Sears Has AOL

SAN FRANCISCO (03/15/2000) - Sears, Roebuck, and Co., the retailer that was born 114 years ago as a catalog, is turning to America Online to jumpstart its online business. The two companies announced Tuesday a multi-year, multimillion-dollar marketing alliance in which AOL will customize a version of its ISP service specifically for Sears customers.

The move will give Sears ample visibility before AOL's base of 21 million customers. Sears is one of many large retailers that are scrambling to assert their dominance online, and AOL is positioning itself to take advantage of this frantic virtual land grab. Sears' biggest competitor, Wal-Mart, is also tight with AOL, having struck a marketing deal in January that included the development of a cobranded, discounted ISP.

AOL also has deals with Gap, Crate & Barrel, Macy's and J.C. Penney. AOL will grant no exclusive provisions to Sears, according to AOL spokesman David Theis. Sears saw an alliance with an ISP as a crucial means to tap into wired shoppers this year and lure them to when they need products for the home.

The AOL deal, says Dennis Honan, VP and general manager of Sears Online, "enables us to drive increased traffic and new customers to our site ... and helps us with a way to get our new customers connected [to the Internet]." By that, Honan means that AOL will soon introduce a customized version of its service that will include prominent links to Sears. Honan is also eyeing the deal's broadband implications. With AOL rolling out its broadband service, AOL Plus, this summer, Sears now has a partner with which to develop broadband programming that ranges from the how-to on building a deck to tips on home decorating.

"We'll be able to not just show in words how to build a deck, but show how to build a deck," Honan says, adding that the retailer could also use its relationship with Bob Vila to develop broadband home-improvement programming.

Sears will actually help AOL introduce AOL Plus to the masses. Areas within the 858 Sears department stores will have demonstration stations that consumers can try out. If they are interested, a Sears salesperson will sign them up for the service. Honan says the deal is arranged so that Sears will get a bounty for every member it brings to AOL. In addition, consumers will be able to use their Sears credit cards to pay for AOL.

Currently, Sears has 39 million active cardholders, Honan says. AOL will also develop a cobranded Instant Messenger feature that Sears customers can use to chat with Sears customer service representatives when their dishwashers go on the fritz. "This relationship provides us with a great opportunity to introduce Sears customers to all the benefits of AOL and the Internet," said AOL President Bob Pittman in a statement. "And by combining the strengths of our two strong consumer brands, we will make it even more convenient and easy for people to take full advantage of AOL's industry-leading interactive services."

The deal also calls for the customary marketing support for both firms. Each of the shopping areas across AOL and its brands, including Netscape and CompuServe, will plug In addition, Sears will promote AOL in its print ads and TV commercials. The full terms of the deal were not disclosed.

Currently, sells tools, appliances and appliance parts. It also offers its Wishbook catalog online. In the coming months, the site intends to add consumer electronics, lawn and garden, and a service to schedule home repairs and services at a consumer's home.

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