March 13, 2006, 12:00 AM

E-retailers should tread carefully with mixed media, analyst says

As leading e-retailers like Amazon.com and Walmart.com expand their shopping experiences with unique video programs, they stand to generate additional traffic and revenue but also risk confusing customers, retail consultant Jim Okamura says.

 

As leading e-retailers like Amazon.com Inc. and Wal-Mart Stores Inc.’s Walmart.com expand their online shopping experiences with unique video programs, they stand to generate additional traffic and revenue but also have to be careful not to confuse customers, Jim Okamura, senior partner with retail consultants J.C. Williams Group, says.

“While developing new revenue, it gets into a fuzzy space regarding what business a retailer is in-is it a retailer or a media company?” Okamura says.

Walmart.com is working with recording artists to produce unique music videos sold exclusively through its Soundcheck service, which makes the music videos available exclusively through Walmart.com downloads or on CDs sold in Wal-Mart stores. Amazon launched a pilot in January of its Amazon Fishbowl with Bill Maher, which will appear on Amazon.com for several weeks this summer as a live interview and entertainment show.

Both efforts are intended to generate traffic to their respective web sites as well as increase revenue through product sales and sponsorships by UPS on the Amazon program and Proctor & Gamble’s Gillette brand on Walmart.com’s Soundcheck.

But while the transition from retailing into retailing and entertainment is presenting retailers new opportunities as they explore ways to capitalize on the convergence of web and media technologies, it’s also raising questions and presenting new risks that could alienate some customers, Okamura and other analysts say.

Some retailers, he adds, have been considering whether media properties, including in-store TV networks as well as online video programs, should develop into profit centers based on advertising revenue, or maintain a lower profile as a means of channeling trade promotion funds from suppliers, or operate independently of advertisers.

The wrong decision, Okamura says, could lead to an overdose of in-your-face marketing. “It could turn customers off, and those are the things that keep marketers awake at night,” he says. “They’ll ask, ‘Have we overdone it?’ Time will tell.”

 

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