August 11, 2005, 12:00 AM

Why more web retailers are issuing private label cards

Newegg, eCost and Bass Pro Shops are among the expanding ranks of web and multi-channel retailers that see private label credit cards as a new way to generate cross-selling opportunities.

 

As they continue to expand their online payment options, more web retailers are looking at a new option: issuing a private label credit card. For instance, Newegg.com, a personal computers, accessories and consumer electronics retailer, plans to issue its first private label credit card in time for the holidays.

While core details have yet to be released, including which company will be its card issuer, Newegg plans to have a private label program established by the fourth quarter. On the web, personal computer and consumer electronic shoppers tend to be big-ticket buyers. At Newegg, where the average order is about $300, the company sees a private label credit card program as a way to round out its payment options, which in turn helps to drive sales. “Customers expect us to have options and there may be times they want to make a purchase and finance that purchase in a different way,” says Howard Tong, vice president of marketing for Newegg.

A 2004 study of 147 web retailers with annual sales of more than $10 million by CyberSource Corp. indicates that Internet merchants that offer at least four different ways for customers to pay for their purchase, including the option of using a private label card, can increase sales conversions by as much as 20%. The study also found that 19% of the web retailers surveyed had plans to issue a private label card.

In May, for instance, eCost, in conjunction with HSBC Retail Services, an issuer of merchant-branded credit cards, began offering customers the option of using a new private label card. ECost tied its new private label program to a marketing promotion that offered qualified cardholders a no-payment-for-6-months and interest-free financing offer. Other options include electronic billing, online bill payment, no annual fee and special financing promotions throughout the year. “We are providing our customers with high quality products at low prices and now available for purchase on very attractive financing terms," says eCost CEO Adam Shaffer.

Retailers also see private label credit cards tied to a web site as a good way of generating multi-channel sales. For instance, Bass Pro Shops this month is expected to be rolling out nationwide a new private label card program in conjunction with GE Consumer Finance. The private label card program is among the first in the catalog and web outdoor retail category. The retailer sees the card as a good opportunity to generate sales and payments transactions through its 27 stores, catalog and web site. “It’s a great way to extend a customer’s buying power without tying up other credit cards,” says Stan Lippleman, vice president of marketing for Bass Pro Shops.

 

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