In its second-largest acquisition, Amazon buys the company for $970 million.
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In addition to product education, manufacturers can use their web sites as a low-cost way of testing new products. The testing strategy has been followed with notable success by Procter & Gamble, which has used its PG.com to test-market new products through an online Try and Buy Store, Whitfield of Retail Forward says. For example, it tested Crest Whitestrips, the teeth-whitening product that has since taken off in store sales. The online test and refinement of the product and marketing approach, as well as the ability to use its own in-house medium to market Crest Whitestrips, saved P&G millions in marketing costs, experts say. P&G has also launched HomeMadeSimple.com, where consumers can find extensive information about house-cleaning and other products.
Manufacturers who have navigated the minefield of channel conflict find that another challenge lies ahead: learning how to sell direct. “It’s an evolution, and not one to be moved into lightly as a manufacturer,” Mills says. “We spend a lot of time thinking about how to do it right.”
Escalate hosts InFocus’s e-commerce platform and provides technical consulting services. Those services enable Mills and his team to develop the web site without relying on InFocus’s own IT staff as well as to concentrate on developing the company’s marketing, merchandising and customer service capabilities. “Our in-house IT team can only spend a limited amount of time on e-commerce operations,” he says. “And I need to develop online expertise around marketing and customer service. If we didn’t get outsourced help on the technology side, we’d be distracted from marketing and customer service.”
Mills notes that web success is based on business, not technological, expertise. “Your ability to grow online is all based on the effort you put into marketing and creating a great customer shopping experience,” Mills says. “I have an entire team dedicated toward growing this part of the business.”
While InFocus already possessed limited catalog experience, which prepared it to manage fulfillment of consumer orders of one or two product shipments, it has had to learn how to use the web to lead up to big-ticket purchases. One technique helping to raise online shoppers’ comfort level is a feature designed with Escalate called Find the Right Projector, which recommends a projector after shoppers answer questions about how they intend to use it.
Highlighting the unusual
InFocus also creates online sales, or at least willingness to buy, with a section that displays pictures about how other customers use InFocus products, Mills says. That helps perk up consumer interest by suggesting uncommon ways of using projectors. “For example, some customers have taken their projectors in their backyards to project large images on the side of their house,” Mills says. “The web presents an easy way to share these ideas with a large number of people.”
InFocus also has adopted common online retailing practices such as capturing e-mail addresses from customers and following up with e-mail newsletters. So far, his overall online marketing and merchandising efforts have led to a noticeable increase in the willingness of online shoppers to scale up to higher-priced items, Mills says. He takes as evidence of consumers’ growing comfort with online buying that it is selling its popular X1 projector online for $999. He expects InFocus can now start to move customers above that price point for other products.
Manufacturers who have significant IT staffs with the expertise to run their own web sites can still turn to another kind of outsourcing, that which provides a direct link from manufacturer to retailer then monitors the sales that occur.
About 70 manufacturers, including Xerox Corp., Hewlett-Packard Co., Microsoft Corp., Samsung Electronics Co. and Panasonic, use a technology platform from Channel Intelligence Inc. that enables shoppers on their web sites to view a list of retail partners, including price and real-time availability of a product. In two clicks, a consumer can travel from a manufacturer’s site to the buy page of a retailer’s site. “Manufacturers wanting to avoid channel conflict are one of the primary drivers of our service,” says Channel Intelligence president Alan Fulmer.
“This has helped drive leads to our channel partners and turn casual site browsers into purchasers of our products,” says Joanne Chan, retail marketing manager for SanDisk Corp., a Channel Intelligence client and provider of computer memory cards and related products. “This enhances the usability of our web site and the shopping experience for the end-user.” (See box, p. 24).
Whatever approach a manufacturer takes, the pressure for manufacturers to connect with consumers is only going to increase, experts predict. “When the total retail bucket was growing 6% to 8% a year, that made room for a lot of manufacturers to expand sales and not have to worry too much about the competition,” says Jim Brownell, COO of Escalate. “But today manufacturers are under pressure to increase sales like the rest of us, so they’re forced to expand their channels of distribution.”
Directing traffic to keep customers from getting away
Joanne Chan, marketing manager for SanDisk Corp., maker of computer memory cards and other peripherals, figures that forwarding consumers from her company’s web site to a retailer’s is a good way to influence the buying process. “Users generally come to a manufacturer’s site for information, then go somewhere else to make a purchase,” she says. “So why not help them do both online?”
SanDisk refers site visitors to 15 of its best retail partners through a networking platform provided by Channel Intelligence Inc. Although it doesn’t realize any direct sales, SanDisk figures it’s providing a valuable service to customers while helping to assure that visits on its informational site result in sales. “We didn’t go online to see a direct uptick in sales,” she says. “We did it to lead consumers to places where they might not have gone otherwise.”