Richard Thalheimer, the ever-restless founder of The Sharper Image, decided a few years ago to expand the company’s universe and makegreater use of all possible sales channels.
The results are exactly what you’d expect of the firm that sells toys for big boys and girls. For one thing, The Sharper Image launched a state-of-the-art Web site, on which it is now conducting auctions – an unusual activity for a traditional cataloger.
“The auction site is part of our Internet strategy to broaden our customer base,” says Tracy Wan, the former executive vice president and chief financial officer, who was named president and chief operating officer of the firm in April. “It allows people to obtain products at less than retail prices.”
The auctions are similar to those conducted by eBay and other auction sites, except that nearly all the items are from The Sharper Image. Results, which exceed expectations, prove that customers are willing to work harder for a product if it means they can get a better price.
Though Wan is reluctant to give numbers on the auctions, she is willing to disclose Web results overall.
The Sharper Image began selling online via AOL roughly five years ago. It introduced its own e-commerce site (www.sharperimage.com) in 1995, earning $500,000 from online sales in 1995. The start-up cost was $2 million.
Web sales hit $5 million last year, representing some 2% of the company’s total revenue for fiscal 1998 (up from less than three-quarters of 1% during fiscal 1997).
Moreover, 65% of those Web customers are new to the company. Far from cannibalizing the list of active catalog buyers, the Web site has brought more customers to the house file. The best online customers often buy from both the stores and the catalog.
In a separate but related development, the firm has added more proprietary items to its product mix, attracting a greater number of women. In 1998, Thalheimer told DIRECT that these “private label” offerings accounted for less than 15% of the catalog’s merchandise; the percentage is now up to almost 50%.
One such female-friendly item is a silent, easy-to-clean air purifier. “It’s a technological product, but it has a huge application for home use. That makes it attractive to the woman consumer,” says Wan.
This is not the firm’s first attempt to reach women; it tested a women’s catalog, Sharper Image Spa, several years ago. Like the short-lived Home catalog, however, it had limited success.
“There’s a perception that The Sharper Image has a very male-dominant product mix,” Wan says. “But that has changed over the past few years.”
When it comes to channels, the sexes tend to revert to their traditional roles: Men are more likely to buy online, while women prefer to shop using the toll-free number.
The new products – things “you can’t find on 10 other Web sites,” as Wan describes them – often figure in The Sharper Image’s new radio campaign.
“We launched the radio campaign to reach new audiences,” she explains. “There are still a lot of people who have never shopped The Sharper Image before.”
The national spots feature Thalheimer, in part because the chairman and chief executive officer is “so passionate about the business,” she says.
The spots are designed to steer customers not only to the stores, but to the catalog and Web site.
The Sharper Image still mails about 3 million catalogs a month during what Wan calls the “non-peak” seasons. In the peak seasons (fall and holiday), mailings can rise between 6 million and 8 million pieces a month. The catalogs promote the Web site, and, of course, consumers can use the site to request them. The catalogs also help boost store traffic.
Wan adds that mailings have to benefit “all three of our sales channels.”
Thalheimer has been “ahead of many retailers in terms of maintaining customer information,” catalog consultant John Lenser told DIRECT in 1998. “He has taken the database principles of direct mail and applied those to retail customers.”
The house file, which The Sharper Image manages itself, contains 10 million names. Wan says between 6 million and 7 million of them are active. While she declines to provide additional numbers, she does say 12-month buyers have increased more than 50% and 24-month buyers have gone up about 40%.
“We’ve built a brand that’s hopefully top of the mind as a specialty retailer,” Wan says.
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