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.
While average order sizes are "quite a bit lower than our typical order," according to Joe Voellinger, a spokesman for Drs. Foster & Smith, "it's a service many of our customers appreciate, so we're happy to offer it to them."
Auto-replenishment programs have a long and successful history in the direct marketing industry, with companies like Harry and David pioneering the fruit-of-the-month-club idea.
Flourishing
Analysts and executives said the idea has flourished in the gift-giving arena, with corporate gift-givers -- hoping to keep clients mollified -- showing a particular fondness for it. The advent of e-commerce has helped retailers attract even more corporate sales dollars with gift-of-the-month programs, since workers can make such purchases quickly online, then get back to work.
Notably, though, for household items like health care and beauty goods, online auto-replenishment programs have been a tougher sell, said Carrie Johnson, a retail analyst with Forrester Research, technology researchers and consultants.
"Only the most advanced online shoppers will commit to this, because you have to completely trust everything about the Web shopping experience," Johnson said. "These are things you need, so if they don't come, it's a serious hassle."
"Now that companies are having some success with this," she said, "it signals a clear shift in Internet shopping, in terms of how advanced some consumers are. And yet, "some of the novelty of these programs might wear off with consumers, once they see that they won't completely save you from running an errand," Johnson said. "You still have to go to the drugstore for certain things."
Perhaps with that in mind, some Web merchants are devoting extra effort to keeping their auto-replenishment customers happy. Alticor's Quixtar.com, where members pay $US20 annually to shop at wholesale prices, and $US45 to shop and participate in the company's marketing program, is a case in point.
According to John Parker, Quixtar's vice president for sales and marketing, the company introduced its automated program, Ditto, shortly after the Quixtar site went into operation in late 1999.
For the first two years, the service logged fairly good growth, Parker said, but some customers complained that they had no way to modify or cancel their orders before they arrived.
About a year ago, Quixtar, which is privately held, began sending customers e-mail messages before each shipment, giving customers a chance to change their orders or buy different items.
Satisfaction
Customer satisfaction has grown, along with sales. Spending by Ditto buyers now accounts for 20 percent to 30 percent of the site's sales, which reached $US900 million in the company's last fiscal year.
Parker said Quixtar now offers the Ditto program for more than 500 different products, including paper towels, energy drinks and toiletries.
Just how much toothpaste someone goes through in a given month, though, is hard to gauge. When determining the frequency of shipments for an item, the site "errs on the conservative side," Parker said, "because if we send consumers more product than they need, it'll cost us a sale."
That is one of the reasons Drugstore.com has not yet rolled out its auto-replenishment program. According to Walter Conner, a company spokesman, the site is in the process of developing such a service, with items for oral care, women's toiletries, feminine hygiene products and shaving supplies.
He said Drugstore.com was "working with manufacturers to help us figure out how many razor heads someone goes through in a month, and that sort of thing, before we get further into this."
Significantly, the company does not plan to offer an automatic replenishment program for prescription drugs associated with chronic illnesses.
According to Jeff Kimmell, vice president for pharmacy, traditional drugstores can offer those services because they can resell the drugs if the customer does not pick them up, but mail-order prescription drugs cannot be returned to the company for any reason -- be it a change of address or change of dosage.
As an alternative to automatic shipments, Drugstore.com sends e-mail reminders to its pharmacy patients, telling them that their prescriptions are nearly empty, and offering the chance to reorder.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
‘CRUDE’: The potential countermeasure is in response to South Africa renaming Taiwan’s representative offices and the insistence that it move out of Pretoria Taiwan is considering banning exports of semiconductors to South Africa after the latter unilaterally downgraded and changed the names of Taiwan’s two representative offices, the Ministry of Foreign Affairs (MOFA) said yesterday. On Monday last week, the South African Department of International Relations and Cooperation unilaterally released a statement saying that, as of April 1, the Taipei Liaison Offices in Pretoria and Cape Town had been renamed the “Taipei Commercial Office in Johannesburg” and the “Taipei Commercial Office in Cape Town.” Citing UN General Assembly Resolution 2758, it said that South Africa “recognizes the People’s Republic of China (PRC) as the sole
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
RSS