Hewlett-Packard Launches Direct Sales Initiatives

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Computer maker Hewlett-Packard Co., Palo Alto, CA, yesterday said it would launch a new direct sales initiative that will include a Web site, a toll-free phone number and catalogs tailored specifically to small- and medium-sized business customers.


The new effort begins next week under the umbrella name of "HP Business Store." The inaugural edition of the new catalog, which will mail four times yearly and marks the first effort by the company to mail a catalog to the SMB market, is scheduled to go out later this month.


"The Internet is changing the rules of customer intimacy," said Kim Tchang, national sales and marketing manager for commercial channels, who noted that sales in the SMB segment have been improving since the company launched an initiative targeting that segment more than two years ago. Sales to the SMB market represent about 25 percent of HP's annual revenues, which totaled about $47 billion last year.


She declined reveal details about the catalog mailings, other than to say that customers would be able to order them either through the Web or by phone. The company also did not reveal details about how fulfillment would be handled.


It was the second major direct-sales announcement in two weeks for the computer giant, which late last month said it would form a new subsidiary, HPdirect Inc., which will oversee the company's consumer-oriented web site, the HP Shopping Village, in the United States. In addition, the company said it would expand its direct sales efforts into Europe, launching a consumer-oriented e-commerce venue in United Kingdom this month and one in Sweden in the third quarter.


By expanding its direct-sales options, the company is entering highly competitive territory dominated by companies like Dell Computer Corp., Round Rock, TX, and Gateway, North Sioux City, SD. Hewlett-Packard, however, is hoping to avoid the missteps made by Compaq Computer Corp., Houston, which was widely reported to have alienated its reseller partners when it began offering products directly to consumers.


In announcing the new B-store initiative, Hewlett-Packard emphasized that the effort would not have a negative impact on its resellers, saying they would be included in the company's distribution network and would not be undercut on price. Consumers who visit the site, located at www.bstore.hp.com, will have the option of linking to some of the company's reseller partners.


"We expect 90 percent of the business to go through resellers," said Tchang. "But there is a segment that knows just what they want [that will find the new site practical]."


In addition to the new Web site, which is scheduled to go live on June 8, Hewlett-Packard also unveiled a new, toll-free phone number (877-GOBUYHP) that will connect customers directly to sales agents specializing in the SMB segment. The call center will incorporate technology that coordinates the page views of agents with those of the caller, so that they can navigate the site simultaneously while on the phone.


Customers also will be able to access the Web site, or those of the company's resellers, through Hewlett-Packard's primary Web site (www.hp.com), where the company maintains what Tchang called a "community portal" area offering technology news and advice for small businesses. Through the site, the company has garnered about 30,000 registered subscribers to an "e-brief" electronic newsletter, which is transmitted once a month.


On the consumer side, the company named Shen Li, who had been running the HP Shopping Village, as general manager of the new HP direct subsidiary, which will be completely separate from the HP Business Store venture.


In conjunction with the launch of the new consumer division, HP launched a new service at its consumer Web site, www.hpshoppingvillage.com, that allows customers to create a personalized page suited to their printer configuration. This allows HP to market products to specific consumers by placing upsell or cross-sell suggestions on the sites that will be accessed by customers.


Although the company does not release sales data for the site, spokesman Jeremy James said the products sold on HP Shopping Village currently account for less than 10 percent of the total volume of sales of those products in the United States.


He said sales volume on the site has increased more than 600 percent since its early days, and has increased most significantly since the company began offering its HP Pavilion line of personal computers and its HP DeskJet printers on the site. Pavilion-brand personal computers and DeskJet printers also are the top revenue generators, in order, at the site, James said.


The site also offers an array of other new and refurbished HP fare, mainly targeted for home consumers but also for small-office, home-office customers.


HP also has been using the site to communicate with its customers. Visitors can register to receive newsletters, which HP uses to promote product specials and new site features, and the company also sends e-mail marketing messages to its registered site visitors.


"One of the driving factors that started HP Shopping Village was that it enabled more direct contact with consumers," said James.


The site does not sell products to overseas customers, however, but this month the company begins offering direct sales in the United Kingdom, and later this year the company expects to launch such an effort in Sweden.


"We're going into markets that offer the most promise initially," said James, "and the plan is to broaden our operations there and go throughout Europe."
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