Case Study: Cornell's True Value

Thanks to high-tech imagery, a small East Coast hardware store is making a Home Depot-sized splash on the Internet.

Summary: Cornell's True Value, a family-owned hardware store in Eastchester, N.Y., is using Webcasting to draw curiosity seekers -- and potential customers -- to its Internet site. As a result, Internet sales have jumped 20 percent since last year, a growing piece of company profits.

Cornell's True Value is not your father's hardware store. Led by MIT dropout John Fix III and co-owned by his father, brother and sister, this century-old Eastchester, N.Y., corner store is making a Home Depot-sized splash on the Internet.

Its Web site features an amalgam of e-stores: hardware, lighting, equestrian equipment, brewing products, and as-seen-on-TV curiosities. But the site is unique in offering live camera views of Cornell's customers standing at the checkout counter and Fix working in his paper-strewn office.

The Webcasts have become one of the most highly trafficked parts of the site, drawing visitors by the thousands. As a result, Cornell's now ships products all over the country and Internet revenues have grown significantly.

"We explore new retailing directions, like online sales, because there are physical limitations to the building, the parking lot, how many people we can fit here." -- John Fix III, co-owner, Cornell's True Value

Webcasting the Line

"In 1995, when our store first had a Web site, there was this backlash against marketing online, but interest in live cameras," says Fix, who tied into America's voyeurism to launch one of the nation's first retail Webcasts. "So we installed a Web camera, which at first was sort of a slap-together thing."

Now it's a sophisticated enterprise, with a T-1 line -- a dedicated phone connection supporting up to 24 high-speed Internet channels -- and continuous real-time feeds.. Scenes are either updated every two minutes, or users can download a video "player" and watch the action as it unfolds.

Since Fix first launched the site, broadcasting over the Internet has mushroomed. RealNetworks of Seattle, the nation's leading supplier of streaming software, now uploads more than 100,000 of its free streaming video players every day.

"Small businesses often use streaming video as an accompaniment to online selling," Erika Shaffer, RealNetworks' director of media systems. "You can use it to bring up the product, have it twirl around to show all the sides of it, in a more interactive environment than the average Webcast."

Shaffer says a growing number of small businesses are using Webcasting to keep this brand awareness going before and after purchases. "It's a really tactile media, so you can build brand awareness really well -- like in the Cornell example."

But should businesses be concerned about Webcasting's apparent privacy issues? “The easy answer to the question is, ‘Yes there are privacy issues,’” says Charles Buckley, a Vancouver, Wash., attorney who has handled a number of cases involving privacy issues. “The hard part is exactly what they are and what rights pertain.”

But, he says, there is little chance a reputable business would be sued for broadcasting a public place. “If they were to broadcast your credit card number or something like that, then it would definitely be over the line,” Buckley says. “But as for just showing customers? Off the top of my head I can’t think of why that couldn’t be broadcast.”

“We haven’t heard anything from customers," Fix says. He recalls one employee who didn't want to be on the site when it first went up, and that person simply stayed out of camera view.

Hardlines in a Soft Market

Despite the new gadgetry, Cornell's is traditional. Its corner storefront is one of Westchester's oldest hardware stores, stocking more than 60,000 items in hardware, housewares, electrical, paints, plumbing, tools and outdoor living.

Cornell's business plan is based on home improvement rather than big-ticket items. "We focus more on housewares than a lot of hardware stores do," Fix says. This has helped the store avoid direct competition from the do-it-yourself mega-stores.

It's a good strategy, says Les Childress, president and retail analyst for Childress Investment Research in Bainbridge Island, Wash. "Hardware stores are very inventory-intensive; they're like auto parts stores with lots of small parts," he says. "In the small hardware stores I visit, they're able to automatically tell you what they have in stock. They've gotten smarter, and they're carrying goods that you just can't get at Home Depot."

So, how successful is Cornell's in capturing that niche online market? "We do real well in the 'as-seen-on-TV' niche," Fix says. For instance, in 2000, Cornell's online store sold 2.5 times more clappers (the gadget that turns lights on and off with a clap) than it sold in 1999. "You'd think this was a dying product, but we do well with products that have a high awareness but aren't found much in stores," Fix says.

Other hot products are Sea Monkeys and WD-40. In fact, Cornell's Web site does "almost as much businesses in stuff you'd never even think would sell," Fix says.

"I shipped off two bags of ice melter to a guy in Chicago the other day," Fix says. And two years ago, someone requested next-day-air of two isolator fans out to Seattle. "They paid $30 to overnight a $9.99 fan," Fix says. "I think it was a guy from Microsoft who just didn't want to go around shopping for a fan."

Though online sales are still a paltry 1.5 percent of hardline sales, Fix believes he's hit the nail on the head with his Internet strategy. "We're up by about 20 percent in online sales from last year, and it's really on the 'niche' stuff."

He offers this advice to other independent retailers: "Don't worry about the bread and butter part of your business -- (on the Internet) you've got to find what makes your store unique. You've got to find some kind of specialized product -- there's no way you can get ahead selling cordless drills online because everybody's got 'em and nobody's making money on them."

The store has been profitable since a few years after the Depression. "Ever since then," Fix says, "business has been growing. We explore new retailing directions, like online sales, because there are physical limitations to the building, the parking lot, how many people we can fit here."

It also keeps things interesting around the store. "It's like a small version of UPS -- like when they get the first order and are standing around the computer," Fix says. "We have that. For instance, when we got 72 clappers in, we shipped out 21 of them in the next hour. And since then we've sold all the rest of the them."

Is the hardware store different because of the Web? Not in any fundamental way, says Fix's father, who worked at this New York corner for the past 50 years. "In the sales area, it's still personal service that ends up counting."

At a Glance

Owners: Purchased in the mid-1930s by John Fix Sr. His decedents continue to own and operate the store.