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.
How niche marketing works for Home Décor Products
At a time when much of retail seems determined to outsize the competition, a bigger online marketer is finding there`s something to be said for also looking focused and small--if that`s what gets a customer`s attention.
Home DÈcor Products has launched three e-commerce sites since debuting its flagship site, HomeClick.com, in 2000, following a previous store on Yahoo. Its strategy seeks to leverage investment in a powerful back-end system by building multiple stores on the front end. Each site targets a different or more niched segment of the same larger home products market. It`s a formula that pulled in more than $50 million in sales last year, and one that CEO Mike Golden hopes to build on by rolling out more sites in 2005.
HomeClick.com, which features upscale kitchen and bath fixtures and other home gear, provides an Internet presence for a number of high-end manufacturers in the category. Home DÈcor Products also operates AbsoluteHome.com, which aims at the mass market.
And last September, it launched the highly niched Barbecues.com, an example of Home DÈcor`s overall approach. Outdoor grills are part of the offering at HomeClick.com and AbsoluteHome.com, but "we found customers didn`t just want to buy a grill; they wanted to buy tools to use with it," says Golden.
The tools and accessories didn`t fit the assortment at HomeClick and AbsoluteHome, but they were just right for a narrowly focused, deep-in-the-subcategory site that offered all things barbecue and nothing but that. So Home DÈcor Products built that site: Barbecues.com.
"On Barbecues.com, you will find all the products you will find in the outdoor living sections of HomeClick.com and AbsoluteHome.com, but you find it gathered in one place. We found that for different customers, that`s the right solution," Golden says.
Keep on leveraging
That`s three different sites that offer some of the same products to varying degrees, targeting different types of customers--but all of them operating off the same back end. "We had already built the platform, and built it in a scalable way that would let us run multiple sites if we wanted to," says Golden. The company`s business model, he adds, allows it to keep leveraging its investment in technology and people to go after more and different market segments.
Under that strategy, Home DÈcor Products launched KnobsandThings.com last month. The site expands on the selection of decorative hardware available on HomeClick.com and AbsoluteHome.com, but doesn`t offer anything outside of that category. "It`s exactly what we did with Barbecues.com, only in the decorative hardware market," says Golden.
Under the same rationale, Home DÈcor Products expects to launch dedicated sites featuring appliances and fireplaces in the near future: narrowly focused offerings that will feature some of the same products available on HomeClick and AbsoluteHome, but also will deepen selection in the respective subcategories.
The notion of leveraging the same back end many times over as a path to profits represents an evolution from some earlier thinking on the opportunity of the Internet, says Mary Brett Whitfield, director of the E-Retail Intelligence Program at consultants Retail Forward Inc. "The strategy of building a platform that you could pile onto to leverage the cost of developing it was a model not very many people thought of five or six years ago," she says. "It`s a good example of how people came out of the dot-com bust looking more rationally at what the opportunities were, and how they could really leverage what`s different about the Internet."
When he joined Home DÈcor Products as executive vice president in 2002, Golden already knew a thing or two about how to build a platform and then drive increasing value from it by using it as a base to grow new online properties. It`s a model that helped spell success for outsourced e-commerce provider GSI Commerce Inc., where Golden was co-founder and chief operating officer. The rest of Home DÈcor Product`s strategy is built around using the Internet to tackle challenges specific to the home products market.
In HomeClick`s case that has to do with broadening the market exposure of luxury home fixtures and products and making them more directly available to consumers. While consumers can walk into DIY bastions such as Home Depot and Lowe`s to buy a basic bathtub, it doesn`t work that way with higher-end fixtures DIY stores don`t stock. The nickel-lined, copper bathtub from French manufacturer Herbeau that lists on HomeClick at just over $50,000 is but one example. For such items--or even for high-style Toto toilets that list at a few thousand dollars--the path from manufacturer to consumer is generally a long one.
"The typical model is: meet with the architect, the designer, the contractor, visit the manufacturer`s showroom, and figure out what fixtures you want to buy. Then generally the designer or contractor or plumber will buy from a local distributor at a 10% to 40% discount and mark it up 25% above list when they sell the fixture to their customer," says Golden. "What we`ve done is to give consumers the tools to be able to find the fixtures they want, make the purchase themselves at the same level that contractors, designers and other professionals would get it, and be able to have those fixtures on the job site when the contractor comes to work. In effect, they are becoming the general contractor."
In contrast to do-it-yourselfers who install fixtures themselves, Golden calls this group "do-it-for-me," and says they constitute about 85% of HomeClick`s market. To these consumers--and to customers at Home DÈcor Products` other sites as well--it`s the product brand that matters most, not the retailer`s brand, Golden believes.
GSI spent money on infrastructure and not brand-building "because we were leveraging other people`s brands," he says. "To the extent that GSI was a marketing and efficiency business model, Home DÈcor Products is the same, but we focus on manufacturers, not retailers."
Focus on manufacturers
Though it doesn`t focus on brand-building for itself, Home DÈcor Products does spend on online marketing that brings shoppers looking for those manufacturer brands to its sites. Without disclosing numbers, Golden says the company is a big customer of Google and Overture, operating a paid keyword program that numbers in the tens of thousands.