 |
| |
Amazon
Outbids Buy.com for Egghead Customers
By Keith Newman, Editor-in-Chief
1. Up the River. Amazon.com recently
outbid Buy.com for Egghead’s customer list. They offered $6.1
m against Buy.com’s $6 m. If the list is so valuable, why did
Egghead go down the tubes? Buy.com’s top guy Scott Blum was looking
for unique ways to “buy” customers. He might try offering
value and service. We anticipate Amazon may face a court challenge
on this one. No matter, they’ll probably use the list effectively
10-20 times before our judicial system ponders its recourse. For Buy.com,
the struggle continues.
2. Virtual store. Word has it Amazon’s online PC Store
is beating its internal forecast. How this will play out in online
PC retail remains to be seen. Profitability and debt issues notwithstanding,
I predict they will find some partners as they have done in other
categories (hint) but from where we sit, Amazon’s combination
of tenacity and customer savvy should not be underestimated.
3. Safe & sound for the Holidays. Early season winners
include security products, MP3, online/game boxes and software. Mac
software is having a surprising resurgence with some cool titles.
Slow: PDAs, Linux and desktops.
4. From our ‘Sorry-we-hadn’t-noticed’ department.
Toshiba announced it will depart the U.S. desktop PC market. This
probably means that there is a customer somewhere being abandoned.
5. Good guys get better. Ken Weller, the top gun at Good Guys
has recruited retail veteran Peter G. Hanelt as COO. Cathy A. Stauffer
has been promoted to EVP of merchandising and advertising. My question:
Who’s going to teach in-store salespeople how to close like Weller?
If they figure this piece out they could hit $1B next year.
6. The wild one. I predict that after The Family pulls Carly
away from the Compaq altar, HP will wait a year for respectful mourning,
then announce it is abandoning the PC business altogether, perhaps
selling it to Compaq as opposed to paying the $500M+ merger cancellation
fee.
7. Spirits of the season. My family loves to shop. Though it
seems they’re having a tough time of it lately. One relative
went to the Disney site and tried to make a buy. Result: shopping
cart abandoned in frustration. They moved over to buy.com. Result:
abandoned cart and increased frustration. They hop in the car and
go to the local mall. They can’t find a parking space. With experiences
like this pervading the Holidays, I predict a big month for distilled
spirits.
8. Unanswered questions. If a cart is lost in cyberspace, where
does it go? Does a virtually homeless person take it? If a shopper
clicks off from a cyberstore, is it really a lost sale? Does another
store find it?
9. The Odyssey of cyberspace. – 2001 – An Odyssey
far spacier than even Arthur Clarke could’ve ever imagined or
Stanley Kubrick would have directed.
10. The happiest to you. Thanks to all for your wonderful support
of ChannelMedia. We wish you a Happy Holiday and a wealthy New Year.
May all your markdowns be miniscule.
Keith Newman is Editor-in-Chief of Channel Media and President of
Newman Media – a services firm focused on helping companies strengthen
customer and partner relationships through the exchange of professionally
edited information services.
For more info contact: keithn@telocity.com.
(top of page)
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Best
Buy’s Shopping Spree Continues
By Keith Newman, Editor-in-Chief
Best Buy’s Laurie Bauer,
director of public relations, responded to some ChannelMedia
questions regarding recent moves by the powerful electronics retailer
related to the company’s Pacman-like tendency to eat everything
in sight. “The acquisition of Future Shop is a valuable
partnership for both companies - it helps accelerate Best Buy's goal
of becoming a global leader in technology and entertainment, while
at the same time, it helps Future Shop realize its goal of growth
and expansion throughout Canada. Future Shop will operate as a wholly
owned subsidiary, much like Best Buy's previous acquisitions of Musicland
and Magnolia Hi-Fi. Kevin Layden will continue as Future Shop president,
reporting to Brad Anderson, vice chairman. And regarding their PC
operations, Bauer added, “Both Future Shop and Best Buy have
developed PC technicians in the stores to provide total solutions
that enhance our customers' experience. As we are striving to make
continuous improvements to our Services, Future Shop provides us with
an opportunity to build on the synergies of both companies.”
