In its second-largest acquisition, Amazon buys the company for $970 million.
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Road Runner has a long-standing policy of closing down any new venture if it isn’t profitable within four months. But so far, investing recurring revenue back into e-commerce is paying off. Internet sales, which totaled around $308,000 in 1997, mushroomed to more than $1.5 million in 1998 and could account for as much as 10%, or $7.5 million, of Road Runner’s total sales by December. “The e-commerce business had to stand on its own and the site is doing just that,” Gotfredson says. “We’re finding new categories of runners and joggers who like to buy their gear online.”
The right mix of merchandising and sophisticated personalization applications can certainly help catalogers convert browsers to buyers once they’re on the Web site. Yet a bigger indicator of how successful direct marketers will ultimately be on the Internet is how adept they are in attracting visitors to their Web stores. And many catalogers are finding that their strong brand name and marketing approach work as well on the Web as in the paper world.
Lands’ End, a well-known cataloger in the casual clothing and outerwear market, is counting on its famous name, a TV ad campaign and other initiatives to grow its already successful Web business.
More than 15 million shoppers logged onto the company’s site last year, which contains-much like its catalogs-a blend of high-quality displays of merchandise and interesting offbeat stories about some aspect of clothing or the rustic lifestyle. And 200,000 shoppers signed up for the company’s online newsletters, which provide biweekly updates on soon-to-be liquidated merchandise, product and style updates and other news.
The approach has been so successful that Internet sales were the bright spot in an otherwise down year for Dodgeville, Wis.-based Lands’ End, which saw its net income plunge 51% in 1998 (due to a slowdown in the sale of liquidated merchandise and other factors). “Our customers know the Lands’ End name,” says Ronald A. Frey, the cataloger’s Internet business manager.
Lands’ End is now counting on its TV campaign to grow Internet sales by reaching even more of its best online shoppers: college-educated customers between 35 and 44 living in dual income households. The first ad, which began airing in April, highlights Your Personal Model, a program that enables women to create a three-dimensional image of themselves and try on clothes based on their measurements.
Subsequent ads will feature So Many Shirts, an application that helps men shop for oxford shirts based on the specific preferences they’re looking for, and a similar personalization application that allows customers to mix and match swimwear styles. “With the right mix of merchandise, technical features and advertising, our objective is to keep them coming back,” Frey says.
Slow and steady
Lands’ End was among the early catalogers to give Internet retailing a try almost five years ago. But other catalogers still aren’t sure where the Internet falls into their business plan. And until they do they’re taking a conservative approach.
Last December, for instance, Lillian Vernon Corp. launched a limited Web store that features about 400 items from the company’s 6,000-product paper catalog. The Rye, N.Y.-based company elected not to put its entire catalog online because its best customers are older women who don’t own computers and aren’t likely to be cruising the Internet looking for shopping bargains. And until it figures out a new marketing and merchandising plan to draw younger customers to its Web store, Lillian Vernon will continue to concentrate on its paper catalog operations while growing its Internet business in increments.
“Our online catalog is not a replacement for our paper catalogs,” says Delphine Hibon, manager, new business development. “It’s an alternative for customers who want to take advantage of technology and shop from their home or office.”
Lillian Vernon has a five-year plan to increase the size of its Internet store, beginning with the best-selling items found in its traditional catalogs.
But given the speed with which Internet retailing is catching on, other executives believe the time for caution is over.
“If a cataloger isn’t on the Internet soon, they’re going to lose business to someone else who already is,” Worsley says. “Catalogers can’t walk a fine line anymore about whether or not they are going to be on the Internet.” •
SkyMall feels the need for speed
SyMall Inc. CEO Robert M. Worsley doesn’t need any more convincing that e-commerce is a big part of his cataloging company’s future. He has given the go-ahead to a major overhaul of SkyMall’s e-commerce infrastructure. Major technical improvements include installing new computer hardware and software that will reduce the time it takes to download SkyMall’s online store page and the number of clicks it takes for shoppers to locate merchandise.
By Worsley’s calculations, it now takes customers up to 16 seconds to access SkyMall’s online store and six clicks to get to the goods. When the changes are in place, he expects the process to take half as long and half as many clicks. “We intend to focus on speed,” he says.
To build a faster Web site, SkyMall is installing new hardware and software from the likes of Oracle Corp., Redwood Shores, Calif., SunMicrosystems Inc., Mountain View, Calif., and Apple Computer Inc., Cupertino, Calif. The changes should be online in time for the holiday shopping season.
Three dimensions, no waiting
When you think of Sharper Image, you probably think of gadgets-say, a personal relaxation system with 10 different soundscapes, from Tropical Cruise to Summer Night. Or an ionic pet grooming tool that guarantees a gentler way to comb the tangles out of Fido’s coat. Selling high-end gadgets is the foundation that Sharper Image was built on.