Electronics firms edge closer to customers

Electronics giants Sony and Philips are to follow other hardware vendors into a more direct web-based relationship with customers.

Electronics giants Sony and Philips are to follow other hardware vendors into a more direct web-based relationship with customers.

Philips is to work with “a couple of our major customers” - retailers - in this country to develop joint websites, says general manager Errol McKenzie. These “web alliances” will not involve Philips selling products but such actions as “using common databases” and joint promotions.

The local move is likely to be part of a global plan. In January Philips said it was using software from iMediation as the tool for collaborative selling to help get its 60,000 worldwide resellers online. iMediation says its iChannel platform will allow Philips to co-brand web sites selling items from Philips' consumer electronics division.

Ruud van Vessem, responsible for Philips' European electronic business, emphasised that the company would be working with the channel. "We want to e-enable our resellers and dealers. Instead of bypassing our distributor network to sell over the web, we work together to reach the end customer."

Walkers Advertising, which produced the Philips website, would only say that it was not involved in any extranet-type project at present.

Sony, meanwhile, is to expand its existing web sales beyond Vaio laptops to include “associated products” such as digital still cameras and Handycams by mid-year, says Sony New Zealand chief executive Rex Chandler. He says the Sony showrooms in Auckland and Christchurch were the beginning of a more direct presence, represented at its strongest by the SonyStyle online sales service that operates in the US.

The company does not have “huge expectations” for online sales here, and Chandler says the company’s “not aggressive” online approach in this country is more about increasing education and brand awareness. Sony resellers are aware of plans and are “probably not entirely happy”, he acknowedges.

But others in the sales channel suggest the moves may simply be a case of an obliging nod to a global parent’s plans, while being aware of the exceptionally strong customer loyalty to the local sales channel, what the marketing manager at distributor Tech Pacific, Scott Cowan, calls a “tick-the-box” approach. Cowan says Sony’s Vaio direct sales, for instance, are handled by Axon and its Quality Direct e-procurement arm.

Tech Pacific distributes Philips monitors, and Cowan hadn’t been told of any discussions with the vendor.

Computer vendors such as Hewlett-Packard have found only 1% of their business being done directly online and Compaq is resisting a move online here because of the strength and loyalty to the sales channel. Compaq recently shut down the last of its direct Connect shops in Australia. Cowan doesn’t believe direct sales will ever increase from 1% of total sales, and he says margins for vendors selling direct will always be slim, given that most IT products ship at a global price and that the cost of delivery to this country remains a “challenge”.

A more direct approach may help Philips out of a sales hole. Last week the global company announced first quarter net income down 91% on the corresponding 2000 quarter, and sales down 1% (see Philips, Ericsson to cut 6000 jobs each).