In one of the more counterintuitive strategies in retailing today, Chairman and Chief Executive Edward Lampert has been pushing his beleaguered company to secure upscale offerings for the Marketplace section of its website, which features goods sold by third-party vendors.
In one of the more counterintuitive strategies in retailing today, Sears Chairman and Chief Executive Edward Lampert has been pushing his company to secure upscale offerings for the Marketplace section of its website. Andrew Dowell discusses on MoneyBeat. Photo: Sears.
So now in addition to the Chanel bag and Rolex watch, Marketplace browsers can find $445 Balenciaga sunglasses, $600 Pour La Victoire boots and a $500 Zac Posen dress, according to a recent scan of the website.
The offerings contrast sharply with the washing machines, tools and basic clothing that are the mainstays of the downscale department-store chain. Luxury vendors said Sears representatives have stressed in meetings that the company was trying to revamp its image and become more hip.
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In addition, Mr. Lampert has made a priority of e-commerce, hoping to position the company to better compete with larger online marketplaces run by Amazon.com Inc. AMZN -0.70% and eBay Inc. EBAY +0.89%
Yet there are hurdles to making Sears Holding Corp. SHLD -1.61% a real competitor online, and some analysts see the effort as a distraction from needed work shaping up the company’s stores, which account for an estimated 97% of its sales.
The breadth of items, particularly at the high end, has some shoppers confused, especially since they usually land there through general Internet searches, rather than by going to Sears.com.
On an online forum for handbag aficionados, a string of members were questioning whether a Gucci purse listed on Sears’ website was fake, merely because of its association with the department store.
“Sears would be the last place most would think to purchase high-end bags from,” a member quipped. Another wrote, “Gucci @ Sears? hmmmmm don’t think so!”
A Sears spokesman said every seller goes through a registration and approval process to ensure the validity of their items.
“Honestly, when I tell people I sell there, I always have to put in a caveat,” said Linda Lightman, owner of ShopLindasStuff, which sells new and preowned clothing and accessories from designer brands such as Christian Louboutin, Chanel and Dolce & Gabbana.
Ms. Lightman began selling on Sears Marketplace in June of last year, and said she sells a few dozen items a week, compared with the more than 1,000 orders she gets daily on eBay.
Sears approached Allison Oseran, who runs AJM Fashions, about a year ago to sell her wares on its Marketplace. AJM carries brands such as Stella McCartney, Jimmy Choo and Zac Posen.
“They convinced us they are working hard to change their image and wanted to focus on designer clothing,” Ms. Oseran said.
Sales have started off slow, but Ms. Oseran said she has sold a $3,000 pair of Alaia heels on the site as well as a Michael Kors handbag. AJM now sells about 30 to 40 items a month via Sears, compared with thousands of items a month on eBay and about 700 a month on Amazon, she said.
“We hope that they’re able to change their image,” Ms. Oseran said.
Marketplace was the brainchild of Mr. Lampert, who merged Sears and Kmart stores in 2005 to create Sears Holdings. Marketplace opened in 2010 and has grown to include thousands of vendors selling more than 85 million products, ranging from sporting goods to consumer electronics.
The Sears spokesman said the idea behind Marketplace was to offer the “best and widest assortment for our members,” and the company remains focused on shaping up its bricks and mortar stores. “Since 2011, Sears Holdings has invested millions of dollars equipping our stores with technology” like iPads, the spokesman said.
Sears collects a commission that ranges from 7% to 20% of sales in addition to a $39.99 monthly fee.
Sears’s Marketplace is now the third-largest online vendor market by number of visits, but it trails Amazon and eBay by a wide margin, according to comScore. In June, Amazon had 98 million unique visitors, eBay had 69 million and Sears had 18 million.
Amazon charges fees ranging from 6% to 25% of an item’s cost, plus a closing fee, and for sellers that don’t buy monthly subscriptions, a per-item fee. EBay charges fees of 6% to 9% of an item’s price for sellers who buy subscriptions, or 10% for those who go without.
Searches for products turn up results for both Amazon and Sears fairly high in the rankings, said Paul Swinand, an analyst with Morningstar. But Amazon still holds an advantage on price, he said.
This proved true during a recent search for a Conair fabric steamer. The GS10 Deluxe model was available on Amazon’s Marketplace for $74.95, while Sears’s third-party vendor was selling it for $138.66.
The Sears spokesman said the company offers competitive pricing and offers free shipping on items of $59 or more for its own products or those sold in its Marketplace section. Marketplace has grown quickly in the three years since it opened, with total online sales, including items sold directly by Sears as well as third-party sellers, up 17% last year, the spokesman said.
While the company is experimenting with e-commerce ventures and other technologies, its core operations continue to suffer. Revenue has declined steadily since the merger that formed the company, falling to $39.9 billion in fiscal 2012 from $53 billion in 2006.
After losing more than $4 billion in 2011 and 2012 combined, Sears Holdings posted weak results for the quarter ended May 4.
Revenue fell 9% to $8.5 billion and the company showed a $279 million loss. Sales at Sears stores open at least a year in the U.S. had ticked up in the previous quarter but resumed their decline, dropping 2.4%.
The Sears spokesman said the company is trying to deliver a “differentiated” experience to customers by integrating its online platforms with its brick-and-mortar stores and through a loyalty program called Shop Your Way.
Matt McGinley, managing director of investor research firm International Strategy & Investment Group, said the Marketplace and other Web initiatives won’t help those results unless the bricks-and-mortar business turns around.
“Regardless of how successful they are in growing this business, the bulk of their business is from stores,” Mr. McGinley said. “And if they can’t plug those holes, it’s hard to see how they remain viable as a retailer.”
Date: July 21, 2013