Lillian Vernon, Sharper Image Crash. Why?
Richard Thalheimer and Lillian Vernon started out as kids with no schooling in direct marketing. Both tested single products using space ads, and both had huge successes with their first shots.
Both started by selling tchotchkes—amusing little stand-alone impulse items. Both founded businesses based on finding more tchotchkes and selling them to their original demographic group.
In the end, Lillian Vernon had 3 million buyers whose average order was $56, while the average sale to the 293,000 Sharper Image catalog buyers was $185.
Why people buy
People buy for three reasons:
* Price. Wal-Mart has become the largest corporation in the world (equal to the GDP of Poland) because it is seldom—if ever—undersold.
* Service. If an organization is a joy to do business with—helpful staff, ironclad guarantee, easy return policy and great customer satisfaction—people will pay a little more to do business there.
* Exclusivity. If a buyer really wants a specific item—Glenlivet Single Malt, Hermes, Rolls-Royce, Rolex—the guy who stocks it will get the order.
Go to the Lillian Vernon Web site and you will find the same kind of stuff that is being offered by Miles Kimball, Potpourri Gift, Carol Wright Gifts, The Paragon, Harriet Carter, Walter Drake, Signals, Target and Wal-Mart—cutsey-poo, low-end tchotchkes for home, for storage and organizing, for holidays, for garden and outdoor, for the kitchen.
Quite simply, Lillian Vernon does not offer exclusive merchandise, nor the lowest price, and her service is probably perfectly OK, but so is that of the competition.
Same thing with The Sharper Image.
“Should you ever find yourself in conversation with Richard Thalheimer, it’s best not to get him started on the subject of nose-hair trimmers,” wrote Joshua Hyatt in FORTUNE: Small Business. “As it turns out, they’re the one gizmo (aptly called the TurboGroomer 2.0, $59.95) that the CEO and founder of The Sharper Image says embodies the retailer’s 25-year history.”