CUShopper provided the e-commerce litmus test for credit unions

BURBANK, Calif. - There were major question marks when CUShopper, a credit union member online shopping network, was unveiled last year. CUShopper's online shopping network isn't a portal that features loads of content and just a few shopping features; it is a shopping component only-one of the purest forms of e-commerce. Was the credit union industry ready for a pure e-commerce component? Were credit union members ready for it? How good was the free service? CUShopper CEO Adam Wicks Walker said credit unions themselves have answered those questions. At press time, Walker said CUShopper had approximately 1,500 credit union clients. With figures from Callahan's and NCUA putting the number of CUs with a Web site somewhere in the 2,500 range, CU Shopper has over 60% of the credit unions that are on the Web. Walker said CUShopper is aggressively going after credit unions with its free service today, because the industry may only be able to support a handful of shopping sites a few years down the road. "I look at all the e-commerce hype with a grain of salt. The last survey I saw gave the statistic that people watch an average of 12 television stations, but surf just 10 Web sites. There isn't going to be room for 10,000 Web sites that do the same thing," said Walker. CUShopper is a privately held company and doesn't give out its financials, but Walker said since its rollout last year the network has processed thousands of member purchases for millions of dollars in credit union loans. The concept behind CUShopper is to not only provide members with a credit union online shopping choice for big-ticket consumer goods, but to allow the credit union to present its financing options at the time of purchase. When members shop at major electronic retail chains they are often presented with a store credit card option that is backed by a large bank. The credit card says "Best Buy" for example, but the account is provided by a Bank One. That's the kind of financing action CUShopper is trying to get credit unions into, said Walker. Walker said the average size of a transaction on CUShopper is approximately $1,500, which could mean a $1,500 loan for the credit union. Some credit unions are looking at CUShopper not as a high-powered vehicle for generating loans, but as a complementary piece to existing Web services and as a Web "attraction" tool. "We have about 50 members every week using the CUShopper feature," said Juan Facudo, vice president of lending for Austin Metropolitan FCU, Texas. The credit union unveiled the service in June of last year. Facudo said the average member CUShopper purchase is for about $1,100. The credit union has a special computer loan members can use if they are purchasing a PC, otherwise they can use the credit union's credit card or a generic unsecured loan. Facudo expects the CUShopper feature to generate about $100,000 in loans for the credit union this year. "We wanted volume on our site. We don't expect the loan dollars to have a real significant impact on this credit union, but I want to bring in things that will attract members to the site," he said. Based on the 200 visits a month to the shopping area, it's obvious the shopping component is enticing members to visit, said Facudo. He would like to get more online shopping loans, but if members pick up on some other credit union product or service during their Web visit, that's fine too. "The main purpose of adding CUShopper was to bring attention to our Web site. We want as sticky a site as we can get. The more members that visit, the more services they'll see. The second purpose was to increase loans," said Kim Brandt, marketing director for Corporate America Family CU. The CU unveiled CUShopper in February of this year. Brandt said the credit union developed a special e-commerce loan product to help members finance CUShopper purchases. While Brandt did not have any loan statistics ready at press time, she said the first month after unveiling CUShopper, Web site hits increased by about 1,000. Brandt said a portal is next on the CU's Web wish list. Walker said CUShopper is even developing Web sites for credit unions that want the CUShopper product, but don't have a Web presence. "It takes us no time to get a site going. It does take two to four weeks to create the marketing materials," said Walker. CUShopper provides direct mail and other marketing pieces for credit unions to market the shopping network to members. The free materials sound great, but have caused concern among some, said Walker. "There is a perception that `gee is this really free?' At this time we want to provide that marketing support for free. With the volume of the printing we're doing, costs drop significantly." "We obviously need to increase the volume of everything. Our business plan calls to build massive scale and build a brand value. That's what creates the favorable economics of this business," he said. Because of its success Walker said CUShopper has become a favorite target of other CU Web firms looking to partner up. "We've looked at a lot of things. Sometimes companies want to partner up `just because.' We need a reason to do it. When we're asked for a partnership, I appreciate it, but we really need to focus on our core business. Let's get really good at that first. We don't want to be in every e-commerce solution," said Walker. Despite the company's success Walker said there's a perception that CUShopper is growing too fast. "I think people might say we're growing too fast, but we have processes in place to deal with that growth." CUShopper recently unveiled travel packages. "Travel so far has been very exciting. There's been a different response than we expected. We have 30 and 40 people going on trips together. Some credit union office managers are going on cruises with their members." -pgentile@cutimes.com