A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
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Shoppers return an estimated $60 billion of merchandise bought in all channels every year and retailers and manufacturers spend some $40 billion managing those returns. It’s easy to spot the problem if you do the math. ReturnBuy Inc. is by no means the only company to come up with a web-based secondary market solution for handing retail returns, but it takes the problem off retailers’ hands with a comprehensive approach that handles products at any stage of life.
ReturnBuy sells under three brands on eBay: BrandNewBuy for new in-box goods, ReturnBuy for like-new returned items, and Real Crazy Mo for the rest. The brands use a five-star rating system to describe condition. ReturnBuy presents merchandise differently on its own, newly-re-launched site. Condition is covered by a quality chart that categorizes condition at one of four levels. Descriptions on each product page provide further detail.
Between its own and its eBay sites, ReturnBuy is set up as one solution for returns and overstocks that a retailer might have to handle through multiple outlets. “We can manage the entire product life cycle for our clients and the range of quality from 100% working condition to items that aren’t functional,” says senior vice president of marketing Steve Kirchner. “It might take a retailer or manufacturer 6 to 18 months to manage through that process because they’re not set up for reverse logistics. We can do it in weeks and we can get a higher price for them.” Those higher prices come in part from systems and technologies that get products back into the sales cycle sooner. And by selling mainly to individual consumers rather than distributors or other retailers, ReturnBuy.com helps clients avoid channel conflict, he adds.
The ReturnBuy site, which focuses on consumer electronics, offers discounts of up to 60% off full retail price on name brand merchandise. The site looks like a well-designed conventional online store with easy navigation, a shopping cart, a 30-day return policy, the option to purchase product warranties-and no auctions. Consumers can shop several ways including by category and brand.
“There is a big market for businesses reselling products,” says GartnerG2 research director Geri Spieler. “Their site looks great. The product descriptions help people understand what the features are, and you can buy warranties, unusual for returned merchandise.”
“The returns are usually current models and we test and certify everything we sell,” Kirchner says. “Because retailers can’t sell the items as new, consumers get a great price-just by taking advantage of someone else’s return.”
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Target Corp. has been making strides in the past few years to refocus its corporate strategy. It dumped the decades-old Dayton Hudson name to leverage the brand of its largest and best-known retail chain, Target Stores, and increased efforts to promote all of its retail brands: Target, Mervyn’s and the more upscale Marshall Field’s. And with a boost from Amazon.com, its corporate branding strategy is working particularly well online.
Over the past year, Target has been moving all of its brands to a common web site powered by Amazon. Operating under the name Target.Direct, the combined site is unique to the online retail world in that it allows cross shopping in all three Target brands and on Amazon.com. All purchases, regardless of how many of these brands are included, are made using the same shopping bag.
The close association of the several brands also supports Target’s long-held strategy of positioning Target Stores as a cut above other discount mass merchants, such as Kmart Corp. and Wal-Mart Stores Inc. By allowing shoppers to place a pair of $19.99 carpenter jeans from Target.com in the same shopping cart as a $59.50 pair of Greg Norman Oxford Microfiber pants from Fields.com, Target Corp. is helping to build on the branded image it has been striving to create for Target Stores.
“Branding is one of the things they do a good job of, and it represents where they want to be in the market,” says Chris Merritt, a principal of retail consultants Kurt Salmon Associates. “Now they have a broader offering of brands and Amazon does a good job of providing a wide offering and making it easy to relate one brand to other categories.”
As a shopper browses throughout the Target.Direct site, regardless of the brand she’s shopping in, the colored logos of all three Target Corp. brands and Amazon’s appear prominently at the top of every page, next to the ever-present shopping bag. At the bottom of every page are links for personalized services such as checking order status and viewing recent shopping history.
Target also offers the option to create a personalized “My Store” page, which takes on the shopper’s name (so it becomes “Tom’s Store”) and features products from any brand on the site that the shopper has visited. It also provides links to a Gift Reminder and a Wish List for registering gift ideas. Another section of the My Store page, called The Page You Made, provides more details on the most recent items browsed. “We believe this alliance with Amazon will further strengthen our brand and deepen our relationships with our guests,” says Jerry Storch, vice chairman of Target Corp.