In its second-largest acquisition, Amazon buys the company for $970 million.
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After some cautious initiatives to sell appliances on their own sites, which were met with indignant calls from retailers, manufacturers have embraced the leave-retailing-to-retailers model and are happy to take part in JGSullivan’s plan to create a common platform from which local retailers build their own sites. “This helps the manufacturers avoid chaos when they have all the dealers building their own sites,” says Eric Agren, vice president of the dealer e-channel initiative at JGSullivan. “It would be impossible to manage if they had all these dealers calling them asking for co-op funds for their different sites.” Not to mention the hundreds of platforms that retailers would be using, meaning the manufacturers’ data would have to be in a multitude of formats.
In addition to the retailer sites, JGSullivan has created and hosts a site for buying co-ops Brand Source, Retail Network Services Group LLC’s BrandsDirect, Best Brands Plus and others.
It also creates and maintains sites for the manufacturers, such as Whirlpool’s. A shopper can decide which product she wants at one of the manufacturers’ or co-op’s sites. When she is ready to buy, she inputs her ZIP Code and the site refers her to a retailer near her home. “Our partners tells us that if they weren’t at our site, such sales would be lost,” Brahams says. “But now it’s an incremental sale.”
As the small numbers of sites that are e-commerce-enabled would indicate, independents still have a lot to learn about using the web, Donaldson says. For one thing, independents often fail to understand that if a customer buys from BrandSource.com at a lower price than the customer would have paid in the store, the sale is a saved sale; many look at it as a sale at a lower price than they would have gotten otherwise. “Retailers complain that the customer was just in the store looking at the same product for $20 more,” Donaldson says. But Donaldson points out that a customer who is price shopping on the web will buy from the retailer that gives her the best price. “The customer is going to buy online,” Donaldson says. “The fact that they still bought from that member is a saved sale.”
Independents also have yet to understand follow-up, he says. “The biggest failure so far is that retailers aren’t getting web customers to come back to them,” he says. “Whenever they make a delivery, they should leave behind material telling customers the next time they’re shopping for an appliance, come back to them, either in the store or on the web.”
Selling the dealers
Dealers must be sold on the benefits of e-commerce and then, once on board, have to be coached on using the channel effectively. “Training the dealer base is critical,” Agren says. “It’s one of the most difficult and time-consuming parts of our job.”
There are, of course, small appliance retailers who are enthusiastic about their web experiences and who have learned to leverage their web presence for their benefit. For instance, Pardini Appliances, a two-store retailer based in Ukiah, Calif., attributes a 35% increase in sales over the last three years to its web site. “The California economy is flat and there have been mill closures in our market, so we attribute a lot of the increase to people finding us on the web,” says owner Mark Pardini.
The increase comes not because people buy on the web-few sales are initiated and consummated on the web, Pardini says-but because customers come into the stores better informed and able to make faster decisions, meaning the sales associates can serve more customers in the same amount of time. “60% of our customers have gathered some information on the web,” Pardini says. “It’s a huge benefit to our salespeople because they’re not starting out from scratch with those customers. The turns are faster because the customer is informed.”
Pardini benefits in another way by being able to direct callers to the web site for routine information. So a customer who has questions about dimensions, color, etc. can look up the information on the web site and get clear color pictures of the products. Similarly, Pardini directs contractors who call seeking specs of products for which they are building kitchens or cabinets to the web site. “It’s made our job tremendously easier,” he says.
Agren says other industries can employ the model that JGSullivan has successfully created. In fact, the company is already selling services to other markets, especially those like appliances, where the last mile is important. It has created web sites for office furniture manufacturers Hon Industries Inc., which has 900 dealers participating, and Flexsteel Industries Inc., which has 400. It also supports Armstrong World Industries Inc.’s flooring site.
Whatever approach manufacturers take from here on, though, analysts caution that they need to be sure the retailer is in the loop. “Manufacturers and retailers both were unsure in the early days whether the Internet would allow manufacturers to bypass retailers,” Jupiter’s Cassar says. “But it has become quite clear over the years that consumers are disposed to buying from retailers. Retailers aren’t likely to be afraid that manufacturers are going to steal their business any more.”
How some consumer electronics manufacturers are getting to customers
Dozens of manufacturers, including Panasonic, Sharp Electronics Corp. and Hewlett-Packard Co., are making it easy for consumers to shop on their web sites and then instantly purchase their selected products from an online retailer’s web page. Through a service provided by Channel Intelligence Inc., shoppers on one of these manufacturers’ web sites are only two clicks away from the buy page of a retailer’s web site. And because the retailer’s inventory status is updated at least every six hours on the manufacturer’s page, shoppers can be fairly certain that the product they want is in stock. As a result, retailers and manufacturers using this system have seen their sales conversion rates increase from four to 10 times, says Rob Wight, co-founder and CEO of Channel Intelligence.