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Strong on-line brands enhance sales
Thursday, October 25 2001
by Andrew McLindon

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Building a brand on-line is crucial as it creates trust between e-tailers and their customers, according to Roger Galligan, chief executive of House of Ireland.

Speaking at an Inspired Leaders seminar on the "Total Customer Experience" in Dublin on Wednesday, Galligan said that because consumers cannot touch or feel products sold over the Internet it is vital for companies selling on-line to develop a brand that is respected.

Galligan commented that House of Ireland, which has been selling giftware on-line since 1996, had created trust in its on-line brand through the site's design, the depth and quality of its product range, and references throughout the site to how secure it was and how the venture was linked to a "bricks-and-mortar" operation.

Galligan said that these initiatives had helped bring the site to profitability and also benefited the company's offline operation. Since the site was launched five years ago, House of Ireland's mail order business has trebled and visitors to the shop have also increased.

However, e-commerce is not "all that it is cracked up to be," Galligan warned. "People thought that there was going to be cost savings such as reduced overheads from selling on-line, but this has not proven to be the case. The high costs involved in areas such as technology and fulfilment actually outweigh any savings that might be made."

Nevertheless, he said there is a place on-line for every company. "The important thing is to start small and build your business and customer database over time," he said.

The other speaker at the event, Mike Welsford, chairman of the Ogilvy Ireland Group, said that branding and branding strategy should be given a higher importance by many businesses. "Branding strategy should appear as number two on the list behind finance on a company's agenda," he commented.

Welsford said that branding was of vital importance because there is a link between brands and shareholder value. "Our research shows that strong brands are more likely to generate higher operating profits before EBITDA (earnings before interest, tax, depreciation and amortisation)," he commented.

He added that in recent years there has been an emergence of new brands that operate under new rules and as a consequence of doing so have established strong brands quicker than established brands. He cited US-based on-line and discount brokerage firm Charles Schwab as an example of one of these new brands.

"Schwab went on-line to reduce transaction costs and improve the amount of information available to users. This has created a sharpened performance by the company and has heightened trust among consumers in its services and products," said Welsford.

Inspired Leaders can be found at http://www.inspiredleaders.com.

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