Apparently, Best Buy is clicking on all sleighs this season. The company
reported sales of $4.76 billion for its fiscal third quarter ending
Dec. 1, up 27% from last year’s comp. The increase was driven
by a gain in comparable store sales of 1.6% and the addition of 65
stores in the past 12 months.
Entertainment software sales posted the most impressive gains in the
quarter, driven by sales of video game hardware and software as well
as DVD movies. The launch of two new gaming platforms (Microsoft's
XBox and Nintendo's Gamecube) was among highlights. Digital products
- including the cameras and TVs plus, DVD hardware and software and
camcorders and wireless communications devices - comprised 17% of
3Q sales, up from 11% last year. Best Buy introduced broadband cable
and XM Radio during the quarter. Home office sales declined overall,
although sales of wireless communications and notebook computers increased.
Desktop computers, which had declined significantly in the past three
quarters, improved but remained soft. The launch of Microsoft XP,
contributed to sales of computers and peripherals.
Modest Guys. Good Guys’ reports were a bit more modest
but improved. The CE chain recorded a decline of 4% to $198 million
from $206.9 million for the same period last year. Comp store sales
for the quarter declined 6% after increasing 10% in the same period
last year. Quarterly sales were an improvement over the previous six
months when net sales declined 7% and comparable store sales declined
8%.
"While September sales were significantly impacted by the terrorist
attacks and subsequent decline in consumer confidence, Good Guys saw
a solid increase in in-store traffic and sales during October and
November that culminated in a Thanksgiving weekend that exceeded expectations,"
said Kenneth R. Weller, president and CEO. "By continuing to
focus on newer, more fully featured higher-end products and improving
the quality and consistency of the in-store experience, Good Guys
will continue to capture wallet-share among the West Coast's discerning
customers."
Good Guys' sales mix, by major product category, was:
| Quarter
Ended |
Nov.
30, 2000 |
Nov.
30, 2001 |
 |
|
|
| Video |
55% |
52% |
|
|
|
| Audio |
17% |
18% |
|
|
|
| Mobile
& Wireless |
12% |
13% |
|
|
|
| Other |
16% |
17% |
|
A Special
in Register One. Dave Karraker, BlueLight.com’s
Communications VP, had something to announce over the loud speaker.
Online shopping over the long Thanksgiving weekend was up 45% over
the same weekend last year even though traffic remained flat.
- Top categories:
Home Electronics, Toys, Home Entertainment and Martha Stewart
Everyday;
- Top products
: Nintendo Game Cube, Sony Playstation 2, GameBoy Advance, Grinch
& Shrek videos/DVD, DVD Players, Nokia Cell Phones, American
Flags, Leap Frog's Leap Pad and Martha Stewart Everyday
The 45% increase
exceeds BlueLight.com's original forecast of a 10-20%
They consider flat traffic good news considering the slowing in the
general economy and the vast number of new online shoppers at this
time last year, who apparently returned as season-shopping veterans
again this year. It also indicates that these shoppers are spending
more online than they did last year.
A Sweeter Tweeter announced results for its 4th quarter and fiscal
year ended Sept. 30. For the quarter, total revenue increased 55.2%
to $150.3 million from $96.9 million in the same period last year.
Comparable store sales decreased by 1.9%, excluding the Sound Advice,
Audio Video Systems, Big Screen City and Douglas TV chains. Net income
for the quarter decreased 76.0% to $0.8 million from $3.5 million
for the same period last year. Diluted earnings per share decreased
to $0.04 from $0.18 for the same period last year. The Company wrote
down its investment in Cyberian Outpost to market value that resulted
in a charge of $1.2 million or $0.05 per share on a diluted basis
for the quarter. Income from operations, as a percentage of total
revenue, decreased to 1.8%, primarily due to a decrease in gross margin
which decreased to 36.3% from 38.0%. Excluding the chains, comparable
store sales for the year increased .6%. President Jeffrey Stone stated,
"Given the nature of the second half of the year and the economic
and world events that occurred in our fourth quarter, we feel pretty
good about the year's profitability." Joe McGuire, the Company's
CFO stated, "Our Company continues to see significant acceptance
by consumers of digital technology based products. All digital products
as a percentage of our product mix grew to 43.3% of total revenue
from 31.3% last year."
