BOSTON (06/15/2000) - Books, movies and CDs--low-cost commodities--are relatively easy to sell online. People don't seem to mind buying them from afar, with only a picture to go by. At the other end of the spectrum, you might find funkier merchandise, unique and somewhat pricey stuff, such as the US$329.95 ionic air purifier purveyed by The Sharper Image (TSI), a San Francisco-based specialty retailer. Products like these can be a tough sell on the Web, partly because of their uniqueness and partly because of their price tags. Before handing over their credit cards, consumers want to inspect these items, pick them up, turn them on, try them out. That's all part of the experience TSI's retail stores have offered for years, and today the company seems to have mastered selling its specialty wares online, too, at www.sharperimage.com. Indeed, TSI's Internet sales increased by 479 percent, to $28.5 million, in its last fiscal year. CIO Executive Editor Derek Slater recently spoke with Kathryn Grant, senior manager of Internet strategy for TSI, about how the company overcomes the "touch issue" when selling online, how it matches its Web efforts with TSI's brand image, and the interplay between the company's online, catalog and store retail channels.
CIO: How important is touch when you're determining how to present products on your website?
Grant: The Sharper Image retail stores are known for the fun of going in and being able to turn something on--to sit in the massage chair and feel it on your back. It's not just touch--there are other elements that are important as well, like sound. A lot of our products have sound, and if you don't present that experience to customers in the right way on the Web, they might think it's sort of white noise. These issues are very important, I think, to the experience of The Sharper Image.
We've incorporated the ability to not necessarily touch but at least to turn something on and experience what it would be like to actually play with the object, to listen to the sounds, to turn it around, to open it and close it. A great example of one of our products that we have rendered in 3-D is our CD/radio alarm clock with sound soother. On our website, you can actually open up the product, insert a CD and listen to the first 30 seconds of the CD. You can also try out the sound soothers. So [sensory and tactile issues] are very important, and I think we've come as close as possible to a live experience without the customer actually being able to pick up the product and move it around.
CIO: What tools do you use to create 3-D online interactions?
Grant: The process starts with a company called Viewpoint Digital [based in Draper, Utah], which is a Computer Associates company. Viewpoint renders the images based on 3-D CAD designs that we provide. They use a product called 3-D Dreams by Shells Interactive to animate the images, and 3-D Dreams works with Macromedia Shockwave to render sound and movement. The 3-D Dreams plug-in installs automatically when you view 3-D products on our site.
CIO: A website affects a corporate brand image, whether positively or negatively. Hip, high-tech, fun, leading edge--judging by your stores and your merchandise, those are values I presume you want to associate with your brand.
Having the cutting-edge stuff on your website can affect TSI's brand image, regardless of how it's affecting the particular experience of examining an individual product. So how much does that play into your thinking?
Grant: We want to create the idea that The Sharper Image Online is a place to check out the latest, coolest Web technologies and how those tools can be used to display products effectively. So I think it's very much a part of our decision making in incorporating fun and interesting technologies.
We had a product for Valentine's Day, for example--a butterfly that opens and closes its wings. The product moves based on the movement around it. So if you walk by it, it will react through sensing your movements. The way the product worked on our homepage, you could actually see it opening and closing. So we definitely try to drive a visual appeal that people haven't necessarily seen on other websites.
CIO: Isn't there also some risk associated with cutting-edge Web technology?
You don't want every new page to require a new browser plug-in, and you certainly don't want something to be broken on your website. What sort of evaluation process do you have to make sure a technology really works?
Grant: That is a very, very important aspect of choosing partners to work with, or choosing technologies that are useful for your website but fun at the same time. For instance, around the time we decided to have 3-D content on our website, Intel came to us [because the company] wanted to feature its 3-D capabilities. Well, we knew that we were going to be working with the leader in the technology space by partnering with Intel. So we were taking a risk and being one of the first retailers, but it was a very intelligent and calculated risk because we were partnering with an extremely experienced and reputable company. There's a lot of testing involved before putting anything up on the website. The 3-D content testing was a lengthy process.
CIO: What lessons or techniques have you learned in your catalog business that you've been able to transfer to your website?
