The policy lets overseas e-retailers sell into China without animal testing, but companies still need help entering the China market.
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As part of that strategy, CUShopper, which has about $20 million in funding on the books, recruits credit unions without an online presence as well as those with a booming online banking service. “We like credit unions with members who are heavily wired. They can generate fast growth, but they are not our only focus,” says Walker. “We want to service credit union members based on how they do business.”
To reach credit union members lacking Internet access, CUShopper mails brochures promoting merchandise marketed on its Web site. The unwired can phone in their orders using a toll-free number. The same call center handles queries from Internet users seeking answers to questions about a product.
One way credit unions envision CUShopper helping them generate more loan volume is the opportunity to swipe loans from retailers using cut-rate financing to capture incremental sales. Many use battle-tested offers like 0% financing for three to six months, no payments for 60 days or a combination.
“A lot of retailers offer great financing for a limited period, but if it expires, borrowers are hit with interest rates of 23%. We might charge 9% to finance the same purchase over 36 months, so there is a financial advantage to go through us,” says Donald Cooper, senior vice president for Central Communications Credit Union. “By educating our members on this point, we can fill a void for them in terms of shopping convenience and capture loans we might not otherwise get.”
The site also is a way for credit unions to capture transaction volume and receivables on their Visa and MasterCard cards for low-ticket items such as camcorders or video games. “We refer to our Visa card rate on low-ticket items,” says Mike Pozzi, an executive vice president for Meadows Credit Union of Arlington Heights, which has 20,000 members. “We may not get a ton of receivables, but it’s great way to position our card.”
Along with generating more installment loans, credit unions see CUShopper as a way to increase traffic on their Web sites. “This is a way for us to leverage our online banking channel by giving our members a unique shopping experience in the credit union environment,” says Pozzi.
Providing that shopping experience is also a way for credit unions to put more computers in the hands of their members, who can then use the system to bank online. Credit unions prefer online customers because they tend to purchase more services and require less hand-holding. That’s a plus, because low-maintenance members generate more revenue, which credit unions can use to underwrite lower interest rates and fund year-end dividends.
For now, CUShopper has no direct competitors according to the credit unions with which it has contracts. “We have looked around, and no other partner in the online shopping space allows us to imbed our financing and approval process,” says Pozzi, whose credit union is one of several piloting CUShopper’s move into online loan approval. Other enhancements in the wings include electronic line of credit applications and credit card line increases.
Such developments are important for CUShopper, since the lack of competitors won’t last long. “It’s a great concept that is perfect for community banks, and you can bet large retail banks will follow suit with their own sites,” predicts a spokesperson for the American Bankers Association, Washington, D.C. “While this service does not compete directly with banks, serving customers online is a critical issue for financial institutions. A service like this can make online financial service sites stickier.”
Walker thoroughly expects competition and he is ready for it. “Our model is adaptable to any group of financial service providers and we expect competitors,” he says. “There are shopping portals that direct visitors to financial institutions, but they’re indirect competitors.”
A speed bump on auto sales?
One area where CUShopper is likely to encounter stiff competition is auto sales. Automakers, using their own financing arms, can stack the deck in their favor by trimming profit margins to offer 0.9% financing for up to five-years. Dealers can also sweeten the pot with incentives of their own. “It can be tough to beat those deals,” acknowledges Pozzi.
Given the intense competition in automobile sales Walker has no appetite to put together a dealer network to fulfill auto purchases. Instead, CUShopper plans to work with third parties that help credit union members locate the best price on a desired automobile at a nearby dealer. “We have no intention of building a dealer network,” declares Walker. “But credit union members can use our service to get preapproved for an auto loan before they start shopping.”
Nevertheless, Walker is convinced that credit unions can win more auto loans, not to mention loans to finance big-ticket purchases, if they’re willing to market their services more intensely. “We serve a credit union in Key Largo, Fla., that is the top auto lender in its market, so it can be done,” he says. “We see a good chance to drive business to credit unions.” And generate big volume in the process.
Peter Lucas is a freelance writer based in Highland Park, Ill.
Adam Wicks Walker
1997 to present: Chairman and cofounder of CUShopper
1996 to 1997: Director of design and production, EarthLink
1991 to1996: Cofounder and managing partner, Dayton/Walker Design
Skipped college and entered business at age 17