Ritz going crackers. Ritz Interactive, parent company of RitzCamera.com,
has acquired one of its largest competitors in online photographic
retail, WolfCamera.com. With the addition to its impressive
network of Web sites, Ritz Interactive now boasts ownership of the
number one and two photographic specialty e-tail destinations. The
Ritz Interactive portfolio also includes several other photo-related
Internet properties, including RitzPIX.com, and Photography.com.
"We have solidified our position as the undisputed leader in
the photographic e-commerce space," said Fred H. Lerner, president
and CEO of Irvine, Calif.-based Ritz Interactive. Founded in
April of 1999 as phobo.com, the company changed its name to Ritz Interactive
in August to leverage brand recognition of 1,350 Ritz Camera Centers
and Wolf Camera stores.
Doing right for kids. EBay and the Consumer Electronics
Association have announced "Bids to Help Kids," an online
charity event that gives gadget lovers the chance to purchase some
of the latest and most "in demand" consumer electronics
products. Handspring has donated the first Treo communicator.
It is available on eBay Dec. 10-20. Treo, is a new line of communicator
products from Handspring that integrates a mobile phone, wireless
data, like email, short messaging and Internet browsing, and a Palm
OS organizer into one compact device. Proceeds will help children.
Roxio music. Roxio, developer of the Easy CD Creator software
for burning music, announced it will acquire MGI Software,
a provider of photo and video editing software, in an all-stock transaction
valued at $32.8 million. According to Roxio CEO Chris Gorog, "Digital
photography is moving into mainstream adoption and we believe digital
video is the next area of high growth." Roxio predicts MGI will
contribute $25 million in 2003.
Go Passing. Joseph Naughton, Chairman of Go Online Networks
announced that 48-week revenues for Go Online exceeded $5.5 million.
"During the month of October and November our Computer Refurbishing
Division refurbished and made ready for sale over 2,150 units compared
with 850 units in August. Demand remains strong across the board,"
said Naughton. "Our sales figures for the past eight weeks were
exceptional. During a period of uncertainty where most of the tech
sector is experiencing a downtrend, our sales exceeded projections.”
Stapling an Eagle. Staples recently tapped Jevin S.
Eagle, currently a partner with the consulting firm McKinsey &
Co., Inc., as senior vice president of strategy.
Atomz, the leading provider of Web-native content management
and site search applications for enterprise-class Web sites tapped
Martin Mazner as vice president of Sales and Marketing. Mazner's appointment
helps mark three-year-old Atomz's transition from a highly regarded
early-stage enterprise to a mature provider of solutions increasingly
used by departments and divisions of Fortune 500 and government enterprises.
He has held executive marketing and sales positions in Internet publishing
and e-commerce, software marketing, media publishing, and advertising
-- working with companies such as Ziff-Davis Publishing Company, Ashton-Tate,
ComputerWare and the ForeFront Group.
A Hart for customers. Best Buy named Tony Hart Vice President
of Enterprise Customer Relationship Management. In this newly created
position, Hart will be responsible for developing and driving the
Enterprise CRM strategy across all Best Buy business units Prior to
joining Best Buy, Hart was an executive strategist with Accenture
in the firm's Customer Relationship Management service line.
RichSolutions, Inc. a leading provider of ePayment Web Services
and developer of RichPayments.NET, has launched the Electronic Check
Capture and Retrieval Service (ECCRS), a paperless check processing
system that securely automates merchant deposits.
(top of page)
|
Sponsor: The
Retail Channel Community Services Board
Looking to hire someone in a channel-related position (i.e. Buyer,
Sales Manager)? Promoting an event? Have a service that you want to
list? Other comments you want to share with the Channel Community?
