CHALLENGE

Although Sharper Image's stores and mail order catalogs are fairly high profile in the United States, the company had a minimal offline presence in Europe. There were three branded stores in Switzerland, a few distribution deals with stores such as Harrods, and catalogs such as Innovations, and that was about it.

But when the Sharper Image management team met in December 1999 to bat around the idea of launching some European eretail Web sites, it seemed like a fairly obvious home run. Andrew Cushing, Senior Manager International Business Development, explains, "We always had a lot of overseas customers come shop at our US stores, take catalogs home, and request international shipping. We ship virtually anywhere in the world. We knew there was a demand out there." Plus, the Company's regular Web site at SharperImage.com had received significant European traffic since it launched in late 1995.

However, international orders were shipped from the US, so customers had to pay more for shipping and wait longer to receive goods. Plus international customers had to pay duties and taxes on orders shipped from the US. So, their online shopping experience wasn't as good.

So, the decision was made. As of January 1st 2000, Sharper Image would begin building a European Web presence. Cushing laughs, "We were going to have the first site up by April 2000! We were raring to go." But, then the reality of what it takes to build an eretail business in Europe began to sink in.

CAMPAIGN

First came demographic research. Should the Company build one pan-European site, or separate sites for various countries? After trolling online stat sites such as Nua.com, and checking current customer data, the team decided to launch three sites. One for the UK, one for Germany and a third Pan-European site which would be in English but feature Euro pricing.

The team also made a key decision that would affect all future development -- international eretail operations would not be separated into a different division. Cushing says, "We view Web very much like a catalog. It's just a little different. All of your fulfillment issues and operations are just the same. We don't want to reinvent things for one channel or subset of a channel. There are a lot of synergies to being multichannel." So, the same Sharper Image executives who lead customer service, operations, Web design, etc., for other channels also manage Europe.

Next, Cushing and Susan Fisher, VP Internet, attended a globalization conference in the US to get a quick overview of the vendors they might require. Cushing says, "Ironically every single one of them offered a 'total solution'!" To narrow down the field, he immediately asked each, "We sell hard goods - physical things that need to move from place to place. Do you set up warehouses?" Invariably the answer was "Of course not", because almost all the vendors were software firms.

In order to understand exactly what needs these 'solutions' providers addressed, Cushing and Fisher began to "learn a vast lexicon of terms: localization, translation, content management globalization, etc." To add to the headache, many vendors used similar terms to describe different services. Although Cushing and Fisher identified only a single vendor they would ultimately use at the conference (Berlitz GlobalNet for translation), they learned enough about the issues surrounding globalization to create a series of very detailed RFPs for each required partner.

With help from two semi-governmental organizations in Europe -- The Netherlands Foreign Investment Agency and the Holland International Distribution Council -- Cushing created a shortlist of potential customer service, payment processing, warehousing, merchandise packaging, and fulfillment partners. In June 2000, a team of four Sharper Image execs, including the VP Distribution, Sr VP Operations, Sr Manager Traffic and Cushing himself, traveled to the Netherlands for five days of intensive meetings. Cushing says, "We met with three potential partners in each of the areas, doing two meetings a day." After several follow-up meetings for which shortlisted vendors flew to America, the team finally chose all partners, including Global Collect for international payment processing.

Finally it was time for the fun part of launching a site -- selecting products, designing the site, translating copy, and training customer service reps.

Many of the Company's products required an up-front investment in changes for Europe, such as electric plug adaptations. So the merchandising team decided to limit risk by launching with about 50 products chosen from the ranks of the more than 500 products available on the US site. (That number has now grown to about 100.) Cushing says, "We started out looking at our best sellers. In retail you do 80% of your business on 20% of your products."

European lawyers made sure that the packaging met local laws and regulations; and, local translation teams helped to adjust copy to fit their culture. However, the Web design team decided to keep the look and feel of the sites as close to the US original as possible. Cushing says, "We have a very strong branding. Making it look like Sharper Image is what it should do." The only significant style change between US and European sites was the lack of Flash and other rich media. "We were very cognizant of lag time. A lot of people in Europe dial up for access. We didn’t want lots of rich media."

Customer service reps, based in Holland, all spoke English as well as several other languages. The US-based operations team initially trained European reps via videoconferencing. Later, Harvey Johnson, Sr VP Operations, flew over for some one-on-one mentoring and coaching. CSR responses are monitored carefully from the States. Both original and translated copies of all European inbound and outbound customer service email messages are sent to the US for review.

Although email marketing is a "huge part of our business in the US", Cushing adjusted the way the site gathers names to comply with current and potential European data laws. In the US, the sign-up box for Sharper Image emailed news is pre-checked. In Europe it's not.

Finally the sites were ready to launch. UK launched in April 2001 (a full year after the naïve, initial target date), and Germany and Pan-Europe followed shortly thereafter.

So far Cushing has mainly relied on the referred traffic from the US site to drive the majority of traffic, because he was highly reluctant to invest in aggressive European marketing during the Summer months. He says, "Most Europeans have 25 vacation days or more. That has a lot of consequences for summer. The only reason you go to Paris in August is to catch a train to the country. No stores are open, there are no French people there!"



RESULTS

Although it's early days yet, Cushing is satisfied with the sales trends that are developing. He says, "We expect our first year's international Internet business to exceed the $225,000 we saw for our domestic Internet sales during our first [domestic] year in 1996." To give you an idea of how sales could ramp up after that, Cushing notes that the US SharperImage.com sold $1.6 million in 1997, $4.9 million in 1998, $28.5 million in 1999 and $60.2 million online in 2000."

Although Cushing had expected the German site to be his sales leader, the UK stepped to the forefront instead. The sales breakdown currently is 60% UK, 20% Germany and 20% Pan Europe. Erik Uljee VP for international payment processing service Global Collect notes that this discrepancy may be due to the fact that Sharper Image currently only accepts credit cards. He says, "In Germany only 14% prefer to pay with credit cards. Customers prefer to pay with local bank transfer. Selling without bank transfers is like selling in the US without credit cards!" Cushing notes that he is considering adding local bank transfers to the site, and the ability to do so was one of the deciding factors when they chose Global Collect as their partner.

Interestingly, best-selling products, average order size and Sharper Image's average return rate are all almost the same for Europe as for America. However, the Company has seen one major improvement for European orders. Cushing explains, "By localizing the product for Europe and shipping within the EU, we have eliminated two of the most significant return issues for international orders. One, the customer encounters unexpected charges for taxes and duties at the time of delivery; and two, the product will not work in the customer's country."

Sharper Image Worldwide:
http://www.sharperimage.com/us/en/intlshopping.jhtml

Global Collect:
http://www.globalcollect.com