February 4, 2013, 11:07 AM

Fast forward

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The site, which launched as a video-driven flash-sale retailer less than a year ago, quickly morphed into a hybrid e-retailer and advertising platform when it realized it was getting more video views than direct sales, Aksas says. "We realized that the views the videos were getting were valuable for the brands we were promoting and we started thinking more about the value proposition we were bringing," he says. "We could have a mix of advertising and commerce. Usually you are one or the other."

He says the new business model is proving more profitable than the flash-sale model. Consumers who view a video on Sharpmen.com as it operates today convert approximately 3.75% of the time, greater than the 2.99% average of North America's top online retailers as ranked in the Internet Retailer Top 500 and Second 500 guides.

The top videos featured on Sharpmen.com's home page—there are nine that cycle through at any given time—usually run about two to five minutes each and tell the stories behind the brands. These longer, more story-like videos comprise about 30% of the videos on the site. The videos comprising the remainder are generally about a minute long and are more straightforward, with a host talking up product features and benefits.

Sharpmen.com shoots seven to 10 videos a week, usually all on one day, using freelance videographers and editors. Aksas says Sharpmen.com spent about $15,000 to buy cameras, lighting equipment and set up the studio space.

The storytelling approach prompted several online media outlets to reach out to Sharpmen.com to ask if they could use the longer, featured videos on their own sites, Aksas says. "Everyone is looking for content," he says. Sharpmen.com now syndicates some of these videos to about a dozen news and lifestyle sites, including EliteDaily.com, which targets Gen Y-aged consumers and MadeMan.com, a site for guys.

Aksas says sharing the content free of charge with these sites has helped increase brand exposure and draw traffic to Sharpmen.com. The brands featured in the syndicated videos also pay an additional fee, which Aksas says is low, on a cost-per-thousand basis for Sharpmen.com to syndicate their brand video in these channels.

Operational efficiency

Daily Grommet handles customer service inquiries and returns on behalf of its sellers. Although she declined to reveal Daily Grommet's return rate, Domeniconi says video has brought it down. "Our credit card processor was absolutely blown away by how low our return rate is, and we credit video with that because consumers are getting a more layered view of the product," she says.

Ali at PulseTV also credits that retailer's video efforts for helping keep returns low. "Our return rates have always been very low, under 2%," she says. "We credit our customer service and how, when we have a more complex product, we try to show all aspects of it."

She says video has had a greater effect on the number of calls made to PulseTV's customer service line. She describes how, before the video push, the e-retailer sold several flashlight models that required consumers to remove the top and pull out a plastic insert before installing the batteries. It included this information on product detail pages, and with the shipped product. Still, customer service agents regularly received calls from consumers saying their flashlights didn't work.

Once PulseTV added a video to the product pages showing consumers that they had to remove the insert, calls about the issue became nearly non-existent. "People just don't like to read," Ali reasons. "I think it's the MTV mentality."

Like any operational area, web merchants at the forefront of video commerce work to contain costs. PulseTV, Daily Grommet and Sharpmen.com all host and stream video via YouTube. PulseTV and Daily Grommet both initially worked with online video hosting vendors and say they were pleased with their services, but they decided to move to YouTube because it provided enough of what they needed and was free to use.

PulseTV, which gradually increased its investment in video, has 22 employees in its offices, including one multimedia person in charge of video and graphics, one full-time editor and a video editor who works part-time. But even non-media people pitch in. "Everybody who is not camera shy goes on," Ali says.

The retailer first started recording video with a smartphone, then, as it saw results, invested in a better camera. An unused office became a studio. It added acoustical tiles to help audio come through more clearly, then painted the office to convey a more professional studio look. "We were really hesitant to spend any money at first, but now we are spending more and budgeting for more," Ali says. She declined to say how much.

Between setup, filming, editing and uploading, Ali says each video takes an average of four and a half hours of staff time to produce. That excludes the time it takes to write original web copy for each product, which the PulseTV team does first to familiarize themselves with the product.

Although the videos are largely unscripted, the team uses the information it learns from writing the product description to help it know what to talk about in the video. "We always do the web copy first so we understand the features, and playing with the product sometimes makes us think of different ways the product can be used, and then we use that when go and film," Ali says. "I feel better prepared to do the video after I've written the deal copy or read somebody else's."

Changing channels

Joyus.com, a year-and-a-half-old specialty e-retailer backed by nearly $8 million in venture funding, also makes video its primary selling point. The tagline on its home page reads: "Joyus is shopping that really speaks to you." And it does. A video automatically starts rolling when consumers arrive at Joyus.com, and when they navigate to any category page—or "channel" in Joyus lingo—such as beauty, home and lifestyle. Joyus videos feature hosts, marketed as experts in their category, so return customers see the same personalities over and over.

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