Send the information, as brief as possible to keithn@telocity.com. |
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| |
Bluetooth
Products Heading to U.S. Retail Market
By
ChannelMedia Staff
A surprising thing happened at the Bluetooth
Developers Conference in San Francisco earlier this month. Companies
were talking about products. Not software and protocol stacks and
RF chips and silicon, but computers and headsets and cell phones,
all of the stuff Bluetooth was supposed to enable.
While the component portion of the wireless technology held center
stage, hardware companies were showing their wares and talking about
finally bringing them into the U.S. market.
Bluetooth is a wireless technology with a 15-foot range designed to
replace wires and create what promoters call 'personal area networks'
where multiple devices such as cell phones, PDAs and notebook computers
can all be in contact with each other. Due to compatibility problems
the technology has never exploded the way some expected it to. But
things are looking up.
While most products are not yet available in the US, a growing number
have appeared first in Japan and now in Europe. It is expected many
will be released here early in Q1 2002.
IBM has said its A30 notebooks will feature Bluetooth, and it already
sells a module to provide Bluetooth functionality for its UltraPad
line. Sony has incorporated it in several of its popular Vaio lines
and Compaq supports it in both its EVO N400 notebook and in its iPaq.
Fujitsu and NEC also have Bluetooth capable notebooks.
Printer king Hewlett-Packard has started building it into its printers
notably in select DeskJet offerings. Then there are the phones, Ericsson
is reportedly making 300,000 Bluetooth enabled phones a month, and
at that rate the technology could quickly reach critical mass. LG
Electronics is designing it into a CDMA phone.
Then there are the add-ons, the products that give Bluetooth capabilities
to existing products. 3Com has a range of PC Cards, USB dongles and
add-ons. Fujitsu has both PC Cards and Flash Cards while TDK has adapters
and dongles as well.
But add-ons are not the key, experts say, even though supporting legacy
equipment will be big. The real jackpot will be first time users who
buy Bluetooth products because they are significantly easier and simpler
to use. Once users understand that, they are expected to add Bluetooth
to their existing products.
The add-on market will get an additional boost now that Microsoft
has caved in and said that by next year Windows XP will support Bluetooth,
bringing native support to the desktop and beyond.
While a customer cannot buy most of these products at the local retailer
today, they probably soon will. Most companies indicated they have
plans to enter the U.S. market. (top
of page)
|
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| |
Retail
Sales Stripping Chipmaker Shelves
By ChannelMedia Staff
All the year-end price cuts, bundles
and promotions that have paid off at retail leave Intel and AMD with
something they are unaccustomed to--a completely sold out inventory.
Both companies report they’ve sold out all their respective flagship
lines--Athlon and Pentium 4. AMD reports sales up 10% over last quarter,
but it will still see red on the bottom line. A recent Gartner Dataquest
market report shows the chip company posted strong year-to-year market
share growth in all geographical areas. The report showed that in
the third quarter AMD had a 27% share of the overall US market, compared
to only 17% for the same quarter last year. It has been helped by
offering a much wider selection including processors for notebooks,
two segments that in the past it had left to rival Intel.
Intel is experiencing a 5% growth, but from a much greater base than
AMD and of course, holds the lion’s share of the world market.
Shortages are expected to be only temporary. Intel, primarily low
on its 1.5Ghz Pentium 4 processors, said they’ll meet demand
in Q1 2002. Ironic that this coincides with the expected rollout of
.13-micron 2GHz and 2.2GHz Pentium 4 processors in January, quickly
followed by an expected price cut. The two new processors, the first
in its Northwood family, are expected to be able to better compete
with AMD's Athlon XPs, which have bested Intel in traditional comparative
tests.
Aside from shortages, another issue is if the two companies pushed
so hard that they did two quarters sales in one, in affect killing
sales in Q1, traditionally the slowest, to bolster current Q4 results.
While there is no real way to judge, Intel's CFO Andy Bryant said
the company expects to see a seasonally normal first quarter. He said
that while there is always the danger of stealing sales from one quarter
to another, all key indicators tell the company it’s not the
case right now.
