In its second-largest acquisition, Amazon buys the company for $970 million.
By now, the product selection on the web is every bit as great as offline—and more so since many web sites stock much more than a store could stock. And it’s available literally at shoppers’ fingertips nationwide. The sites that make up the Best of the Web specialty/non-apparel retailers are evidence of the broad offering and the varied approaches.
By now, the product selection on the web is every bit as great as offline-and more so since many web sites stock much more than a store could stock. And it’s available literally at shoppers’ fingertips nationwide. The retailers that make up Internet Retailer’s Best of the Web specialty/non-apparel retailers are evidence of the broad offering and the varied approaches.
These retail sites represent everything from customized make-up created in batches of one to telescopes. What they have in common is that they use the web to create unique shopping experiences or to create a business that would not have existed without the web-or both.
While by now it has two retail outlets, beauty site Reflect.com used the web to prove the market for its product and to aggregate demand as a way to make production worthwhile. A woman shopper answers a series of questions relating to her skin type and make-up preferences, then Reflect.com creates a product just for her. Evidence of the success of the site: It backs up its products with an iron-clad guarantee, yet its product return rate is a mere 2%. “Women tell us that when they get their order in the mail, they feel as though they are receiving a gift,” says vice president of marketing and design Richard Gerstein.
At the other end of the spectrum from reflecting on the needs of the individual is a site like DiscoveryStore.com, the online retail operation of the Discovery Channel, which also operates 130 stores. While the products, such as telescopes, at DiscoveryStore aren’t custom, much of the shopping experience is. Cross-sells are hand-picked by merchandisers. And the site features an innovative packaging of batteries. Merchandisers have determined the battery needs of each product, and a customer can click an “all batteries required” box to receive whatever combination-however unusual-of batteries that a product requires.
Then there’s SharperImage.com, which is almost in a class by itself. It offers products that are unique to Sharper Image-CEO Richard Thalheimer attributes much of Sharper Image’s success to the company’s proprietary, high-tech products-while offering a shopping experience that favors the web, which appeals to its tech-smart customers. The company is truly channel-agnostic; nonetheless, web sales are up 42% for the first nine months of the year, vs. 27% for store sales.
Where multi-channel is multi-channel
Given that it grew out of a visual medium-a cable TV channel-it’s no surprise that DiscoveryStore.com excels in product presentation. “There’s a lot to like about this site,” says Kelly Mooney, president of consultants Ten/Resource. “It’s easy to understand, and at the main menu level, you get a good idea of the breadth of their offering.”
When Discovery Channel launched in 1985, founder John Hendricks, chairman and CEO, had the notion that the brand could extend beyond TV shows. Customers provided the direction for extension when they began inquiring about buying videotapes of TV shows. That set the stage for a retail operation that today encompasses the web site, a catalog and 130 mall-based stores. And just as it was alert to receiving direction for expansion from customers, Discovery’s retail operation is not focused on pushing customers to one channel or another. “Customers will shop where they want to shop,” says Tom Burke, senior vice president of marketing and e-commerce.
Since it wants customers to shop where they want, DiscoveryStore offers the same product lines in all channels. It leverages each channel, however, to best advantage. The web site features the entire depth of a product line, such as all telescopes and accessories vs. the most popular scopes and basic accessories in stores. The stores sell lower-priced impulse items unavailable on the web.
The multi-channel approach has been effective, Burke reports. Two-channel customers spend two and a half times as much as one-channel customers and three-channel customers spend five times as much.
No surprise, says Mooney. “They have lots of ways of intriguing you at the web site to look at not just what you came for but something else as well,” she says. In addition, an “All required batteries” box gets high marks. A customer clicks the box to add batteries to an order. DiscoveryStore says that feature increased battery sales by 1,000%.
Just as it applied human intelligence to the battery combinations, Mooney says it’s obvious DiscoveryStore.com uses humans, rather than technology, to offer cross-sells. “Cross-sells are very relevant and priced appropriately,” she says.
All this has resulted in strong Internet sales growth. While he won’t reveal numbers, Burke says that web sales growth will outpace the industry average this year of 25%. And so DiscoveryStore will continue with its winning formula next year, he says. “We will continue to optimize visual merchandising and presentation so experienced customers and first time buyers will both be comfortable,” he says.
Unique Visitors (monthly)
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Achieving retail success is no hobby
Since the dot-com investment bubble burst, one of the accepted wisdoms of the e-retail industry is that VC companies foolishly spent on Cadillac technology when they should have been buying tricycles. There’s some truth in that-but the reality is that the Internet was not mature enough that low-cost outsourced options were available then. But they are today, and that’s one reason some dot-com retailers who are thriving now would have failed back then-or did fail back then.