Pazanga: From CD E-Tailor to E-commerce Enabler

That Pazanga had the foresight to reinvent its business model in an ever-changing market is the sign of a savvy company. Now it's starting to get noticed.

The e-commerce enabler, based in Los Angeles, recently scored a five-year e-business deal with Virgin Megastores and helped develop the company's new Virginmega.com online shopping site. In the process, Pazanga impressed Virgin so much that the London-based company became one of Pazanga's first strategic investors.

Not bad for a company that started out five years ago as a small e-tailer, hawking CDs and other merchandise over the Web.

The transition came a few years back when CEO Adam Lilling saw the market for CDNow clones growing too quickly. He knew the bubble was about to burst and didn't want his company stuck inside when it did.

His decision: Take the Web tools the company had already built and market them to established retailers. So the firm partnered with companies such as eManage and Level 3 Communications to provide its tools as a hosted service.

Pazanga's proprietary e-commerce solution, which combines its own search and database applications with solutions from a number of strategic partners, gives clients everything they need from catalog management to page-creation tools. It was designed so consumers can browse merchandise as if in a brick-and-mortar store, perform extensive database searches and cross-reference all the selections.

"Virgin saw what we had and where we are going, and asked, 'Can we license this from you?'" Lilling says. "The second was, 'Can we invest in you?'"

Now Pazanga, which is working on similar Virginmega.com sites in the United Kingdom, France and Japan, wants to market its services to other clients. "Everybody talks about bricks and clicks, but the reality is that when you walk into, say, a Gap, you still have to call another store to do some things," Lilling says. "But this is literally taking catalogs, warehouses and fulfillment from around the world and being able to say that if it's not on the shelf, it will be on your doorstep in 48 hours."

While Pazanga's work on Virginmega.com isn't directly related to the retailer's $50 million project with iXL to build a Virgin.com portal, Lilling doesn't rule out future collaboration between the two.

"We're talking with Virgin.com over the next few weeks to see how we fit together," Lilling says. "Pazanga is strictly an e-commerce company. We are not looking to do portals or intranets, and we're not looking to be a competitor of iXL. But, looking forward, will we sell Virgin Atlantic airline tickets or mobile phones? That's up to Virgin.com to decide. But there is a definite possibility there since they have an equity stake in us."