In that situation, profit margins get depressed and companies are forced to compete largely on the basis of brand awareness, customer service and price, Thalheimer says. Our model has gotten better with time. We're not subject to the price compression and price shopping that's squeezing other retailers on the Internet. In Thalheimer's estimation, the biggest benefit the Internet offers a direct-response business is the automation of business processes, such as ordering products, that previously had to be performed manually. In the past, this was done through toll-free numbers and by talking with an operator.
Consumers can now go online, click on stored information or key in their own information.
In nine months, the Sharper Image site will offer consumers the ability to track their orders, Thalheimer says. The Internet has also helped The Sharper Image phase out business models that weren't working, such as outlet stores. The company is now using its new auction site to clear out older merchandise. Those people who would like to shop at The Sharper Image but for some reason couldn't justify paying the normal price now can find products at half the normal retail price, or less, he adds. To remain competitive, Thalheimer realizes that an online retailer must keep abreast of the underlying technology on which a site is based.