In its second-largest acquisition, Amazon buys the company for $970 million.
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While image, presentation, core merchandise and price-to-value ratios need to match up to convey brand across channels, that still leaves plenty of wiggle room. “Those are some of the pieces that need to be consistently communicated to the consumers, but how that’s done in different channels may be quite different based on what you’re trying to accomplish and maximize in terms of the channel’s properties,” says McKenzie. “Our home page, for instance, doesn’t look like the catalog cover because that wouldn’t be an appropriate use of consistency. But there are elements of both the catalog cover and store signage in our home page.”
And while similar, the online product offering doesn’t necessarily have to be identical with offline offerings. Matching up assortments across store, web and catalog is less of a problem for retailers such as The Sharper Image, whose product line centers mostly on gadgets of which an increasing number are private label. It can be more problematic for an apparel seller, for example, who must factor in regional and seasonal differences and fluctuating stock levels from manufacturers over which it has no control.
When to break ranks between online and offline offerings has been a key learning among retailers in the last few years. Some do it strategically in short runs, using the web’s speed and reach to test products in advance of when they roll out in stores, for example, or to move small amounts of end-of-season merchandise it’s not practical to put in a catalog. “You may be down to your last few sizes and colors and it’s just not profitable to send out a catalog with those odds and ends in it,” says McKenzie. “And once the sale catalog is out there, letting customers know about further price reductions is difficult. Moving more of our liquidation in the direct channel online takes advantage of the flexibility that channel offers.”
No more bobby pins
Some retailers split online and offline offerings as a matter of policy, presenting certain merchandise only in certain channels. Office Depot, for example, uses web-enabled store kiosks to feature bulky items the stores don’t want to display in quantity on the floor. And as much as 35% of sales in some items of apparel at Eddie Bauer are in extended sizes but the company offers them only through its catalog and web channels to save floor space in the stores.
“Wal-Mart once may have thought it had to learn how to economically sell Rubbermaid containers and plastic bags on the web,” Cassar says. “Now that the Internet is seen less as a dire threat to offline business and more as an interesting sidebar, that’s changed. It’s apparent that while some online retailers will want to sell their entire offline assortment on the web, that may well be the exception to the rule.”
The rationale for precisely matching online and offline offerings-or not-also depends in part on the scope of the retailer’s product assortment. Pet food, for example, has become a classic example of a bad fit for online merchandising-just look at what happened to Pets.com. With a poor weight-to-value ratio, dog chow is pricey to ship compared to the revenue it brings in. It makes sense to split it off from a web site to a store-only offering. On the other hand, The Sharper Image, with an assortment that’s more tightly focused than Wal-Mart’s and that affords higher margins than pet supplies, finds it pays big branding dividends to make all of its products available in every channel.
While keeping web, catalog and store presentations enough in line not to bump into the brand, multi-channel retailers are beginning to learn to leverage each channel’s unique properties. “Increasingly, the web is seen primarily as something that supports traditional channels, and secondarily important in its ability to drive sales. That’s flipped from the conventional wisdom two or three years ago,” notes Cassar.
Let the web be the web
The most successful cross merchandising approaches play to those strengths in an integrated strategy that lets each channel do the things it does best. “Nothing can replicate the tactile experience of a retail store, which also offers an impulse and entertainment aspect to shopping,” McKenzie says. “A catalog has permanence, sitting on your coffee table. You might get better outfitting ideas by flipping through and the rich photography has a lot to do with projecting brand image for the company. The web offers a lot in its interactivity, its continuous availability, and it allows for much deeper levels of product information and product views.”
Cross channel merchandising takes more than just knowing how to convey consistent branding across channels and identifying the opportunities of each channel-it takes knowing how to knit it all together in an integrated strategy in which the channels play off each other to best advantage.
Teen retailer Delia’s in January launched its most ambitious cross-channel effort to date. The web has quickly grown to represent about 50% of Delia’s direct business, which itself is half of Delia’s sales, but the strategy for the promotion, which featured international rock star Shakira, combined the unique strengths of each channel to build interest and capture sales.
All three channels are transactional, but they had different roles in the promotion, says Hilary Chasin, executive vice president of marketing. The web site presented the merchandise in a way that leveraged the selling power of the singer, an aspirational figure for teenage girls. It used technology’s ability to deliver detailed content. Site visitors could select an interview with the signer, video clips of performances and downloadable songs, as well as fill out an entry form for a contest that awarded shopping sprees and other merchandise. This depth of content built affinity between the teen visitors and the singer, thus boosting interest in the featured merchandise that was presented as reflective of the singer’s style.