For Jack Ma, executive chairman of Alibaba Group Holdings, today is an extremely busy and lucrative day because the company he founded 15 years ...
(Page 2 of 2)
The company is also gearing up for email campaigns and reminder programs relating to past purchases. NaturalBeauty.com is waiting for ROI to develop automatic upselling based on an if-this-then-that format (for example, if several women buy lipstick A and mascara B, then a woman who buys lipstick A would be recommended to buy mascara B). Further down the road, Lapp says, the site will suggest products to members based on past purchases and consultation recommendations.
NaturElle spent about $20,000 to program the survey. Although the survey has improved business, it has not yet paid for itself. “We expect to be at breakeven by December,” Lapp says. Breakeven may by fine for this year, but the company expects the online consultation will play a big part in reaching its long-term goals. Lapp says he believes the database of personal profiles will increase to more than 100,000 over the next 12 months.
The mother of invention
Daniel and Rhonda Karayan, both of whom had worked for beauty supplier Bare Escentuals, founded NaturElle in 1991. In 1989, Rhonda could not find natural makeup products that were mild enough for her sensitive skin-so she started buying the raw materials and mixing her own. “She began providing the products to her friends and it just snowballed,” Lapp says. By 1993, NaturElle was selling its line through Whole Foods stores.
The company says it put the first e-commerce cosmetics site on the Internet in 1994. Although sales in the retail outlets were good, there was a lack of customer support. Customers had specific questions about the product before buying, and the store personnel did not have the expertise to advise them. Training store employees was too costly, so in 1996, the husband-and-wife team pulled the line out of the stores and began selling direct through the web.
Now the company offers 2,500 standard products that do not change and about 1,500 that are custom made. The company will make to order products to fit specific colors; for example, a customer can send in a swatch of fabric to have it matched.
The survey itself had its own humble beginnings as a script for telephone consultations. The company found that these scripted questions and recommendations were about 90% accurate. When the Internet began to grow, the company started collecting the information from its web site. “We still found that we were extremely accurate and that customers were very happy with results they were getting,” Lapp says.
The customer base of more than 10,000 women are mostly in the 30-to 60-year-old range, in the higher income brackets, in higher education brackets and in the very ingredient-conscious group. On average, NaturalBeauty.com customers will return to make purchases twice each month.
Annual sales for this year are expected to be $560,000, Lapp says, which is a big improvement over previous years. Taking products out of retail stores took its toll on sales, but the company is rebounding and expects revenues of about $2 million in 2001.
Harvesting data over the Internet is becoming easier. But, taking that data to market is a much different animal. NaturElle believes it’s found a winning formula. “We see real value in the data,” Lapp says. “The technology and stuff are great, but the end result of the technology is to collect more and more information on your consumer and develop a long-term relationship.”