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Direct-to-Consumer Revolution

Retail Editor 3, Jennifer Marks -- Home Textiles Today, October 16, 2006

Google's acquisition of YouTube opens some intriguing possibilities.

What, one might ask, does YouTube have to do with the retail business? Aside from the endless videos of teens lip-synching in their bedrooms and Tivoed clips from “The Daily Show,” the site is also home to 36 videos featuring Bed Bath & Beyond.

These include a young woman showing off a bookcase she just purchased there, a clip from an episode of “The Family Guy” set in a BB&B store, and a posting titled “Bed Bath & Beyond Insane,” which is described by poster itsALLmusicTOme as “me and my best 8th grade friends going crazy in bath and beyond. katie and i are having fun with the music thingys.”

Other retail goodies on YouTube: 1,490 videos about Wal-Mart (not all of them complimentary, I would guess); 4,831 on Target (albeit several are about a “target” rather than the store), and the clip “Pottery Barn Boogie,” in which a woman filmed her grown son dancing to the store music while she shopped.

The genius of YouTube is that it's free. Anyone can post a video at no charge. But the Google acquisition signals that the time has come to monetize the site. Hardcore YouTubers are, naturally, wary. But the site is not without the occasional YouTube-appropriate commercial ad. Currently, for example, Cingular is hosting a video competition for unsigned bands there.

What seems most likely going forward is that Google will yoke AdSense to YouTube, linking online ads to videos with the same content. It's a fascinating opportunity for merchandisers, but will require a level of creativity beyond “All Towels now 20% Off!”

The explosive growth of direct-to-consumer product and content delivery systems is one of the biggest phenomena of the times. Hence Target's warning to Hollywood that it will reduce DVD shelf space, if online movie downloads are offered to consumers more cheaply than the hard copies. Hence Restoration Hardware's launch of four new catalog concepts over the course of 12 months — knowing, as its ceo said, that it can test concepts directly, roll out the winners, and drop the losers with a relatively small capital investment.

The revolution is nigh.

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