The Rise of DRTV-Friendly E-commerce Sites1 Apr, 2012 By: Bridget McCrea Response
Online retailers increasingly embrace DRTV products and welcome them into the fold.
The Web has long been a hotbed for companies that sell direct to consumers. Using their own corporate websites, landing pages, and other methods, marketers were quick to tap into this budding sales opportunity and use it to augment their TV, print, offline retail, and/or radio efforts. As online sales grew, so did the number of online options available to DRTV marketers, who have been adding social networking, mobile marketing, QR codes and other tech-centric marketing techniques to their toolboxes.
As DRTV products infiltrated the Internet and posted successes online, companies like Amazon, Newegg, Buy.com, and even daily deal sites and brick-and-mortar retailer sites sat up and took notice. You’d be hard-pressed to find a major online retailer today that doesn’t feature at least a handful of infomercial products on its website.
A quick perusal of Amazon’s “discount infomercial products” storefront turned up ads for the Twirl-a-Tie Tie Rack/Organizer, Ove’ Glove Hot Surface Handler and Bendaroos. Surf over to NexTag’s price comparison site, and you’ll get an eyeful of the PFS Lateral Thigh Trainer Exercise Stepper Machine, the DeWALT Cordless Compact Drill/Driver Kit and the Pressa Bella Steam Iron. Groupon has also jumped onto the DRTV product bandwagon. Its newly created “Goods” category recently featured the Big Boss multi-blender set and Kettleworx’s Kettlebell workout system.
With research firm Forrester predicting that Americans will spend $327 billion online annually by 2016 (up from $200 billion in 2011), the purveyors of these direct products will be well positioned to claim a piece of that huge chunk of business. Denise Kovac, president at Full Service Marketing in Carlsbad, Calif., will be one of them. Her firm’s DRTV successes include the Hercules Hook and the Nicer Dicer, both of which have been sold through the new crop of direct-friendly E-commerce sites.
“We’ve been working with Groupon and new Web retailers. We are advertising both DRTV and non-DRTV products in this manner and have found that, in general, consumers are looking for bargains,” says Kovac, who in February was named marketing director at San Diego-based Genius Brands Intl. Inc., developer and marketer of entertainment products including the award-winning Baby Genius® line of music and education-based products and characters. “To be most effective in the Web retailing space, you have to provide added value. Most DR marketers are used to coming up with great products for a great value, so they are a good fit for this type of selling.”
Marketers just breaking into the online retailing segment should brace themselves to handle very large order volumes, says Kovac, and to keep a close eye on price points. The latter is especially important for firms that are selling across both the online and offline retail space.
“You have to be able to keep your traditional retailers happy while strategically pricing for your E-tailers,” says Kovac. “Achieving that balance can get pretty tricky.”
Such challenges aside, Kovac sees a time when the majority of DRTV products are hawked through online retailers versus brick-and-mortar stores. “It’s completely shifting right now,” she says, “with Web retailing completely taking over the retail marketplace.”
A Channel That Won’t Be Ignored
According to Forrester, an increasing number of credit card-toting consumers make their way to the Web every day. In 2011, 167 million consumers made an online purchase. Forrester expects that number to increase to 192 million during the next four years. Concurrently, the average per-person amount spent online will increase from $1,207 last year to $1,738 in 2016.
But wait, there’s more: Consumers are also buying a wider variety of categories online. In a 2001 survey, for example, Forrester reported that just three of the 30 retail categories were able to attribute more than 20 percent of sales to online channels. Since then, that number has grown and is expected to expand to 14 categories by 2016 (up from eight in 2011).
The fact that online consumers are opening up their minds and wallets to a wider swath of products and services will set the stage for even more alliances between DRTV marketers and Web retailers. Whether they are selling through brick-and-mortar retailers’ online sites, discount online-only merchants, or the growing crop of daily deal platforms, direct marketers will be well positioned to claim their share of the $1,738 each consumer will spend online in 2016.
Some of that growth will be buoyed by faster Internet speeds and improved computer processing power, says longtime DRTV guru Kevin Harrington, chairman of AsSeenOnTV.com in Clearwater, Fla.
“Online video — and consumers’ ability to watch it — has come a long way during the past few years,” he says. “That puts DRTV marketers in a good position to demonstrate their products in a low-cost manner.”
On AsSeenOnTV.com, for example, consumers can watch full-length spots, read testimonials, view the product purchasing and shipping details on a website, and then revisit any of the content before making the decision to buy. “They can spend some time understanding the offer before making that commitment,” says Harrington.
Like Kovac, Harrington says getting the pricing right is the key to success when working with online retailers and discount sites. When selling products through sites like Amazon and HSN.com, Harrington says his firm established a suggested retail price.
