PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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SalesHound, which started out operating a web site for consumers to search for sales online, began creating online circulars last year. It soon landed one of the biggest retailers as a client: Sears. In late May, Sears.com began featuring an online sales circular under the “Browse This Week’s Ad” section of Sears.com, which also runs on the SalesHound home page.
SalesHound believes that putting sales circular information online is paramount to retailer branding. “Most brick-and-mortar stores have brand equity which they can leverage online by putting sales information on the web sites,” says Brian Hand, CEO and founder of SalesHound. “Putting circulars online can help retailers turn their web sites from a cash register to a media channel because a lot of consumers going on those sites are looking for information on a purchase. The way to look at this market is that there is an opportunity open when a customer is telling you they want to use the web site. It’s an opportunity to take current promotions and get them online.”
CoolSavings.com, a site known for its promotions and incentives, is the newest player to provide online sales circulars to retailers. CoolSavings designed the sales circular product to drive traffic into bricks-and-mortar retailers and grocery stores, as well as to help online retailers increase catalogue and online sales.
The CoolSavings sales circulars offer real-time tracking that allows retailers to see which offers online visitors view. “With newspaper inserts, retailers don’t know if consumers will look at it, whereas we know if they look at the online circular,” says Golden. Retailers also can quickly update their circular online and target consumers locally to fit their changing sales and traffic needs.
CoolSavings.com is adding retailer circulars from such stores as GNC and Petsmart to its own consumer web site, where 4 million members go to look for deals at retailers and online stores. Golden says the web site had 13.5 million visits in the first quarter. “Retailers will put circulars on their sites but we can give retailers more reach because of our traffic,” says Golden. “Retailers still have to reach out to consumers online. They can’t just rely on consumers to come to them.” CoolSavings can combine circular offers with its established base of coupons and discount deals it has with retailers, which can give consumers incentive to shop at stores and web sites.
Portland, Ore.-based Fred Meyer Stores, which started using DailyShopper in 1999, says putting the Daily Shopper online has been a success because it helped the store target the online audience. The chain says that the service allows Fred Meyer Stores to reach customers it might have missed in print advertising. Traffic to the online circular far exceeded the company’s expectations, the company says.
Finding the loyal ones
The costs of putting circulars online are less than the printed counterparts. SalesHound charges from $50,000 to $500,000 per year depending on how often a retailer advertises the circular information. Retailers typically pay about $85 per 1,000 print circular inserts, Hand says. “But the real value is that when consumers click onto the sales circular online they are 100% interested in getting product information and possibly making a purchase. It’s not like when a retailer spends money to send out marketing material hoping that some consumers are interested,” Hand says. “And those people who come to the site for circular information are brand-loyal consumers. Why wouldn’t you want your web site to promote your store sales when loyal customers are looking for products?”
Costs for Daily Shopper’s NetCircular service, which are based on the printed circular pages that are translated, are $35, $45 or $55 per page printed, depending on the amount of work needed to translate the pages online, says Perruso. Setup fees start at $10,000. CoolSavings charges from $8,400 to $15,000 to produce and host circulars and track usage.
Retailers are just catching onto the idea that they can reach consumers if they are online to check out deals. As more shoppers come online, market observers expect them to be looking for product research, especially as more retailers combine their shopping channel promotions and as consumers cross over between offline and online shopping. “Using a web site to find store circulars is a new idea and a new application of the multichannel strategy,” says Mary Brett Whitfield, director of PricewaterhouseCoopers’ E-Retail Intelligence System. Because of the newness, Whitfield cautions that it may take some time for consumers to catch onto the practice of looking for the sales circulars online.
Even so, companies who see the opportunity to provide this information to retailer web sites are expecting good responses. “It’s evident with the new players entering the market that the retailers are interested in this type of solution,” says Perruso. “Consumers are very interested in knowing what retailers are promoting in print and on the web. And more consumers are doing their pre-shopping on the web. Smart retailers want to be where their customers are.”