In just six weeks, Kmart has signed up 1 million customers to its free Internet service, making it the fastest-growing Internet service provider on the market, the company announced today.
One reason for the blistering growth at BlueLight.com, Kmart's Internet arm, is that many of its customers are firmly rooted in the middle class and are just joining the Internet revolution, executives say.
Analysts say it's a smart move to tap into Middle America, the next big wave of e-commerce shoppers who are looking for a way onto the Net. By offering free Internet access, Kmart builds an online customer base.
"Kmart is going to be extending their brand name to a mass market," said Zia Wigder, an analyst at Jupiter Communications. "Kmart wants to be in their face every day."
Kmart, which has 2,200 stores and has more than 30 million customers every day, has been handing out the free software on disks at checkout counters.
The Kmart Web page will automatically greet customers when they log on.
The free ISP is the result of a deal struck in December among Kmart, Yahoo and Softbank Venture Capital. It was one of the earliest deals between a large Internet company and a brick-and-mortar retailer to offer Internet access.
Unlike most ISPs that rely on marketing or partnerships to distribute software, Kmart used its vast network of brick-and-mortar stores. Roughly 80 percent of Americans live within six miles of a Kmart.
In addition to the huge number of customers, the companies said they also had altruistic goals of helping bridge the so-called digital divide.
"We wanted to enable Kmart customers to make their everyday purchases on the Web," said Drew Lanham, Yahoo's senior director of business development. "And to make their life more convenient."
Studies show that Internet users have evolved from a mostly male, affluent and well-educated audience to a much larger group that is less educated, less affluent and includes more women, according to The Boston Consulting Group, an Internet research firm.
And while they are less affluent, they still represent tremendous buying power.
"Yes we want to make money, but we also believe that everybody should have the same access to the knowledge the Internet provides," said Fran Maier, vice president of marketing at BlueLight.