Web strategies vary for co-ops

The co-op model has always been focused on driving customers into dealer members’ stores. But as more consumers migrate their purchases online, the three largest hardware co-ops have taken different approaches to harnessing the power of the Web.

Do it Best Corp. launched its Web site and e-commerce department in 1999. Back then, it was simply a tool to help customers find their local store. But it didn’t take long for the co-op to realize there was a major selling advantage online.

In order to leverage all 4,100 Do it Best locations, the company made ordering online easy. Customers could log on to doitbest.com and have access to about 65,000 SKUs — the full line of merchandise from Do it Best — and the item would ship from one of eight distribution centers around the country. By entering the shipping information, the customer’s local Do it Best store would get the credit from the sale. In order to drive sales in the stores themselves, customers can choose to have the item shipped to the store, waiving shipping costs and get ting customers in the stores.

“We remind customers through out their online experience that they can avoid shipping charges by simply picking up the item at their local store through our ship-to store program. This drives customers into our stores, and many times converts that online shopper into an in-store customer as well,” said Joe Caldwell, e-commerce manager.

But members are fully capable of developing their own Web sites. Gillroy’s Got it Complete Hardware has found running its own site, gillroys.com, has helped drive the store name, while benefiting from the Do it Best e-commerce model. While the Flint, Mich.-based hardware chain hosts its own site, it still links to doitbest.com to complete purchases, eliminating the need to run its own warehouse.

“Even though we don’t handle it, we don’t stock it and we don’t have to inventory it, we get a significant amount of the profit margin from it,” said Kurt Zimmerman, of Gillroy’s e-commerce department. “You would need to have a massive warehouse to stock that many SKUs,” he added.

Zimmerman said that Do it Best provides all of the price updates, photos and product descriptions to them — all they need to do is update the server.

“It’s basically like having another store, but Do it Best makes it very easy,” he said.

Currently, 60% of Do it Best members participate in the e-commerce program to some degree, according to Tim Miller, VP marketing. “The key to our program is that flexibility, to let our members take an active or passive approach to e-commerce,” he said.

Ace Hardware’s e-commerce approach has some similarities to Do it Best. It too drives sales through the company Web site, acehardware.com. It also offers customers the same ship-to-store option to avoid paying shipping fees and gives the sale to the customer’s local Ace member store.

At Ace, the e-commerce system is intentionally kept as simple as possible, according to Mark Lowe, of the co-op’s digital interactive marketing team. According to Lowe, driving customers to one online site, and from there directing them to their local store has proven to be very successful. Lowe points to the growing trend of customers selecting the ship-to-store option.

“Overwhelmingly they choose to ship to store,” he said. From there, Ace has been able to track that 33% of ship-to-store customers make additional purchases once they are in the store.

According to Lowe, that drives to the heart of Ace’s e-commerce strategy: to capture the online sales that are out there while driving customers to the stores when ever possible.

In 2007, the company launched the My Local Ace feature on its Web site. “We took the store locator to the next level,” Lowe said. The feature not only gives customers a look at what local Ace dealers are near them, it provides contact information, store hours, current in-store promotions, a list of departments and a list of services the store provides. “We’re really trying to bring on a local feel,” he said.

True Value’s e-commerce model is currently in the works, said CEO Lyle Heidemann in a recent interview.

“We are seriously looking at an e-commerce site in 2010. This is something we believe we need to do to be competitive,” he told HCN in an interview at the co-op’s fall dealer conference in Salt Lake City.

Heidemann recognized that consumers are out there shopping on the Web, comparing prices, and ultimately “you have to be there,” he said.

At least one dealer member has been there for some time. Fusek’s Hardware, of Indianapolis, has its own Web site, fusekstruevalue.com, which it uses to drive customers into its store. But recently, it has expanded its online presence by launching an exclusively online store, Ron’s Home and Hardware (ronshomeandhardware.com).

For Steve Fusek, running an online business apart from the sister store was a necessity. For him, trying to run the brick and mortar while meeting online demands would have been a logistical nightmare. By separating the two businesses, he can run them exclusively — even warehousing his online stock at a different location — and still meet his customers’ demands.

And while Fusek was left to build his online business on his own, he said he does like the freedom that True Value grants its members to explore new ways of building their businesses.

“They aren’t necessarily helping me do it, but they’re not standing in my way either. Their attitude has always been ‘If you have a better way to do it, more power to you, do your thing,’” he said.

