The arrival of videotex and other electronic shopping systems lets smaller companies try out some fresh marketing options.
Silverman's Inc. had been selling shirts and suits in Grand Forks, N. Dak., about the same way for 71 years. It is, says vice-president Steven Silverman, the largest men's clothing store in North Dakota. One location, one market, with sales of around $2 million a year.
Now all that has changed.
Last fall, Silverman tapped into Viewtron, a videotex shop-at-home system that Viewdata Corp. of America, a wholly-owned subsidiary of Knight-Ridder Newspapers Inc., operates in southeast Florida. Silverman set up a separate corporation, Essential Clothiers Corp., which has the same clothing lines as the original store, but offers them electronically to an entirely new group of customers.
As Silverman, who also is president of Essential Clothiers, puts it, he has, in effect, created a new store without having to worry about staff, inventory, sales space, or any of the other problems that the Silverman family has wrestled with for more than seven decades. Essential Clothiers is simply another marketing outlet for the same inventory that Silverman's stocks.
That is not to say that the new venture presents no problems. But the long-awaited advent of videotex and other electronic marketing systems can offer startling new opportunities to small companies. In the case of Silverman's, the new marketing option promises to transform the entire company: While there are only 45,000 people in Grand Forks and 650,000 in all of North Dakota, there are some 1.6 million in metropolitan Miami alone. "The potential exists for Essential Clothiers to become bigger than out retail operation. We could become a major national company without ever opening another store," says Silverman.
"We can be in business 21 hours a day, seven days a week, and we don't need someone to be available to take orders or wait on customers," Silverman explains. viewtron subscribers can call up a display of Essential Clothiers's wares on their home televisions by using special keyboards and telephone-line connections. The orders are punched in directly by consumers and nearly all are entered during the night or at other times when customers are not usually out shopping, according to Silverman.
"We check the order index at least once a day," he says, "generally early in the morning." The customer is then sent a confirmation electronically to verify that the order has been received. The confirmation is personalized, allowing Essential Clothiers to achieve a "high tech/ high touch" relationship. "We promise shipping within 24 hours from the time the confirmation was sent, 48 hours if alterations are needed."
So far, sales have been slow, but Silverman considers Essential Clothiers still a test operation. He thinks it will take the company roughly three to five years to make money on the videotex operation because it requires further research to refine and perfect it. "We're spending more time analyzing than doing the business," Silverman explains. "Say we retail the merchandise for $35 and theoretically it costs us $17.50. Well, we're probably spending another $20 to $25 worth of time, phone money, and everything else to find out why the customer bought the product and who they are."
Originally, Essential Clothiers offered Viewtron customers a broad range of clothing with not much depth in terms of different brands and styles, so that Silverman could get a feel for what the customers would want. In the future, the new company plans to tailor its offerings to the new market. "We'll start to narrow down the range and go into greater depth," Silverman says."If dress shirts seem to be the hot thing, we'll try to have the most complete offering [customers] can find anywhere."
Despite the long wait for an initial payoff, Silverman is enthusiastic about videotex as a marketing vehicle. It is, he says, "a perfect way for a small business to grow as long as they understand the system." When Times Mirror Co. Launches its consumer videotex system in Orange County, Calif., in the fall, Essential Clothiers will enter the southern California market, too.
The importance of videotex has been predicted for years, but it is only recently that the systems have begun to move out of the pilot phase. Videotex is an interactive system in which a subscriber can shop at home using a specially designed terminal and a television screen. Customers can use the system to seek out the goods and services they want, from appliances to gabardine slacks; then they can actually place orders over the same system.
A marketer, such as Essential Clothiers, buys space on the system by the "page," which corresponds to a full display screen. The pages might include graphic displays, lists of products, descriptions of the goods, or order information. Essential Clothiers, for example, has about 60 pages on the Viewtron system. The first page carries a picture of a double-breasted sport coat, the Essential Clothiers logo, and an index of all the clothes the company carries. The pages also include a questionnaire called "Nobody Just Like You," which covers clothing sizes, such tailoring preferences as cuffs on trousers, and other information often needed in ordering. The customer completes the questionnaire and sends it to Essential Clothiers electronically. Then, to place an order, the customer simply checks a box on the order form, notifying the company that the rest of the order information is already on file. It all happens simply, directly, and electronically.
The new technology has brought a whole array of new marketing options to small businesses, offering vast opportunity as well as an element of confusion. Since most small businesses work with limited marketing budgets, any funds that go into newer -- somewhat experimental -- marketing vehicles might have to be taken away from more traditional advertising and promotion media.
"It's like going into the world's largest candy store. You've got your quarter and you want everything, but you're limited by what you can afford," says Benson P. Shapiro, professor of marketing at the Harvard University Graduate School of Business Administration. "Small businesses damn well better think carefully about priorities and not move too quickly."
