Online sales increase almost 3%, but HSN’s total sales dip by the same amount.
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Using Mirror Image’s services means only a small infrastructure investment because Mirror Image has already built the network. “In this model, you build the minimal site and outsource the capacity to our network,” Hammond says.
Global reach at a high performance level is usually beyond the abilities of retailers-or at least beyond their desire to make the investments necessary to create such a capacity. “The core competency of a retail site is not the web site itself, but the products it sells,” Hammond says.
Doing new things
Thus outsourcing to a network improves a retailer’s ability to compete online, he says. “The ability to do high performance across the globe enables them to do things they could never do before,” he says.
Furthermore, integration with the Mirror Image network is easy, he says. “That gives them the ability to bring on capacity almost instantaneously,” he says. In addition, Mirror Image licenses all the necessary software for graphics and image production, taking another management headache off the business and IT sides of a retail operation. “They can provide richer, heavier pictures, use Flash and other high-fidelity graphics without a lot of licenses,” Hammond says.
At the same time that Mirror Image provides content and performance monitoring to clients, it also allows them to control how the content is distributed to end users by setting operating rules that they can change on the fly as situations evolve. “Merchandisers get to control the merchandising function, much like they do in brick-and-mortar stores,” Brilliant says. “You have control of your stuff while it’s on our network. Retailers really get this, especially if you talk to the business and marketing sides.”
Mitigating the risk
Entry-level cost starts as low as $10,000 a year. An average cost is $20,000-$40,000 a year, depending on volume and platform, Brilliant says. A site planning for 35% growth a year, which is typical of retail web sites, would probably spend $100,000-$125,000 a year building additional capacity, plus the costs of operation and maintenance. Over three years, the cost could amount to $3 million to build, then expand and maintain the necessary network capacity, Brilliant says. “Mirror Image cost is a fraction of ownership cost,” Brilliant says.
Plus, he adds, outsourcing mitigates the risk that the business will develop differently from how management envisioned it. “If I spend the money, I’m stuck with it, whether I need it or not,” he says. “It doesn’t go away if I don’t need it.”