allow users to buy and sell collectibles and memorabilia, similar to the service by online auctioneer eBay. An announcement is expected in the next couple of months.
The move marks a shift in emphasis for the troubled Virgin group, which is turning its focus to the Internet and away from divisions which have failed to perform. Last week Virgin announced it was to stop selling its branded clothing in the UK and that Virgin Express, its low-cost airline, made a loss last year. The V2 record label and Our Price stores have also required multimillion- pound injections.
Developing Virgin's powerful consumer brand on the Internet - using some of the £400 million the company made from the sale of its 49 per cent stake in its airline - makes sense.
As Virgin Net is one of the most popular Internet ser vices in the UK, the company's online expansion plans represent a new challenge for companies like Lastminute and QXL. Lastminute sells late holidays and gifts, while QXL specialises in auctioning bulk orders of goods and services.
Last week Lastminute's share price continued to depress investors. QXL, meanwhile, surged 128 per cent on Thursday alone as a wealth of analysts expressed faith in the stock and the company's ability to consolidate the fragmented online auction market.
The Virgin site is being built by US technology firm FairMarket, which also built the auction service for FiredUp.com, the online firm owned by News Corp.
The system monitors users' instructions so that it can offer a more personalised service. 'It learns what they buy, it gives Virgin the ability to market to its customers,' said Lou Shipley, president of FairMarket.
'Over time, we would expect to get all of their products from phones to excess plane seats on the site. They'll start with one set of auction products and then they'll expand the range from there.'
Link-up with London Electricity to sell energy over the Internet
Virgin is finalising a deal with French-owned London Electricity to sell energy over the Internet. The joint venture, which is majority-owned by Virgin, will see London selling electricity and gas across the United Kingdom under the Virgin Energy brand. The final details about exact equity stakes are still being hammered out, but an announcement should come some time within the next two weeks.
Virgin has talked to a number of utilities about launching its energy brand, and London Electricity is thought to have pipped Eastern Energy, owned by the American giant TXU, and Scottish & Southern Energy to the finishing post. The site is due to be launched in the summer, with Virgin aiming to add other services, including telecoms, at a later stage.
Virgin is entering the utilities market as other players such as npower, the former National power, Centrica and Scottish Power expand their web-based operations.
