PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
(Page 2 of 2)
Bereck believes that his approach fits not only the new focus on profitability in e-retailing, but also a trend within fashion retailing by which manufacturers operate their own stores and sell direct to the public. “Ralph Lauren started the trend and they all followed,” Bereck says. A similar phenomenon is happening on the web. “Eighteen or 24 months ago it was hard to get cooperation from the manufacturers,” Bereck says. “Then everything changed. They went from ‘Call us in 10 years’ to ‘How do I get on right away?’ No one is comfortable being a CEO today without a web strategy.”
Fashion500’s site is very chic and starkly fashionable. Rather than jumping from one page to the next, the site uses a fade, which adds an ethereal feel to navigation. The graphics do not assault the user by jumping out; rather they glide the user to the next page. In addition, the site uses close-up technology whereby a shopper can inspect the details of a piece of jewelry. The drawback to the site, however, is that the technology might be too sophisticated for some users.
“I tried it on both my cable modem and my dialup, and there is a significant difference in the experience,” says David Taylor, co-founder and partner in Emarket Holdings. “I suggest they offer people an opportunity to view the site with or without flash/animation, as some other high-tech sites do, and then they can see how many folks choose that option.”
Bereck, however, disagrees that the high-tech requirements of the site are a drawback. Half of web shoppers buy on company equipment, which is generally faster than personal equipment, and the target audience is a younger, more affluent audience who is likely to have more sophisticated equipment than the population as a whole, he argues.
Retailing on the Internet is new enough that anyone might have the formula for success and fashion500’s might be just the right mix. But in the meantime, the retailers with more traditional approaches have to take a close look at their profitability.
Miadora.com, which debuted on the web just over a year ago, fell to the same pressures that have knocked other retailers off the web-its investors wanted profits, and when they didn’t get them, they pulled the plug. And luxury sellers are bracing themselves for more such deaths. “Everything is going to become more and more competitive,” says Kelley.
The real measure of success may be in something as mundane as financing and managing expenses. Ashford’s average ticket of $500 creates profit per sale of $100. Kelley believes that will put Ashford in a position not only to weather any consolidation but also to come out a leader. “We have a clear path to profitability,” Kelley says.
The other retailers who want a piece of the $1 billion in 2004 sales better have their maps ready as well.
Temple St. Clair-Carr
To Boot New York
Carmen Marco Valvo
White & Warren