ZIFFPAGE TITLEBy David F. Carr | Posted 2005-05-23 Email Print
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Choice Hotels has made a tidy profit selling supplies to its franchisees. The next step: extending the b-to-b site to the outside world.The Search for Shampoo">
The Search for Shampoo
Another problem: The search process was inadequate for the wide variety of products ChoiceBuys offered. Users might search for "shampoo" and get back a list of results that included both hair shampoo and carpet shampoo. They needed a better way of filtering search results and making price comparisons.
Following a redesign, usage began to climb. In 2004, the number of users rose to 1,003, up 13% from the year before. That was actually a disappointment, since Choice had been targeting a 30% to 35% increase. Of those users, 14% placed 10 or more orders through the system during 2004, up slightly from 13% in 2003. By the end of this year, Smith hopes to have 30% of users ordering with that frequency. Overall, the number of orders placed through the system rose 17% in 2004.
Gartner analyst Rob DeSisto, who studied the ChoiceBuys.com application as part of his coverage of Comergent, sees it as a model for how a company can establish itself as a trusted intermediary. ChoiceBuys offers franchisees one-stop shopping while giving suppliers streamlined access to buyers, according to DeSisto. "They used technology to establish a deeper relationship where everyone could win," he says.
At times, Choice's financial managers questioned the viability of the program, particularly while ChoiceBuys.com was caught in a cycle of successive technology investments. But now expenses are dropping, with capital expenditures for the Web site down from about $1.5 million per year in 2002 to about $250,000 per year now that the Web commerce platform is firmly in place, Douglas says.
Even when the investment was high, Douglas had a winning argument: Although Partner Services is supposed to get a percentage of preferred supplier sales that aren't made over the Web, those transactions are harder to trace. "This truly is only way we could measure results," Douglas points out. "If an order goes offline, it's out of sight out of mind. You really don't know it occurred."
Looking ahead, Douglas is excited about the deal with VGM Club to launch VGMClubBuys.com in late 2005 or early 2006. "When you take 3,000 country club locations, combined with 3,800 hotel locations, that's pretty significant in the marketplace," he says.
Bottom line: The increase has the potential to roughly double Douglas' buying power, which should let him negotiate better discounts, which in turn will attract more users and purchases.