But as True Value looks to create Internet sales, it could easily find itself adopting Fusek’s online model.

“We’re blazing a bunch of new trails,” he said.

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Build Your own Facebook Store

Shopping search engine Sortprice.com expanded its merchant store application on the Facebook Platform to help retailers expand their e-commerce capabilities that can be used by the social network’s audience.

The free application, available to any Sortprice.com enhanced merchant with an existing Facebook account, works hand-in-hand with their product listing on Sortprice itself and allows them to build a virtual store right on Facebook. Merchants can have their full inventory available to Facebook users for shoppers to peruse and compare prices on, complete with photos and direct links to their own Web sites, according to Sortprice.

The tools give retailers complete control over the ‘look and feel’ of their stores, with dozens of choices for color schemes, an option to upload category images, and the ability to add a slogan to their page as well. Sortprice also included an extensive FAQ section to guide merchants through the process of configuring their stores while offering tips for promoting the application to internal and external audiences.

On the user side, Sortprice’s unique Drag & Drop feature for the merchant pages is now compatible across all web browsers, facilitating each user’s visit. Shoppers can now quickly and easily compile a “wish list” of desired items from a particular merchant’s store. These lists are viewable to all users and are the foundation for a truly interactive shopping experience. Visitors can comment on other users’ wish lists, indicate particular items that they “like”, and even invite friends and family to check out wish lists or specific products.

To learn more about the Facebook store application, visit http://www.sortprice.com/facebook_store

LG catching up fast in GSM market

SOUTH Korean mobile phone manufacturer, LG Mobile’s assessment is that India can overtake China and become its largest market in terms of size and demand for handsets in the near future. In the background of a sharp economic slowdown in the US and Europe, the company has identified India as a strategic market for investment for its GSM and IT verticals, its managing director Moon B Shin said during an interaction with ET.
How important is India for LG, especially with demand in developed countries such as the US slowing down? What are your plans for India in the current fiscal?

India is an important market for us due to the opportunities it presents. We have plans to launch more than 32 new models here, of which six will be touch phones, while many other models will be 3G-enabled and some of these will also be entry level phones. At present, we have about three touch phones and six 3G-enabled handsets already in the market and we plan to have about 10 models each in both these segments by the year-end. We are betting big on the touch screen segment and we are targeting sales of up to six lakh units  and a 10% market share in this space alone within the next six months.

What will be your investments in India this fiscal?

We will double our investment this year and the company as a whole will spend about Rs 400 crore on advertising this year. Additionally, we will invest Rs 200 crore in R&D to study market dynamics and consumer behaviour here. We are looking at increasing our headcount in our sales vertical to enhance our presence.

How many of the products you sell here are made here? How have your sales been so far?

Currently, we manufacture mobile phones at two units located in Pune and Greater Noida and these plants have a production capacity of three million units per year. About 70% of the production is exported while the rest is for domestic consumption. We sold about 2.4 million GSM handsets in India last year and we expect a 50% increase in sales this year.

Our institutional sales account for just 10% our total mobile sales.
Currently the Indian mobile handset market is dominated by some of your competitors.

How are you looking at improving your brand visibility here?

LG is rapidly gaining market share in the GSM market, despite being a late entrant. We are already the fifth-largest player in the segment. I believe our distribution line was poor earlier, but now we are reworking our strategy here. Based on the analysis of our marketing team, we are deploying 1,000 additional shop sales executives and we will be launching about 1,000 additional shop-inshop formats in rural and tier II cities. On the organised retail front, the overall channel coverage is at 42%.

India is an important market for us due to the opportunities it presents. We have plans to launch more than 32 new models here… We are betting big on the touch screen segment
MOON B SHIN

MANAGING DIRECTOR, LG

Mobile Micropayments Roll Out In Shanghai.

According to China Mobile’s Shanghai branch, its regulations related to micropayments made with mobile phones have been completed and consumers in Shanghai will soon be able to pay with mobile phones in McDonald’s and Starbucks.

China Mobile Shanghai said with a new SIM card that integrates the payment function, people in Shanghai can pay with their original mobile phones in the stores of China Mobile’s cooperative partners, including McDonald’s and Starbucks.

The new SIM cards are expected to realize volume production within two months. At the end of April or the beginning of May 2009, China Mobile Shanghai will invite a group of users to experience this new service first.

