When Supplier & Retailer Work Together

June 1999

Managing:Technology

When Supplier & Retailer Work Together

Bagley & Hotchkiss has designed an e-commerce-enabled site that allows consumers to shop online for its jewelry – but their local jewelers still get the markup

If you're at all familiar with the Internet and the growing use of e-commerce, you know people buy tens of billions of dollars worth of every imaginable product on-line yearly. A real concern among retail jewelers is that manufacturers and other suppliers will use this electronic megamart to cut them out of the distribution chain. Bagley & Hotchkiss, Santa Rosa, CA, has developed an innovative way to use e-commerce and the Internet not to circumvent their retailer customers, but to make them active partners in the e-commerce explosion. Here's how it works.

Bagley & Hotchkiss created an e-commerce store – an interactive Web site from which consumers can buy their jewelry. The site is prominently featured in all Bagley & Hotchkiss national consumer print ad campaigns. A consumer goes to the site and sees a piece he or she wants to buy. The site asks the consumer to enter his or her ZIP code. Then the consumer sees a short list of retailers in that area who carry Bagley & Hotchkiss products.

The consumer can pick a retailer or ask the site to pick one for him or her (done on a rotational basis). The consumer then is referred to the retailer and encouraged to go to the store to pick up the item. In fact, the consumer must go to the store to get Bagley & Hotchkiss's certificate of authenticity or to buy the center stone for rings in the bridal collection. If the consumer buys a finished piece and doesn't want the certification, Bagley & Hotchkiss can ship the piece to the consumer and give credit to the retailer for the markup on that piece. In other words, regardless of whether the consumer goes to the store, Bagley & Hotchkiss gets the wholesale price and the retailer gets the markup. There is no charge to retailers for being listed this way. They simply need to carry Bagley & Hotchkiss products.

Retailer Web Sites
A second and equally innovative way Bagley & Hotchkiss partners with the retailer is by franchising a five-page, interactive, e-commerce-enabled Web site featuring the retailer's own merchandise and information about his or her store.

Franchises became available in May at a cost of $2,500 for two years. John Bagley of Bagley &Hotchkiss says that for a single retailer to set up a site as visually exciting and e-commerce-capable would easily cost more than $20,000 (e-commerce-enabled sites, because of their security features and other technologically advanced aspects, cost much more than advertising-only and promotion-only sites). This provides a way for retailers who carry the Bagley &Hotchkiss line to get the benefits of the Internet without the cost of going it alone.

The goal is not so much to have a retailer sell to people all over the country, rather to help the retailer use the Internet to sell more effectively and intensively in his or her own area. Customers who see the Web site in print ads or direct mail promotions can learn more about the store before coming in to see it. They also can go to the site to look at pieces they saw in the store but couldn't decide on. "It's a great way to close the sale," says Mara Shepard of Bagley & Hotchkiss. "After a customer sees a piece in the store, she can go home and show it to her girlfriends or her husband before decidin g if she wants it. If she does, she can order it right off the Web site."

Bagley says his company's decision to expand its use of the Internet is part of a larger distribution strategy that includes the use of laptop computers and multimedia in-store sales presentations, all of which reduce the need to take inventory into the store. "The idea was not the result of a vision," says Bagley, but was a response to having three of his salespeople robbed over a six-month period with losses exceeding $1.5 million. He decided there had to be a better way, and technology was his answer.



Copyright © 1999 by Bond Communications.


 

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