It’s rumored Intel didn’t debut its Northwood chips in the
current quarter so it could offer something fresh for customers who
held off buying during the holiday season.
Market analysts see AMD’s position as solid. With sales up 10
points over expectations, they’re seen filling a void created
by the Pentium shortage. Computer makers are feeling more confident
in using them interchangeably with Intel's chips. The company is not
expected to revamp its lineup anytime soon, having just unveiled the
Athlon XP family and it is still ramping up production at its Dresden
facility. (top
of page)
|
Job
Opportunity: Product Managers Needed
Daisytek, distributor of computer supplies in Dallas, needs
Product Managers in several categories. Min 5 - 10 years of
channel experience.
Contact: sreedy@daisytek.com |
|
| |
Shape
Up or Ship Off
By Todd Smith, ARS Channels Analyst
How should an online retailer charge
for shipping and handling? Getting a product from point A to B efficiently
is a tough chore with real bottom line implications. If you visibly
profit from shipping, you risk losing credibility with customers.
If you don’t charge, you risk losses as fulfillment costs eat
margins. Many online retailers argue that part of their value proposition
is the convenience of delivering goods to customer doorsteps. But
online shoppers, conditioned to freebies from the “Dot-bomb
Era,” harbor the view that they’re entitled to free shipping.
Online retailers face the challenge of un-spoiling customers without
losing them.
The Golden Rule is to be truthful. Make it clear that shipping and
handling fees are not a revenue stream. Buyers ship packages themselves
and know the relative costs and sense when they’re being ripped
off. Research shows customers cite excessive shipping charges as
the #1 reason they abandon online shopping carts. Why pay $10 in
shipping fees for a $30 order when you can easily purchase it in
a nearby store? When buyers sense fulfillment gouging, they usually
take their business elsewhere.
To illustrate the impact shipping costs can have on online pricing,
ARS regularly conducts its E-tail Price Comparison Review comparing
“list” prices with the actual costs after taxes and shipping.
This month’s report reveals how the low cost source changes
when you add on these costs. We found NECX Direct, 4Sure.com, and
Buy.com placed second, third, and fourth respectively in List Price
Competitiveness. That was until we examined the costs after completing
the checkout process. NECX dropped from 2nd place to 6th with list
prices 8.6 percent below average to 1.5 percent above when we added
in shipping and California sales tax. Similarly, 4Sure.com’s
list prices were 4.9 percent below average before check out. After,
it climbed to 3.2 percent above. For the most part, pure plays were
more price-competitive after factoring in tax and shipping.
| |
Overall
Price
Competitiveness
Rank |
Overall
Price
Competitiveness |
List
Price
Competitiveness
Rank |
List
Price
Competitiveness |
|
|
|
|
|
| Dell.com |
1 |
-16.9% |
1 |
-12.1% |
|
|
|
|
|
| PC
Connection |
2 |
-3.4% |
5 |
-1.8% |
|
|
|
|
|
| Amazon.com |
3 |
-2.1% |
7 |
2.0% |
|
|
|
|
|
| Insight
Enterprises |
4 |
-2.0% |
8 |
2.5% |
|
|
|
|
|
| Micro
Warehouse |
5 |
-0.3% |
6 |
0.0% |
|
|
|
|
|
| NECX |
6 |
1.5% |
2 |
-8.6% |
|
|
|
|
|
| 4Sure.com |
7 |
3.2% |
3 |
-4.9% |
|
|
|
|
|
| CDW |
8 |
4.1% |
9 |
3.0% |
|
|
|
|
|
| Buy.com |
9 |
4.1% |
4 |
-2.9% |
|
|
|
|
|
| PCMall |
10 |
6.5% |
10 |
3.5% |
|
|
|
|
|
| Zones |
11 |
7.1% |
12 |
6.7% |
|
|
|
|
|
| Outpost.com |
12 |
8.6% |
11 |
4.8% |
|
This fluctuation
can do more than just force a customer to abandon a cart. It can scare
him or her off for good. To reduce the risk of losing customers, e-tailers
must be up front about their shipping rates. How? One way is to add
ZIP-code calculators that show customers geographic shipping rates
before they have to submit personal information. This is one of many
ways resellers can extend value while earning loyalty. E-tailers who
recognize the vital importance of shipping cost have a better chance
to shape up before too many customers ship off.
