Buying Big-Ticket Items
By MYLENE MANGALINDAN
March 22, 2006
Internet-only deals are increasingly turning the Web into a virtual bargain basement for big-ticket items from snowblowers to HDTVs.
The offers are stoking a marked change in consumer behavior. For years people have embraced the practice of buying small and easily-packaged items, such as books, online. But purchasing big, costly products after merely viewing them on a computer screen has been much slower to catch on. In recent months, however, a number of retailers have noticed a significant jump in online sales of big-ticket items, like refrigerators and treadmills.
Overall, total revenue from online sales of large items, including furniture, appliances and other equipment rose 34% during the most recent pre-Christmas holiday period (Nov. 1-Dec. 25, 2005) from a year earlier, according to research firm comScore Networks. Electronics retailer Best Buy Co. says sales on its Web site in December grew more than 40% from December 2004, with appliances such as big-screen television sets selling particularly briskly. In fact, Best Buy tallied that TV sales on its Web site grew three times as fast as TV sales in its stores in 2005 from a year earlier. Companies such as Sears Holdings Corp., sporting equipment retailer Cabela's Inc., and Wal-Mart Stores Inc. now report selling hefty items like treadmills, log cabins and mattresses on their Web sites.
Some retailers believe that the increased complexity of products such as TVs and washing machines has sent more consumers to the Internet to conduct research -- and many end up placing an order while they're online. Many manufacturers and online retailers have also put better systems into place so that online orders can be shipped to the customer directly from the manufacturer. To entice consumers further, some online retailers are offering to pay the shipping costs.
Jeff Elliott, a 46-year-old building-materials project manager in New Palestine, Ind., purchased a $2,700 42-inch plasma-screen television set late last year from Best Buy's Web site, and about a year ago he bought a $1,100 Bose audio system with speakers and subwoofers online. Mr. Elliot says he bought the large items over the Web to spare himself from "breaking my back, or taking a chance of breaking something" by having the retailer deliver his big purchases to his home. He adds that if Internet sites are willing to do the "heavy lifting" with big items, he's all for it.
All of this is a boon to consumers as some retailers, eager to promote online sales of large items, offer more Internet-only specials related to big stuff. Target Corp.'s Web site is offering free shipping on select furniture and patio furniture through Saturday. J.C. Penney Co. offers discounted beds, bedroom furniture sets, patio furniture, mattresses, tables and chairs on its Web site. Home Depot offers no shipping charges on its patio furniture bought online. Best Buy currently has two offers centered on sizable items that can be found exclusively on its Web site. In one offer, Best Buy says it will give away a free DVD recorder with any $999-or-higher TV purchase. In its other offer, Best Buy promises a free 20-inch television set with the purchase of any large appliance priced at $999 or more.
When Charley Geoly, an executive recruiter, was building a home in Menlo Park, Calif., recently, he bought 3,600 pounds of copper gutter, a 37-inch and 50-inch TV, 1,000 cabinet handles and pulls, and other items on the Internet. "What the Web gives you is much broader access" to suppliers and manufacturers, he says. "I had better selection and more easy selection."
The trend differs from buying used cars and homes through the Internet, since cars and houses can't be mailed to a consumer's home. Many of the car and home sales that take place through Web sites also aren't sales at all -- real-estate and auto sites typically refer a consumer to a car dealer or real-estate agent and take a cut for making the referral. Some sites such as eBay Inc.'s eBay Motors site are exceptions, because the entire transaction, mostly used cars, takes place on the site and delivery of the used car varies widely from in-person pickup to shipment and special delivery. For the most part, actual physical sales of homes and used cars over the Web are limited.
For retailers, the payoff from selling big stuff online can be huge. The average order on Costco Wholesale Corp.'s Web site, which sells many large items such as caskets and children's playhouses, is $450, according to Ginnie Roeglin, senior vice president of e-commerce and publishing. Some retailers and analysts say that big, brand-name items carry a higher price and are more generally more profitable than small products such as socks, though that varies by product.
Some online retailers say consumer purchases of big merchandise on the Web will help fuel their growth. Amazon.com Inc. last year built several new warehouses, which Chief Executive Jeff Bezos said were constructed in part to accommodate the larger products that he anticipates the company will sell. Amazon sells jumbo items including patio furniture, mountain bikes and home gym equipment. The company declined to comment on the number of big items it sells.
Start-ups also are capitalizing on the growing appetite for buying big items online. UShip Inc., an Austin, Texas, company founded in 2003, helps buyers and sellers transport large items. The firm created a Web marketplace in the image of Internet auctioneer eBay, where individuals post an item that needs to be moved -- such as a car -- and independent truckers and freight carriers bid on listings to deliver it. UShip charges the trucker or person providing the moving service a fee of 7.9% of the accepted bid price.
Doug Dolginow, an executive at a genomics drug company in Gaithersburg, Md., recently tested out UShip. In August, Mr. Dolginow bought a 250-pound astronomy dome from another hobbyist on an astronomy Web site, but didn't know how to transport the odd-shaped 6-by-7-foot item from Boston to Maryland. Commercial shippers wanted to charge $1,000 or more, and flying to Boston to drive the dome home by U-Haul would have cost just as much, says Mr. Dolginow. So he turned to UShip, and found a mover through that site.
The transaction and the move were "amazingly smooth," says Mr. Dolginow, who ultimately spent $550 to get the dome to his house.
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