Grant: For starters, 30 percent of our revenues right now comes from Sharper Image-designed products. Our company has transitioned from a company that carries other people's very cool, latest, high-tech electronics to one that actually develops products itself. When we're coming up with a new product, the goal is to create not only a very interesting product but one that has a lot of visual appeal so that people can really be excited by it when they're looking at it in a catalog. Or when they walk into the store, they see, for instance, that our CD/radio/alarm clock comes in a gorgeous cobalt blue color as well as a beautiful mahogany. So the products are designed to be attractive.
Then we have created a gorgeous catalog with a very precise, very artistic approach to the photography. We have great photographers and writers. These competencies transfer very effectively to the Web, which, until recently, was two-dimensional like a catalog. Now we have the benefit of taking it far beyond a catalog and making it an interactive experience.
CIO: How do you bring that expertise in catalog presentation into your Web efforts? Is the Internet division a separate entity, or does it borrow talent from catalog development?
Grant: We decided that instead of creating a separate dotcom company, we would be able to make a much more seamless experience--not only for our customers but internally also--and really benefit from the [retail store and catalog] channels by allowing SharperImage.com to be a part of the entire Sharper Image Corporation. So the catalog, the retail stores and the website all work together. Therefore, we are able to use on our website not only the artistic elements that we have in the catalog but, even further than that, our 22 years of fulfillment in distribution expertise. Retail store, online and catalog orders are fulfilled out of the same distribution centers.
Last summer, we prepared our fulfillment centers to handle the sales that we anticipated during the 1999 holiday season. We wound up having a 500 percent increase in sales on the website over the 1998 holiday season. So we started beefing up our distribution center back in July. We also hired a third-party fulfillment center to handle the larger ebbs in traffic or orders.
CIO: How is the Internet division represented when strategic decisions are being made by top executives?
Grant: That's a great question, and it gives me a moment to have some bragging rights. Our CEO, Richard Thalheimer, insisted that we get on the Web back in 1995. He is extremely involved in all of the decision making for our website.
It's really his baby, I think, next to the TSI design products, which, as I mentioned, we manufacture ourselves. So there's a large focus and a real interest in making this particular channel a success. Our CEO, our COO, our head of technology, our head of creative--they're all involved in the decision making when it comes to anything from how we make it visually appealing to whom we partner with on the technology side.
CIO: So far, we have been talking about taking the expertise developed in catalogs and retail and bringing that to your website. How about the reverse:
Do you use the website to test-market new products? And have you thought about bringing Web-based informational kiosks into stores to help answer customers' questions?
Grant: We have considered kiosks. It's something that we revisit frequently, but we have not yet decided to implement them in our stores. There have been some success stories [for other companies], but I'm not sure that the technology is totally there. It takes a lot of work to prepare every single store for a kiosk. You need to make sure when you're setting up a kiosk that you're creating something that is going to be easy for your customers to use.
That means potentially bringing in DSL, things like that, because we don't want customers to be slowed down by technology that we're using to help them.
Regarding whether we are using the Web as a testing ground for products, that's another thing that we're starting to look into. We started an online auction back in March of 1999--you can get to it from our homepage. There, we offer brand-new items, one-of-a-kind products as well as repackaged and refurbished items. This follows our idea that we want to be leading edge. There are very few retailers out there that have an auction site. It might be a place we can start using to test products and to decide, "Hmm, customers are really reacting positively to this particular product. Should we bring it into our catalog or stores?"
CIO: The capabilities of the online medium are always changing. What might the online shopping experience be like down the road? Will we have a little automated, robotic assistant guiding us through your website?
Grant: Sure. We've actually started exploring those types of technologies. For instance, one idea is sort of a morphing assistant that can travel around a site with you and share ideas about products. We've looked at that.
We're exploring [technologies] other than 3-D for displaying products in a very visually appealing, very technically advanced and precise way. I think right now it's a question of making sure that these are technologies that are really useful in the shopping experience. That's our focus.
Executive Editor Derek Slater's office probably could use an ionic air purifier. Ask him about it at email@example.com.