Sears Clones Best Buy Movie Site, Both E-Tailers Lose

Outsourcing is always high on the list of ways to cut E-Commerce costs—but it is possible to hand off a little too much. Case in point: Sears, which last Tuesday (Dec. 28) launched an online movie download service that's being operated by a vendor that also runs Best Buy's competing movie service—and the two sites are virtual twins.

It's another example of how tricky E-Commerce can get when you put the work in the hands of a third party who has as much loyalty to your competition as it has to your business—and is taking money from all sides. But there's a deeper question: If no one at either retailer insisted that the third-party vendor protect branding with a unique Web site look, what else is unprotected from competitors? Customer recommendations? Sales data? CRM information?

For Sears and Best Buy, the problem stemmed from the fact that both retailers turned to vendor Sonic Solutions to run their movie-download sites. Best Buy's CinemaNow came first, last May, but Sonic was eager to repurpose its technology and sold Sears on using it for the chain's new Alphaline Entertainment site. The result: E-Commerce sites for two multi-billion-dollar retailers that look almost exactly alike, offer the same products at the same prices and share the same functionality. (The main difference: the Sears site has an orange logo, while Best Buy's is blue.)

Sonic also didn't quite succeed in scrubbing away all references to the Best Buy version in cloning it for the Sears site. The CinemaNow name shows up in the HTML code for hundreds of Alphaline Web pages. And on Alphaline customers' PCs, downloaded movies are actually stored in a folder named "CinemaNow." When Sears launched Alphaline, some pop-up messages on the site even mentioned CinemaNow by name.Cutting those corners probably made it very inexpensive for Sonic to launch Sears' movie download business. That's cost savings on the IT side, but it's very expensive from an overall E-Commerce perspective. If there's literally no difference between E-Commerce sites from Sears and Best Buy, how can Sears compete? For Best Buy, there's an even bigger issue: What happened to the E-Commerce differentiation it thought it had? Apparently those questions didn't occur to either Best Buy or Sears when they cut the deals that resulted in twin, competing E-Commerce sites.

All outsourcing involves losing some control. That means CIOs have to be especially careful when IT work lands in another vendor's hands. If you don't look out for your business, it's not likely that an outside vendor will—especially if that outside vendor is also doing deals with your competitors.

It's not just the issue of two competitors whose E-Commerce sites look the same. If Sears didn't spot that problem long before the Alphaline site went live, what else slipped through the cracks? Handing off the operation of an E-tail site to a third party is one thing. Giving complete control of customer information to a third party who is providing the same services to a competitor can make things very murky indeed.

Could customer reviews generated on one E-tailer's site percolate to the "twin" sites of competitors? What about competitive data on what products sell best, or actual CRM data on specific groups of customers?

If you think that can't happen, consider this: In 2008, a group of 109 McDonald's restaurants in the Salt Lake City area decided to do a mobile commerce test. The work was handed off to a third party, mobile-coupon vendor Cellfire. But it didn't occur to anyone at McDonald's that nothing prevented Cellfire from pooling E-Commerce data with that from other Cellfire customers.

Yes, outsourcing is always high on the list of ways to cut E-Commerce costs. Just make sure it's doesn't end up costing you control of the business.