Mary you are absolutely right about the credibility which being part of the editorial content (rather than advertising) gives e.Digital.
Some here apparently believe that e.Digital paid for this exposure. I am sure that is not the case. The reporter (apparently Robert Lorenz, who writes "The Gadget Guide") putting together the article wanted a collection of items which represented cutting edge technology.
The actual text:
"ON OUR COVER
On Fox TV's "24", Kiefer Sutherland plays Jack Bauer, a counter-intelligence agent, and Sarah Clarke plays turncoat agent Nina Myers. While their future on the popular show remains classified, we asked them to help reveal our own internal investigation of the coolest high-tech gadgets for the holidays. Sutherland holds e.Digital's Odyssey 1000 MP3 player and wears Timex's Ironman Speed+Distance System watch. Clarke carries Fujitsu's Stylistic ST4000 Tablet PC. Take a peek at the rest of our roundup."
Immediately following is the column which features the products, starting with the Fujitsu tablet PC and then the Odyssey next.
The text for the Odyssey, which is next to a large picture of the original (July) version of the player states:
"Store Your Music -- And Your Files
With a nod to the Apple iPod, e.Digital's sleek Odyssey 1000 MP3 player (www.edig.com) boasts a whopping 200gigabyte drive (4000-plus songs) and FM tuner. It also doubles as a portable storage unit for your PC files. Coolest feature: voice recognition for easy navigation through your music. About $400."
(Bold emphasis is my own.)
I think it is clear that the voice recognition feature is what prompted the choice of the Odyssey over the iPod for this feature.
This kind of exposure is far more valuable than any advertising (as your post states well.)
The key now is to capitalize on the happy circumstances of a very hot celebrity and national exposure to 75 million readers during the peak holiday shopping period.
For example, why not sell certificates good for one Odyssey player at a 10% discount for early orders prior to product availability?
The margins obtained by the on-line store greatly exceed those of the wholesale business. Remember, when a consumer electronics manufacturer sells a product to a retailer it receives (at best) 20% of the wholesale price. In reality that margin may be only 10% or 15% (notwithstanding the negative margins e.Digital has obtained to date).
The retailer then marks up the wholesale price and receives about 30% of the final selling price.
On a product priced to sell for $400 (retail) the retail gross profit would be about $120 (at 30% margins) and the manufacturer's wholesale price would be about $280, from which the manufacture would receive from $28 (at 10% margins) to about $56 (at 20% margins).
By selling the product on its own on-line store e.Digital captures both profit elements (i.e., $148 to $176) which gives a total margin opportunity of about 37% to 44%. This is partially offset by the distribution costs associated with the on-line store, but the bottom line is obviously potentially huge for direct sales.
The downside is that it is difficult to get shoppers to come to an on-line store and to buy products which they cannot test first-hand.
Hence the value of an editorial endorsement of the product as one of "the coolest high-tech gadgets for the holidays."
JimC
AI