A representative from China Mobile Shanghai told local media that users can complete the small-scale payments by placing the mobile phones near the card reader. The costs for the change of a SIM card are between CNY50 and CNY100. The accounts of these new SIM cards are bound with the bank card or credit card accounts of users. Once the money in the SIM cards is used up, they can recharge by simply sending a short message.

Orange shop-in-shop heading for HMV stores.

Orange and HMV are teaming up to promote Orange products and services via store-in-store units in HMV stores.

Dedicated Orange ‘show and sell’ spaces will be situated in the entertainment retailer’s stores, with a focus on music, games and video mobile handsets and services.

The deal will extend Orange UK’s retail presence and contribute to taking the brand past the 400 high street stores landmark. It also underlines HMV’s growing interest in the mobile and digital marketplace as it continues to diversify its product mix and develop as a multi-channel brand.

A first wave of up to 15 concession stores will be rolled out from June 2009, with the HMV stores in Glasgow, Plymouth and Teesside earmarked as the first to incorporate an Orange offer. Up to 100 locations have been earmarked to take the store-in-store approach by Christmas.

“This deal marks the coming together of two of Britain’s biggest and most iconic high street brands,” Orange UK chief executive Tom Alexander. “Moving beyond mobile and into media and entertainment is a key part of our future, and joining forces with such an iconic and well-loved brand as HMV allows us to mark our clear intention in this area, while expanding our presence on the high street.

“HMV has been diversifying and extending its customer offer, which is increasingly becoming a multi-channel one with a growing emphasis on technology and new media,” says HMV chief executive Simon Fox. “I am delighted to welcome Orange into our stores – our brands reflect a shared passion for bringing entertainment content to life, and complement each other well.”

FreshDirect Will Limit Idling Time for Trucks.

FreshDirect, which uses 150 diesel-powered trucks to deliver groceries that customers order over the Internet, is outfitting its fleet with shutoff systems that will keep the trucks from idling longer than permitted by city law.

But a FreshDirect senior vice president said the upgrade would not affect the equipment that has led to occasional complaints about the company — a smaller motor that runs refrigeration equipment to keep the food fresh. The new equipment will shut off only the engine that powers the drive train. The two operate separately.

The state attorney general, Andrew M. Cuomo, announced Friday that his office and FreshDirect, based in Long Island City, Queens, had reached an agreement on installing the shutoff equipment after an investigation into consumer complaints that FreshDirect trucks were violating anti-idling laws.

A statement from Mr. Cuomo said the investigation documented at least 30 cases of illegal idling by FreshDirect trucks. Under state law, trucks and buses cannot idle for more than five minutes at a time. New York City limits idling time to three minutes, and in areas near schools, it is no more than 60 seconds.

FreshDirect, which averages 7,000 deliveries a day, has agreed to pay a $50,000 penalty for violating state and city anti-idling laws, the statement said. It said the penalty had been $120,000, but $70,000 had been suspended contingent on the company’s compliance.

Mr. Cuomo said that besides affecting public health and the environment, idling wastes fuel: an average of 30,000 gallons of gasoline and 20,000 gallons of diesel fuel in the city every day.

Jim Moore, FreshDirect’s senior vice president for business affairs, said the company has had experience with engine-control technology. It has the equipment on 20 to 25 trucks, the newest in its fleet. The engine turns off if the vehicle remains in park for more than three minutes.

The company promised that any new trucks would come with the equipment.

Mr. Moore said the company had received complaints about idling since its trucks hit the streets in 2002. He said the company had looked into those complaints and concluded that they stemmed from noise made by the refrigeration engines. Those are not covered by the agreement with Mr. Cuomo.

Grabbit Gets Bigger, Brings in M-payments.

Grabbit has tied up with Atom Technologies for a mobile payments platform. Shoppers will now be able to purchase clothes, jewelry, etc. from Grabbit vending machines and make payments via credit cards by dialing a toll-free number. Grabbit said the service will first be launched in Mumbai and Delhi, followed by other ‘A’ cities.

The partnership between Grabbit and Atom will cover 400 vending outlets across the country (including 40 metro stations).
“We are confident that our customers will welcome this idea, because ultimately it is a matter of convenience for them. This feature will be available for all three of our machines i.e. exclusive brand/product machines, beverage, and snack/food. We are confident that the addition of m-payments facility will also speed up the adoption and usage of vending machines in India for high value products,” said M. D. Nayar, director (vending) of Grabbit.

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