As ARS Channels Analyst at ARS, Todd Smith tracks both the e-commerce
and retail channels for the PC industry, providing research and analysis
on trends, promotions, transactions, sales results, business programs,
new players, and key product categories as they enter the market.
ARS, Inc. is a La Jolla, California-based business-to-business Competitive
Market Intelligence Company specializing in the daily tracking and
analyzing of the e-commerce, PC, and Networking markets.
Contact: Todd Smith, tsmith@ars1.com,
858-729-5379 (top
of page)
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Windows
XP Won't Rescue PC Sales
By Michael Silver and Charles Smulders
Event: Microsoft officially
launched Windows XP in October. Microsoft and its partners will
likely spend $500 million on advertising and promotion.
First Take: Consumers will likely pick up Windows XP faster
than enterprises will and the introduction will do little to realize
the PC industry’s hopes that it will lift sales dramatically.
Gartner believes the marketing hype surrounding the launch will
not do enough to lift PC sales noticeably in 4Q01. Structural problems
— most important market saturation and economics — will
determine growth rates to a greater extent. Gartner Dataquest forecasts
that worldwide PC shipments in 4Q01 will likely decline by 13.2
percent compared to 4Q00. For 2001, worldwide PC shipments will
likely decline by 6.6 percent compared to 2000.
Commercial Uptake:
- Windows XP
Professional will likely have little uptake in new commercial
PCs in 2001 because of testing and preparation cycles, but a modest
uptake will occur in 2002, reaching 16% of new commercial PCs.
- Windows
2000 Professional will lead in 2002, being loaded on 41% of new
business PCs.
- Many
enterprises still not prepared for Windows 2000 technology will
continue to use Windows 9x and NT Workstation v.4.0 on new PCs,
with 41% of new commercial PCs running legacy OSs in 2002.
- Although
Windows 2000 technology (which takes in Windows XP) will reach
half the commercial PC installed base by the end of 2003, most
will continue to use Windows 9x through 2002 (57%, down from 80%
of the installed base in 2000).
For
more details contact michael.silver@gartner.com
or charles.smulders@gartner.com.
(top
of page)
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Hug
Your Customers!
By
Scott Reedy
Everyone talks about treating customers
well. Some actually make an effort. I go further. I give my best
customers hugs. Really. My customers are actually suppliers and
over the years I've learned that the best way to build and maintain
relationships is through direct, personal interaction. I put on
a semi-annual event for them and have found it to be the wisest
of my marketing expenditures. My experience shows that the ideal
mix of time is half cooperative learning and half just plain fun
and networking.
So far, I've produced about a dozen of these events and have learned
a few key points on how to ensure success and what to avoid.
A few tips:
- Timing
is important. Spring and fall tend to be best. Avoid colliding
with Trade Shows and other events, especially those events that
your clients typicaly attend. ie. Comdex, CES, RetailVision etc.
- Two's
the limit. Events lasting no more than two days produce the
best results and I've found Wednesday evening to Friday afternoon
works best. On Wednesday I would normally have a reception or
cocktails for those who have already arrived. I usually let people
make their own dinner plans but make sure that I have a staff
member accompany key customers. Thursday night is for fun. Friday--don't
start too early--spend 2-3 hours giving a business overview then
allow time for "break-out" meetings. Wrap up by 3 pm
so everyone can get on planes back home. Weekend events need to
include spouses and are costlier and less popular.
- Factor
in fun. Have one day of pure fun and socializing. Include
fun events, but remember-- not everyone plays golf. When we did
our events at Egghead.com, we set up spa and downtown getaways.
- Get
Sponsors. I would limit it to one or two. One of my favorite
sponsors in the past, ServiceNet http://www.servicenetdirect.com/partners.html
(thanks Greg), would always help out in my events. But I guarantee
he made several great connections that lead to business down the
road. Don't expect sponsors to offset all your costs, but the
subsidies do help.
