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By using a third party to funnel orders to its retailers, Panasonic is avoiding channel conflict and giving customers faster delivery options, says vice president of e-business Jeremy Dalnes.
It’s one of the largest manufacturers of consumer electronics, but Panasonic Corp. of North America still walks a fine line as an Internet retailer.
Having invested several years and millions of dollars in an e-commerce operation, Panasonic wants to maximize revenue by selling its base of more than 2,000 products direct to the public over the Internet. But the company also wants to avoid alienating its retailers, which include some of the biggest chains in the business.
To achieve both its goals, Panasonic, No. 160 in the Internet Retailer Top 500 Guide, is expanding a pilot program with Shopatron Inc., a third-party service that funnels orders from manufacturers’ web sites to retailers and dealers.
During the pilot, about 30% of web orders on Panasonic.com are going through Shopatron, but eventually that number could rise as high as 100%, says Panasonic vice president of e-business Jeremy Dalnes. “Once those types of orders are able to be processed by our retailers, we’ll open it up so that almost 100% of our orders to the public will be fulfilled by our retailers,” he says.
Panasonic sees several benefits to working with a third-party exchange to funnel orders to retailers. Panasonic keeps and processes the transaction on its site, but eliminates fulfillment and logistics costs by having retailers fulfill orders from their existing inventories. Since orders are funneled first to the nearest retailer with the most comprehensive inventory, merchants also have an incentive to order more gear from Panasonic. “Retailers like this program because it sends them actual orders and not just leads to follow up on later,” Dalnes says. “Once we launch in-store pickup in the fall, we will be sending additional foot traffic to the stores."
The program also benefits shoppers by expediting order fulfillment. Today, Panasonic ships most online orders in the U.S. from its distribution centers in Illinois and California. Depending on the shipping address, the standard delivery time can take up to seven business days. But when the order is fulfilled by a local Panasonic retailer, the delivery time is reduced by at least 50%. “The benefit to the shopper is that they get the product quickly and locally,” Dalnes says. “By fulfilling orders out of the nearest retail outlet to the consumer, Panasonic also reduces its carbon footprint by not shipping the item twice to the same geographic location.”
The Shopatron system allows Panasonic retailers to receive automated e-mails about potential orders. Actual orders are then accessed by the Panasonic retailer from the manufacturer through a web-based portal. Retailers can also automatically receive and process orders via XML. For its services, Shopatron, which has more than 500 retailers using its platform, receives a commission of between 2% and 5% on each order.
Panasonic, which expects its e-commerce sales to grow slightly in 2008, is also expanding its drop-ship program to generate more sales for its retailers. “We will make available certain SKUs that our retailers do not carry in their physical locations to sell on their web site and use our direct-to-consumer platform to ship on their behalf,” Dalnes says.