Sears (NASDAQ:SHLD) is getting more upscale—and expensive—items in the Marketplace section of its e-commerce site, including Rolex watches and Chanel bags, the Wall Street Journal reported.
The biggest problem? Customers doubt that the items are real, mainly because they're being sold on the Sears site. The idea of buying a $33,000 Rolex, a $4,400 Chanel handbag, or even $445 Balenciaga sunglasses or $600 Pour La Victoire boots at the home of Craftsman tools is confusing to regular customers and just not believable to fashionistas.
Sears says every seller goes through an approval process to make sure they're selling genuine items, and some of the high-end sellers also sell through eBay (NASDAQ:EBAY)—though they typically sell a lot more through eBay. One small seller who began offering merchandise on Sears Marketplace a year ago said she now sells a few dozen items a week, compared with more than 1,000 orders daily on eBay.
Understanding why Sears wants to go high-end in its Marketplace is easy: The retailer collects a commission that's between 7 percent and 20 percent of the sales price (along with a $39.99 monthly fee). If the chain can actually grow that online revenue, it would be worth confusing some longtime customers. One downside: It's nothing like an omnichannel approach, since Sears is unlikely to ever replicate its Marketplace merchandise in stores.
Retail analysts, on the other hand, point out that Sears is neglecting its brick-and-mortar stores, which represent 97 percent of its revenue. Same-store sales fell 2.4 percent in the past year, according to Sears Holdings' most recent earnings. "Regardless of how successful they are in growing this business, the bulk of their business is from stores," said Matt McGinley, managing director at International Strategy & Investment Group. "And if they can't plug those holes, it's hard to see how they remain viable as a retailer."
- See this Wall Street Journal story
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