- Cover
the ground. Pay for everything except air travel, which can
be a killer cost. People seem to understand this if they have
advance notice. General rule of thumb: budget $500 per person
and $250 per staff member.
- Hire
professionals. Their experience is worth the investment. They'll
manage dozens of little details that less experienced people may
overlook. Plus the pros often earn back their fees in negotiating
with hotels and vendors. Count on spending about 10 percent of
your budget on them.
Try
it and you will see the results in loyalty and friendship that build
truly great business relationships. The cost for hosting 100 key
customers is $30K - 50K, excluding airfare but I guarantee the relationships
you form will be priceless.
Scott Reedy is an Independent Channel Consultant. With over 15 years
in the computer channel, he has had tenure at several companies
including Apple Computer, Ingram Micro, Multiple Zones, and Onsale
/ Egghead.com.
Contact: scottreedy@hotmail.com
(top
of page)
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|
| |
Get
Rich by Asking Customers
By Steve Cross, The Cross Channel Group, Inc
Want to know the best way to increase
company value? Get as close to your customer as you can. Anticipate
changes in his or her priorities. You’ll be moving through new
windows of opportunity before your competitors even know they’re
open. They’ll end up in the weak position of staring at you from
behind.
Last month, I shared with ChannelMedia readers how traditional retail
customers evolved into catalog customers, then Internet customers
and how Retailers who saw the evolution of customer priorities benefited
the most. That’s an example of monitoring customer priorities
in technology. You find examples everywhere.
In the steel industry during the 90s, tiny Nucor developed a deeper
understanding of the customer’s primary need for lighter materials.
They responded by being the first to produce aluminum, graphite, and
even ceramics. Nucor beat the big steel guys with new products and
pricing. As a result, by 1995, tiny Nucor’s market valuation
was higher than US Steel’s!
There are tools, mechanisms, and processes to get closer to the customers;
like Dynamic FAQs to see what the customer is thinking, or on-line
surveys to gauge their reactions to your plans. If you use them faster
and better than your competitors, you’ll win. Does anyone remember
Quarterdeck? Several years ago, they launched a new software product
called CleanSweep. The software utility was 5th into a crowded market
dominated by Uninstaller. Somehow, they captured the top position
within a year and held it for years. It’s still a contender today,
as Symantec’s CleanSweep. Was it luck? Not a chance. Best product?
Debatable. What I do know is that they understood their market and
customer better than the other guys.
Quarterdeck’s marketing VP at the time was Brad Peppard, a believer
in market testing. Brad’s team tested every facet of the product
on real customers: the name, tag lines, box copy, fonts, font sizes,
box colors, pricing, EVERYTHING! When they shipped, Brad’s team
was confident they had a winner, and they were right. The product
leaped into the hands of the customers. Maybe CleanSweep wasn’t
the best uninstaller, but it was unquestionably the one with the best
marketing because it got closest to the customer.
These days we hear lots of excuses about why people can’t survey
and test customers. None are valid. Anyone can accomplish what Brad
Peppard and Quarterdeck did back in 1994 by using online surveys.
You don’t need expensive focus groups. You can quickly, cheaply,
and effectively establish your product before it even ships. How many
are using advanced tools like this, even though they’ve been
around for years? Not many, I’ll bet.
Next time I’ll examine more ways to get closer to your customer
to anticipate his or her changing priorities.
Steve Cross is a leading consultant specializing in building value
for high tech companies. He is best known as former Vice President
of Sales at Connectix during their turnaround from under $1 million
to over $70 million in annual revenue from 1993-1997. His clients
have included Pinnacle Systems, Visioneer, Dazzle, Network ICE, Margi,
Aladdin, Outpost.com, and many others.
Contact: steve@crosschannel.com
408-528-7211 (top
of page)
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Old
Soldier Welcomes ChannelMedia
By Paul Terrell
Old Soldiers never die, they just stray
away. Welcome back Keith Newman. Good luck with ChannelMedia, from
one old retail soldier to another. We have missed Computer Retail
Week’s tidbits telling us what’s new, and who has gone where,
or scoops on the next killer app. Too long missed is the news and
the gossip surrounding the news, impacting my life as a computer retailer.
