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Sun, May 18, 2003 - Page 12 News List

Shopping sites offer automatic shipping for routine purchases

Auto-replenishment programs, which have a long and successful history in the direct-marketing industry, are now making waves on the Web

NY TIMES NEWS SERVICE , NEW YORK

Now that the Web is a mainstream shopping medium, some consumers are feeling sure enough about the process to put themselves on autopilot.

A small but growing number of online retailers are rolling out so-called auto-replenishment programs, in which customers sign up for periodic shipments of everything from pet food and steaks to diapers and acne medicine. The programs require a fair amount of finesse on the part of retailers, as they determine exactly how many razor blades a typical man uses in a month, say, or whether to give customers the option of skipping a shipment of vitamins. But for merchants that can get consumers to stay with the program, the resulting revenue stream can be a boom to business.

Take USA Interactive's HSN.com, the online operation of the Home Shopping Network. Since the company rolled out its Auto Ship program about 18 months ago, enrollment has grown to more than 100,000 customers.

"This is one of the drivers behind our growth," said Will Keller, senior vice president for off-air sales at HSN.

Keller said the program began on the television network six years ago, with a line of vitamin products -- an obvious choice for auto-replenishment, since a customer's supply dwindles at a predictable rate. While vitamins still represent the foundation of the company's Auto Ship sales, HSN.com now includes 250 products in the program, including some unexpected items, like artificial tanning lotions.

"Tanning has become a huge business for us, which surprised me," Keller said. "But it makes sense for customers to want it shipped this way, because if you run out, all of a sudden you don't look quite as tanned as you usually do."

Bringing benefits

But sweaters? It turns out that some people are actually willing to sign up for the company's line of collectible sweaters with different motifs, which HSN and the Web site roll out on a regular basis. When HSN began offering the sweaters on Auto Ship early last year at a typical price of $US70 to $US85, "they blew out," Keller said.

For online retailers, these sales programs can bring benefits, beyond the obvious allure of revenue flow. Because customers grow more familiar with the products as they stay on the replenishment program, for example, they were much less likely to return items. What is more, Keller said, "you have all these orders sitting in your system, so there's very minimal inventory risk."

When selling a selection of collectible items, for instance, "We'll choose how many items to put into inventory initially," Keller said. "But for the second in the series," he said, "we'll put in an order to our vendor based on the Auto Ship demand."

When HSN.com executives started the Auto Ship initiative, they feared customers might stop going to the Web site after signing up to receive a given item. "But we found the exact opposite," Keller said. "That box arrives every 60 or 90 days that reminds them of HSN, and they end up buying more overall from us, whether on TV or the dot-com, than non-Auto Ship customers."

Pet suppliers are also warming to the idea of automatic deliveries. Earlier this year, Doctors Foster & Smith (DrsFosterSmith.com), a catalogue and online pet supply company, began testing the service with dog food, and now ships more than 900 different items to nearly 2,000 customers each month.

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