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As soon as online retailing came on the scene, analysts predicted the death of the middleman. Since the Web enabled consumers to buy directly from manufacturers - quite easily - the future of retailers looked dim.
But things haven't turned out that way. In the case of Panasonic.com, the trend is actually being reversed, with this major electronics manufacturer using its Web site to refer shoppers back to retailers.
In a new twist on online retailing, Panasonic recently hired Florida-based Channel Intelligence to set up and maintain a system that deep links from Panasonic.com to an array of online retailers. Under the new system, called Channel Buy Links, when a shopper at Panasonic.com decides to purchase, say, a DVD player, they are given the option to buy it at online retailers such as CircuitCity.com and BestBuy.com.
Since the Channel Buy Links program launched in June, Panasonic.com has used it to refer approximately 250,000 sales leads to other retailers. And now that the site has tweaked its navigation those numbers are trending 30 percent higher, says David Chapin, Panasonic's senior manager of e-commerce. (The site itself gets about 700,000 unique visitors a month, according to recent ComScore figures.)
Retailer vs. Manufacturer
Indeed, Panasonic could sell to these customers, as many manufacturers do. And in fact the company does sell part of its product line on its site. But, says Chapin, "There are a lot of reasons consumers would want to buy from a dealer besides us. The dealers - that's their business, they're set up to merchandise product, make it attractive to consumers, answer their questions, provide the level of service and support that a consumer demands." He points out that the local retailers provide a convenient location for returns and exchanges, which is logistically difficult for a manufacturer.
The Buy Links program is not a completely new idea for Panasonic, Chapin says. The company's site has always linked to online retailers, however, according to Chapin, it was not very customer friendly or effective. "It was a difficult navigation path to get you to an online dealer."
When Chapin explored improving the link path, he learned that linking to a retailer's buy page from a manufacturer's site is a maintenance headache. When Panasonic looked at making this upgrade in-house, its MIS personnel told Chapin they could handle it, but a fair amount of money would have to be spent and staff would need to be hired in order to maintain it.
Panasonic also tried working directly with online retailers to set up deep linking. "We got a similar kind of reaction," Chapin says. "Some of them were very eager to provide this, but they also had to do a very large amount of maintenance for it."
These difficulties with deep linking were caused by a number of factors: changing URLs, variations in Web page layout, and new product models and categories. According to Chapin, "It's especially tough when you start looking at not just one or three dealers, but at 15 or 20 dealers, or 200 dealers."
Well-timed Sales Pitch
It was about this time that Panasonic was approached by Channel Intelligence, which until recently was known as Youknowbest.com. Chapin learned that because Channel Intelligence designed their solution to meet the needs of the manufacturer - rather than designing it as a shopping site for a consumer - they were able to overcome many maintenance problems.
"From the day we said 'go,' it took us 10 days or less to implement it," Chapin says. "It was only a couple thousand dollars of MIS time on our side." Of the 1,500 consumer electronics items Panasonic sells online, 1033 are linked using the Channel Buy Links program.
As for early results, "We're really thrilled with it," Chapin says. Not only has traffic to dealers increased, but also conversion rates have gone higher - from the one to two percent range to the eight to 10 percent range. Chapin explains that buyers who click through to a retailer from a manufacturer's site have typically spent time researching products and are therefore more committed buyers.
Making It Easy
These deep links between manufacturer and a retailer's buy page make it easier and more convenient for surfers to make a purchase. Chapin points out that it can be time consuming and frustrating for a consumer to navigate manually between a manufacturer's site and a retail site, especially if there are discrepancies with things like model number. "Whereas with this solution, you just click-click-click and you've got your information," he says. "And we present only those dealers who have it in stock."
The program also provides Panasonic with more accurate information about sales figures. Before Buy Links, if a shopper clicked off Panasonic.com to buy elsewhere, Panasonic would not know the result of that referral. Now, according to Chapin, "We get very accurate information - we understand how many sales have resulted from this."
A Three-Part Approach
As Chapin explains it, Panasonic.com uses a three-part e-commerce strategy. The Buy Links program is only the first of these three parts.
Part two is using the site to refer consumers to local brick-and-mortar locations. "We have an online dealer locator that gives you the five closest stores to your zip code. This is very heavily used for all those people who research online and then buy from a brick-and-mortar retailer," Chapin says.
Part three is continued direct sales through Panasonic.com. Panasonic uses this option to sell hard to find accessories, such as fax ribbons that retailers don't carry. Or for newer items, like recently introduced MP3 players that don't yet have wide distribution.
Chapin says this direct sales channel plays an important role but also has its limitations. "Dealers are still very important in this world. We recognize that and want to support them."