New York—Don’t ask Richard Thalheimer which of The Sharper Image’s marketing channels is most profitable. The founder/chairman/CEO of the high-tech gadgets marketer doesn’t know. And that’s how he wants it. As Thalheimer explained in his keynote address Sept. 26 at the Shop.org Annual Summit here, the whole of The Sharper Image is greater than the sum of its parts.
For instance, “the catalog supports all our avenues,” he said, which include a retail chain and a Website.
But while Thalheimer said The Sharper Image doesn’t break down profitability by channel, the company does calculate the return on investment for all of its marketing and advertising expenditures. For that reason, he said, he prefers direct response advertising, including infomercials and space ads, over pure branding messages. “I want to see, measure, and source a response for every dollar I spend,” he told the standing-room-only audience of more than 350 e-commerce professionals.
Last year, Thalheimer said, his San Francisco-based company spent more than $30 million on catalog advertising, a sum that is approaching $40 million this year. More than 70 million Sharper Image catalogs mail each year. The Sharper Image spent more than $20 million on TV advertising in 2001 as well. And Thalheimer expects to see payback from a campaign within 90 days.
That The Sharper Image has been seeing appreciable payback during the past several years—the company has been enjoying solid top-line and bottom-line gains—is due largely to its emphasis on exclusive product, according to Thalheimer. More than 75% of the company’s revenue comes from exclusive product, he said. And of that 75%, about half of the items are Sharper Image Design—developed by the company.
Differentiating one’s brand with unique merchandise is far preferable to competing on price: “It’s more fun for the consumer and provides better margins for us,” Thalheimer said. Offering exclusive product, particularly in the gadgets and gifts arena, also helps the company steer clear of what he defined as “two problems inherent in online shopping: it’s too easy to compare prices, and it’s too difficult to touch and feel the product.”