Thanks for the research and analysis of my competition and the looming
booms and busts of in technology.
As a retailer, I didn’t have the time to find this stuff out
without you. Mine was to do or die at retail’s breakneck speeds
and you alerted me to each new S-turn in the road. I too am an old
soldier who strayed from retail. I founded the first computer retail
store The Byte Shop. After three years I left to build a better PC,
which I would sell through my own stores and maybe others. My oft-forgotten
Exidy Sorcerer Computer was born at the Long Beach computer Show and
was the first PC designed for retail. At the same show professional
technology distribution began with Loraine Mecca’s Micro D which
over the years merged with nearly all of its successful competitors
to become today’s Ingram Micro.
We need a channel of our own because our products are like no others
in retail. Our storage drives and software, computer games and peripherals
are constantly changing the playing field in retail. While traditional
retail is about stability and seasonal predictability, computer retail
is about change, constant, disruptive change. That’s why Keith,
we of the Old Guard are glad to see you back, standing guard in these
tremulous times of fear, uncertainty and doubt. Your understanding
of our history will help you have the wisdom of what you choose as
information for us to live on. ChannelMedia, I look forward to your
insights on channel. I look forward to sharing in future publications
my insights and personal experiences.
Paul Terrell started his career working for IBM San Jose in 1966 for
90 days. Fresh from the US Air Force he saw too many similarities
to remain in their employ. After founding the first chain of computer
stores, Byte Shop, in 1975 he went on to create nine more silicon
valley start-ups supporting the personal computer retail channel.
Contact: Paul Terrell at pterrell@vendorbase.com.
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Make
the Most of your Retail Displays
By Carolyn Nolan
It’s the year’s busiest season,
and you’ve just committed some serious dollars (at least $100
per store.) toward a semi-permanent display. You don’t want to
merely justify the expense, you want to blow the product out the doors.
How do you make this happen?
1. Buy right. Make certain your buyer has enough for replacement
stock. If you succeed, goods will move and need to be refilled. Once
a display looks over half empty it needs to be either replenished
or it will be relegated to the dumpster.
2. Work with the best. Choose a POP manufacturer who really
knows retail and reads your lips when you say, “semi-permanent.”
A display lasts on the floor only as long as its customer appeal.
3. Pay attention to logistics. A Merchandising Company specializes
in the logistics of coordinating shipments with in-store personal
visits. A POP company specializes in design and production. One of
the biggest pitfalls is that a rep goes to a store to meet a display
shipped by the POP company, and the display is not there. You’ve
just paid for absolutely nothing of value. When possible, ship your
display to the Merchandising Company’s field reps and have them
install it in the stores. This will guarantee compliance in the assembly.
Another option—ship it to your store but mark very clearly that
it is to be held for assembly by the merchandising company.
4. Use the pros. Don’t use in-store retail staff to assemble
your display. Hopefully they’re too busy making sales anyway.
Select a Merchandising Company that has its own employees--not contractors.
This is important with display assembly because a great deal of success
depends upon the relationship that the reps have in the stores and
you usually lose continuity when contractors are used.
5. Follow up is vital. Make sure to hire merchandisers who
come back often enough to keep the display full and pricing current.
Make sure that the firm expedites reporting so that you immediately
know of low stock situations and can get orders placed immediately.
This way, during the next visit, there will be product waiting at
the store.
Carolyn Nolan is Director of Strategic Marketing for Brann NRS, a
National Merchandising Organization that services retail stores.
Contact: Carolyn Nolan at (800) 432-4399 x2798 or email: cnolan@brann-nrs.com.
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The Channel Access Company. For information on expanding your distribution
options, visit Global Marketing Partners at www.globalwrx.com
or call 800-661-9715.
Resellers, check out these hot products
now available at Ingram Micro!
For more information, click
on the product picture below. |
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