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AOL, Sears ink agreement
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March 14, 2000: 2:31 p.m. ET
ISP, retailer beckon customers to come see the interactive side of Sears
By Staff Writer Michele Masterson
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NEW YORK (CNNfn) - Sears Roebuck and Co. and America Online Tuesday announced a multi-year cross-marketing and Internet broadband alliance.
Financial terms of the deal were not disclosed.
"We're not putting out dollar figures, but we expect this to significantly enhance the number of visitors to our e-commerce sites, the number of customers, and obviously, our revenue," Dennis Honan, president of Sears Online, told CNNfn.com.
The partnership names Dulles, Va.-based AOL (AOL: Research, Estimates) as Sears' preferred online service provider. AOL will pair with Sears (S: Research, Estimates) in creating a special co-branded edition of AOL with Web links to the Sears site. The Sears-AOL service is slated to be launched in the second half of this year.
During midday trading, the news sent shares of AOL up 2-9/16, or 4 percent, to 63-7/8, while Sears climbed 1-1/16, or 3.9 percent, to 28-1/2.
"It's a good, strategic move, a good partnership," said Bear Stearns analyst Steven Kernkraut. "Sears is trying to jump into the e-commerce world in a pretty big way, focusing on their strengths and their hardware lines and appliances and home areas."
"I think it gives them another way to become more visible," said PaineWebber analyst Jeffrey Edelman.
Under terms of the agreement, AOL interactive products and services will be marketed to Sears' customers throughout its chain of stores nationwide. Sears merchandise and services will also be marketed to AOL's 23 million members and Web site visitors, on AOL channels including AOL, AOL.com, CompuServe, Netscape Netcenter and Digital City.
Featured product lines from Sears Online that AOL will showcase include Sears online product appliances, tools, lawn and garden equipment, home electronics, PartsDirect, Wishbook and the Sears Gift Card.
Alan Lacy, president of services for Sears, believes the company has an advantage over pure e-commerce companies. (378K WAV or 378K AIFF)
"This alliance will be focusing on delivering solutions for our customers, in areas where Sears is strong and we can leverage our great brands in Craftsman and Kenmore, with us realizing that we cannot do this all ourselves," Honan, of Sears Online said.
The alliance also includes plans to market and sell high-speed Internet access or broadband services to Sears customers, who will be able to subscribe to a co-branded version of AOL, featuring special offers from Sears and links to its home page. The service will be displayed at all 858 Sears full-line stores, offering AOL products and services in a designated area and Sears will also promote AOL as its preferred online service.
"Since Sears is involved in home installation, installing the broadband would probably be a natural adjunct in terms of offering services," said Edelman.
"This will give Sears good positioning on the near-term basis with AOL, but, on a longer-term basis, it probably could be a fabulous opportunity for them. It depends upon when broadband will become of age," said Kernkraut.
"If we all have to buy a new device for the home that's a combination of a TV and PC, Sears is the largest seller of home appliances today in America. Whatever that appliance is, it's going to require installation, which would leverage their home services business," Kernkraut said.
In addition, Sears' 60 million credit card holders will be able to pay for AOL service using Sears charge cards. AOL also plans to create a co-branded AOL Instant Messenger service for Sears customers.
"This is the first time, to our knowledge, that a proprietary credit card has been accepted on the AOL service," said Sears' Honan.
"We intend to proceed ahead with AOL as our partner in these areas, and we will also look at other things in which both companies can work together on," Honan said. 
-- Click here to send e-mail to Michele Masterson
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