The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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“The way we’re building the brand is through experience, not by spending inordinate sums of money on off-line advertising campaigns,” Kurtzman says. “A lot of other pure-plays made the mistake of burning a lot of cash to build a brand without generating any sales; we’re doing the opposite.” If the customer has a good experience he or she will return and spread the word to friends, he says. Ashford’s return customers made up 28% of its Q3 2000 sales.
In addition to the Amazon marketing partnership, Ashford has used acquisitions to expand its offering and reach. Early this year, Ashford said it will acquire Guild.com. Wilder compliments Ashford on its partnership with fine-art web site as a “great way to expand their offering without cluttering their web site.” Says Wilder: “That is appealing to the same type of customer. To the extent that they can do more to leverage the luxury lifestyle positioning of their site will help them succeed.”
Of the Guild acquisition Shaw say it has “neat synergies and is a beautiful company financially.” He says Ashford should be able to convert Guild customers into Ashford customers and vice versa. Ashford hopes the addition of the fine art offering will increase the reasons for shopping at Ashford and speed the company’s path to profitability. The Guild acquisition also gives Ashford a springboard into the catalog medium. Guild.com has a good catalog system and Ashford is looking to piggyback on that expertise to go multi-channel, Kurtzman says.
The Guild acquisition was not the first for Ashford, nor will it likely be the last. In January 2000 Ashford bought fragrance retailer Jasmin.com, and in October 1999 it added TimeZone.com, a community and content site for watch collectors. TimeZone was receiving 80,000 visitors per month from collectors who buy between two and ten watches per year. Ashford sells a line of luxury watches. In fact, Ashford began as a watch retailer, called New Watch. But at Kurtzman’s insistence, the company expanded its line and changed its name. He felt the customer acquisition costs were too high if the company offered only one product. Shaw says Ashford is looking at other brand-expanding deals, but won’t say with whom.
By any other name
But even as it expands, Ashford intends to continue to pay attention to the details. Ashford learned a valuable lesson in customer responsiveness this past summer. A buyer contacted Ashford regarding a $175,000 diamond. “They sent out a number of e-mails to several sites,” Kurtzman says. “We were the first to respond-within an hour. We ended up winning the business. That kind of responsiveness drives sales and makes customers happy; we saw that in action.” That diamond was the highest-priced item sold on the site to date.
“We pay very close attention to how we respond to customers on the phone and through e-mail,” Kurtzman says. The average call wait time during this past holiday season was 31 seconds, which dropped from 69 seconds in 1999. “We try to treat e-mail as if it were a phone call,” he says. “We were responding to over 80% of the e-mail within two hours with the answers not just ‘hey, we got your e-mail.’”
Kurtzman’s attention to customer service was put to the test this past holiday season when Ashford guaranteed on-time delivery. To back that guarantee, Kurtzman personally sent 25 roses to each customer whose order arrived late. The program was promoted through ads in The Wall Street Journal and USA Today, on Ashford’s home page and through e-mails. Ashford was successful on 99.5% of its orders, meaning it sent out fewer than 500 sets of roses. “Anything you can do to make the customer feel special helps,” Wilder says. “Customers hate being ignored. Sending roses is a very nice touch.”
Paying close attention to the backend operation was key to keeping the rose count low. Ashford’s infrastructure is such that it can ship a product within 15 minutes of when the sale is made. Ashford operates a single, 45,000-square-foot warehouse and fulfillment center in Houston. “It’s a combination of our business model and the systems we’ve put in place,” he says. “Everything we sell is small and light. So the logistics of picking and packing are different than if you were shipping large, heavy items. We’ve worked very hard at tying all the systems together and building a process that is efficient. I think we do that element of customer service better than anyone else.”
All the right notes
And doing things better than anyone else is important to Kurtzman. His competitive juices flow so deep, in fact, that he passed on a career as concert pianist to play sports. Both Kurtzman’s parents teach music at Washington University and his sister is a professional violinist in Switzerland. Kurtzman, who has played since he was 5, strongly considered becoming a concert pianist in high school. But, he was very involved in sports, and realized he would have to give up sports to focus on the piano. The thrill of competition was too much.
Much of Kurtzman’s competitive attitude was honed on the playing field. Aside from high school sports, he played soccer at Rice University, basketball at Cambridge and went to the French Open as a member of the U.S. Paddle team-a sport similar to tennis and racquetball developed in Mexico.
But Kurtzman also incorporates what he learned from music into running a company. “I’ve drawn from the discipline of learning and practicing a piece of music to get it to perfection. As an Internet CEO, you have to have a lot of discipline to manage the business; all of it has to be well timed and perfect in its execution.”
Part of his management philosophy involves staying in touch with what customers want. The typical Ashford customer is not the Thurston Howell III type. “It’s someone between 35 and 45, well off, busy all the time, and who knows how to use technology and shop online,” he says