PORTABLE PC ORDERING TEST IS EXPANDED BY SCOTTY'S

DENISE POWER

LAKE ZURICH, Ill. -- Scotty's Home Market here is expanding its portable PC on-line ordering test to include more new shoppers, customers on whom it has little or no demographic data or shopping history.

The company said it's extracted quite a bit of learning about established customers' shopping behavior but now wants to explore the potential for increasing order frequency among new customers. Early indications are promising, as a small test group of new users has already demonstrated a propensity for greater shopping frequency than established customers.

The Internet retailer has issued to a group of shoppers their own "Scottyscan" devices, which are handheld personal computers equipped with bar code scanning technology. Using the wireless units, shoppers build their grocery lists on an ongoing basis "as needs are identified," said Chris Sang, chief operating officer of Scotty's. This approach differs from typical "session-based" on-line shopping, in which a consumer allocates time to log on to an electronic commerce Web site and figure out what they need to purchase all at one time, in one session.

Sang said the new shopping approach, in which shoppers build their grocery lists through the Scottyscan keypad or by scanning the bar code of an item to add it to the list, is taking off particularly well among those shoppers new to the service.

Initial results among the first group of 200 shoppers using the service since August indicated they shop about 18 times per year, with a typical order size of $130, he said. However, more compelling results emerged when Scotty's recently expanded the program to include 50 more shoppers new to the program. Among those shoppers - who did not have a history of shopping with Scotty's in the past - the "annualized frequency" of shopping is estimated at 33 times per year.

New users' positive response to the technology lends optimism to the technology's potential as a customer-acquisition tool.

Sang said a larger test group than the current 50 new shoppers, and a longer test period, will yield more reliable numbers, but he remains confident that shopping frequency is on the upswing. He said Scotty's calculated the "annualized frequency" by tracking the number of orders placed by new users over three months' time and then extrapolating that figure over 12 months' time.

Unlike the first shopper group of 200 consumers, on whom Scotty's had collected demographic and historical purchase data, the retailer does not have data on the second group of 50 new shoppers.

"Frankly, we were surprised by the results," he said of the increased shopping frequency among new customers. "We'll be a little more assured about the results after we get to 100 new users" involved in the program.

The Scottyscan devices are PalmPilot devices equipped with scanning technology from Symbol Technologies, Holtsville, N.Y., and order entry software from HighPoint Systems, Cambridge, Mass.

"The [metrics] that are most important to us are the frequency and order size," Sang said. He said the order size among new and established shoppers has been pretty steady at $130 however, the frequency of shopping seems to have potential to grow. "An extra eight shops [per year] is another $1,000" in revenue, he noted.

The shopping approach differs not only in that consumers can build their grocery lists throughout the week, but that they are given a running start on the task because Scotty's downloads to each device a starter list of items that a particular household purchases on a regular basis.

"The real benefit of this device is that it is portable and always in the kitchen so you can be creating your order throughout the week, and because it takes you away from 'session-based shopping,' the process of sitting down before the computer and figuring out what you need," he said.