Manufacturers’ Web sites can bolster revenue by encouraging product sales. However, many of them leave would-be buyers confused and frustrated—they can’t readily locate retailers (online or otherwise) that actually stock the product they want to buy. SharpUSA, the U.S. Web site for Sharp Electronics Corp., added a simple, low-cost technology solution to remedy this situation. Putting the solution in place required the CIO to prove that the technology would be successful to garner the necessary executive board buy-in for the Web project.
The project has produced sales while increasing service to customers and vendors. And it has had the added benefit of bringing more attention from company executives to the site and its capability to contribute to the bottom line.
Sales channel interference = lost opportunities
Until recently, SharpUSA fell victim to the dilemma of sales channel interference, something Kent Allen, research director at Aberdeen Group, describes as fumbling the handoff. In doing so, manufacturers have “lost a customer, potentially for life,” he said. Exactly how many sales Sharp lost in the years prior to its move to better product-linking technology the company couldn’t say. However, Doug Topken, director of business integration at Sharp, said the company didn’t want to squander the leads it already possessed. Through market research, the company knew that half of the prospects researching products on SharpUSA’s Web site were likely to buy them within a month or less.
So in early 2002, the company set out to improve its conversion rate with a technology solution. Sharp could have hired HTML coders to update “buy” links so that they pointed buyers to product pages deep inside retailers’ Web sites. But competing staffing priorities made that undertaking unlikely. And Sharp had no guarantee that the static links would be accurate from one day to the next. “We wanted to go directly to where our products were featured,” said Carmine Salierno, Sharp Electronics’ CIO.
To identify a cost-effective automated tool, Sharp evaluated Ask Jeeves, Inc.'s Jeeves Purchase Advisor, CNET Network’s CNET Channel, NexTag, and others. Sharp settled on Channel Intelligence for its product value and prompt customer service. Service availability and redundancy issues were less of a concern, too, because Channel Intelligence uses the hosting and IP services of major player Qwest.
Channel Intelligence sold Sharp two services—Channel Buy Links and Product Pinpointer. Both are sold under an ASP arrangement and both send would-be buyers to an Internet page where they can purchase the in-stock product on retailers’ Web sites or, in the case of Product Pinpointer, in a physical store. Product Pinpointer also includes mapping technology that helps users locate a store near them. While dozens of dot-com retailers are linkable to the Channel Buy Links product, only Best Buy, Circuit City, CompUSA, and Sears stores have agreements to share real-time product in-store availability with Product Pinpointer.
Low cost, quick implementation
Manufacturers pay a monthly charge based on 25 percent of the manufacturer’s suggested retail price for every product they want linked in Channel Buy Links (with discounts on volume). Product Pinpointer costs $75 per SKU (stock keeping unit) per month, plus a $1,000 to $5,000 monthly charge to cover the cost of each store locator map called online.
Pilot helps gain wider funding
Getting executive board approval to move forward with Channel Intelligence products was not automatic. Sharp’s executive board, like many, had grown skeptical of allocating additional funds to the Web site. “Unfortunately in some cases you can’t get the senior management to see the value,” said Salierno. Knowing that unproven Internet technology can be an even tougher sell, Salierno proposed to pilot Channel Buy Links with six products to demonstrate its effectiveness. The pilot launched in May 2002, and once decision makers saw that dealers were getting direct leads, “they realized that now the Web site is really open for business,” said Topken.
Funding was approved, allowing Sharp to scale up the number of SKUs connected to the service. By October, Sharp had 200 products linked to the service, sending potential buyers directly to the product pages of 40 online retailers. In December, SharpUSA.com began offering customers the choice of viewing availability on a few products at physical retail stores via Channel Intelligence’s Product Pinpointer.
ROI and other gains
When it comes to computing ROI, Sharp has had to use a bit of creativity until Channel Intelligence can deliver actual sell-through data. Right now, Web-based reports allow Sharp to see how many leads it sent to retailers, but not the number of actual purchases. Of the 800,000 visitors who hit SharpUSA.com monthly since it launched the Buy Links service, 85,000 people have clicked “buy.” If only 10 percent of those people bought a product, Sharp’s modest investment (the company wouldn’t reveal how much it has spent on the service) may be paying for itself in those 8,500 sales.
There are other reasons to believe that the ROI question might not be worth answering. “It’s like saying, ‘What’s the ROI for keeping stores clean?’” said Allen. It’s simply a matter of doing the right thing to service customers and provide vendors better leads. The move to Channel Intelligence has also had another positive effect. It has brought more visibility to the site among senior executives at Sharp. “The objective for the Web site was kind of like a light bulb,” said Topken. “It was either on or off. This sort of project has contributed to senior management paying attention to the site.”