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Join Our Research Team at DMA 2014
Apr 18, 2005
How To

How to Avoid Retail vs. eRetail Channel Conflict: 5 Tactics Danskin Uses

SUMMARY: Do you need to solve cross channel conflict? Are your brick and mortar retailers upset because you sell direct online? We interviewed Danskin's CEO Carol Hochman to discover five smart fixes her team invented to keep consumers, retailers, and Danskin.com's bottom line happy. Less impossible than it sounds.
"Even though we have 8,000 or 9,000 points of retail, what I always hear is, 'I can't find your products.' My answer is Danskin.com," says Danskin Inc. CEO Carol Hochman.

When Hochman came on board in the summer of 1999, Danskin had an 88% brand awareness among active women. So the team figured getting site traffic wouldn't be a big problem. However, relations with those thousands of retailers might be.

How could Danskin.com avoid conflict with offline channels, including department stores, dance specialty retailers, and sporting goods stores?

Here are five specific tactics Hochman and VP Sales Operations Eric Nadler use to keep both retailers and consumers happy with the site, while boosting Danskin's bottom line.

-> Tactic #1. Focus on SKUs retailers rarely carry

When Danskin was preparing to launch the site in 2001, the team did an extensive email survey to discover what customers wanted from Danskin online.

The overwhelming response: consumers wanted to purchase more plus sizes. "Large sizes are an unusual business," Hochman explains. "They've got three square feet in a store. For years, retailers have voted not to carry plus sizes. So that's one of the things we've focused on, on the Web site, that has kept us out of the line of fire."

In fact, for the first six months of ecommerce operations, Danskin.com sold only plus sizes. Today, although the site now sells all Danskin items, 30% of the online business continues to be in plus sizes.

Next, the team began to add retail bestsellers. However, to avoid any appearance of competition, the team made a point of carrying hundreds of products in all colors and sizes, resulting in thousands of SKUs that the retailers don't carry.

"Even our biggest retailers can only carry 20 or 30 products at a time," Hochman explains. "We're not competing head-to-head, we're filling needs" of customers who can't find what they want at a retail outlet. "The real reason for our existence is nobody can carry all of our product."

-> Tactic #2. Stick to noncompetitive pricing

Hochman's main concern when it came to channel conflict was the specialty retailers. Often family-owned, smaller businesses, these retailers could soon find themselves in trouble if they had to compete in price against Danskin.com.

"We don't want to compete on price," says Hochman. "If you find an item that we have on Danskin.com, and then find it at a retailer, many times it's cheaper at the retailer."

That's because Hochman's team has chosen to price items online at the same level as the retailers that have the highest markup. "The most aggressive retailer in terms of mark-up is usually the department stores," she says. "The sports stores are usually more aggressive with discounting."

-> Tactic #3. Use noncompetitive promo offers

Danskin.com does run special online-only offers to consumers. However, to reduce channel conflict, the offers are never based on a specific price point. Instead, offers are based on a percentage discount; plus, they always come with conditions (i.e., "spend at least X amount and get X% off").

"So nobody can say, 'You're selling that leotard for $25 and we can't sell it for less than $30," Hochman explains.

-> Tactic #4. Offer tools for shoppers to find retailers

Naturally the Danskin site offers a "Find a store near you" tool to visitors.

In addition, the site's email promos also include a store locator link. Plus, newsletter copy augments product descriptions with phrases such as: "Want to see this in person?" or "To feel this item in person, check out our store locator."

(Worth noting, the emailed store locator tool link is not getting an overwhelming click rate. On average over the last three months, says Nadler, 6% of their total newsletter clicks have been to the store locator.)

The team is considering adding more tools to help Web visitors who prefer to shop at brick and mortar. Ideas include a shopping list that visitors can print out and bring with them to a retail outlet. This would make sense, Hochman says, because the site is also a marketing vehicle: "People see something online and go to the stores and request it, so the stores order more from us."

-> Tactic #5. New site section "For Retailers Only"

Danskin.com offers retailers access to a convenient B-to-B site section. There they can download images and logos of Danskin products to their Web sites. They can also place orders directly online.

"Out of 3,000 accounts, we have about 150 people using it actively. These are small businesses used to dealing with customer service people on the phone. They haven't warmed up to it yet," Hochman admits.

"We think we could do better, and once we get it better we'll start marketing it actively through email campaigns and box stuffers. We have grandiose plans."

Note: Danskin is a member of Shop.org, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights, and intelligence. More info at http://www.shop.org

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