“We don’t like to see our products blown out at ridiculously low prices; that affects the other retailers and the TV campaigns,” says Harrington, whose radar goes on alert when online prices are posted at more than $2 less than what consumers are paying for the products offline. “TV drives the retail and the campaign can get hurt across the board when the cost structures aren’t properly monitored.”
Harrington advises marketers that are selling via multiple online retailers to monitor the price points carefully. Offering up different configurations and packages is another good strategy.
“You can create a lot of consumer confusion and problems within the market if you don’t mix up the offers,” says Harrington, “and make consumers feel as if they are getting a good value from whichever outlet they are buying from.”
A Warm Embrace
Steve Heroux regularly receives E-mails and phone calls from online retailers looking to feature his company’s successful DRTV products on their websites. “Everyone sees the awareness that we’re creating on TV and they want a piece of it,” says Heroux, CEO of Williston, Vt.-based Hampton Direct, whose successful DRTV products include the Total Pillow, the Wonder Hanger and PajamaJeans.
Most recently, Heroux says daily deal sites like Groupon have become very interested in his firm’s products. And while sites like Amazon and Buy.com have been around for years, both of them — and many of their competitors — are gracing their website pages with more DRTV products. Add sites like AsSeenOnTV.com to the mix, and the options for marketers are virtually limitless right now.
The key, says Heroux, is to only do business with reputable sites that will hold your price points (and not slash them down to unacceptable levels) and that have strong policies around counterfeiting. “Marketers should only work with the E-commerce sites that have the best reputations,” Heroux advises. “There are a lot of them out there, so choose carefully.”
Once the relationships have been established and the selling channel set up, Response Advisory Board member Heroux says DRTV marketers must keep close tabs on issues like counterfeiting. “Regularly review the websites to make sure it’s only your product that they are selling,” he says. “There are a lot of different sites and opportunities to counterfeit products out there on the Web. The only way to tackle this challenge is through constant monitoring.”
Ultimately, Heroux says DRTV marketers interested in folding direct-friendly E-commerce sites into their portfolios should understand that any type of exposure helps, particularly when the firm is trying to get its products onto the shelves of large, offline retailers.
“If you want the biggest demographic possible you have to come at it from every angle,” says Heroux. “For us, online retail is another vehicle to help create awareness for products that consumers will likely wind up buying from a store anyway.”
Keeping Close Tabs
Anthony Medico, president at E+M Advertising in New York, says it’s not enough to simply sign up with various websites and then sit back and wait for the online orders to pour in. Using online retailing sites effectively requires a more methodic approach, and it starts with good management of every aspect of a product’s online presence.
Don’t overlook the fact that a presence on Amazon or Buy.com will likely cannibalize internal sales, says Medico. That could be good (if the profits generated are on par with what you’re earning on your own sales) or bad (if the online retailers are slashing price points and cutting into your margins). “While consumers are comfortable ordering from sites like Amazon,” says Medico, “every time they hit ‘buy’ on these sites, the number of orders generated by your own promotions is reduced.”
Marketers can keep the cannibalization to a minimum by selecting just one or two key online retailers to work with, and then ignoring the rest. “If you’re selling through just one or two venues it will be easy to police the activity and track the impact these sites are having on your sales,” Medico explains. “On the other hand, if you are working with 15 or 20 Web retailers, it will be very difficult to control.”
The E-tailing Counterpoint
AJ Khubani has no interest in seeing ads for Aluma Wallet, HeelTastic, Slim Away, Lint Lizard or Chefdini on websites like Amazon, NexTag or Buy.com, nor does he want to see them being peddled by discount deal sites like Groupon. In fact, the CEO at venerable DRTV marketer TELEBrands in Fairfield, N.J., says the best advice he can offer to other marketers is: Set up your own website and sell directly to the consumer through it.
“We made a conscious decision not to sell to any online retailers because we maintain our own E-commerce presence,” says Khubani, who points out that 50 percent to 60 percent of consumers go online to purchase products these days instead of using the 800-number that they saw on TV. When consumers make the final decision to buy, Khubani says he wants the transaction handled by his own company’s website — not someone else’s.
“We don’t want to get in a situation where consumers visit sites that they are familiar with, like Amazon, to buy our products,” says Khubani. “If that happens, we make a much lower profit and we miss out on the upsell opportunities. The bottom line is that we make less money — not more — when working with online retailers, so we choose not to sell to them.”
Does that stance take away from TELEBrands’ long-time commitment to offline retail, where its Aluma Wallets and other products are mainstays for retail biggies like Wal-Mart? Not at all, according to Khubani, who estimates that brick-and-mortar sales comprise about 90 percent of TELEBrands’ business. “We’re in the online retail space on our own,” says Khubani, “and that goes more hand-in-hand with our offline efforts than selling to online retailers would.”