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 ...
Even though Alloy began life in 1996 as a dot-com retailer, executives quickly added a multi-channel strategy. They are grateful today that they never believed in the pure-play approach to online retailing.
For most catalogers, the addition of a web site was a no-brainer. They were already skilled in direct-to-consumer merchandising and fulfillment, and a catalog, as Lands’ End Inc.’s Bill Bass puts it, “just puts another funnel” into an existing merchandising and distribution channel. But for Alloy Online Inc., a multi-media direct marketer to teens and young adults between 13 and 22, the web site came just before the catalog.
Both were launched in 1996 as part of a strategy to reach teems with the combined power of web sites, magazines and catalogs. “We felt there was a huge opportunity for a young adult media brand, because the demographics of the teen market were so favorable,” said Alloy co-founder Matt Diamond in an interview with IRNewslink following his presentation at the eTail 2001 Conference in New York. “These are the kids of the Baby Boomers. But we also believed that it wasn’t a huge opportunity if all we had was a web site, because to build a media brand you need to have a way to drive people to your e-retailing site.”
Diamond is grateful he and his partners put that strategy in place before the dot-com investment craze created and lavishly funded what proved to be a flawed pure-play strategy. “We were founded a year before the Internet hype, which meant we were grounded,” observed Diamond. “Otherwise, we might have gone toward a 100% web strategy.”
Grateful, indeed. Instead of being another failed dot-com, Alloy developed its web and print media in tandem and creatively used the synergy to emerge as a hot growth company merchandising to an exploding teen market. Diamond reported to his eTail audience that Alloy’s sales are on track to grow from $90 million last year to $150 million this year, enough to put the company in the black for the first time with $700,000 in estimated profit for the year and $7 million in profit in the second-half.
The company relies heavily on an editorial approach in print and on its web sites (Alloy.com for girls and CCS.com for boys) to grab the attention and retain the loyalty of its 7.5 million teenage subscribers, while always remembering that its principal mission is to sell merchandise. Its magazines (Alloy Girl for teenage girls and Strength for both) features teen lifestyle editorial on movies, sports, young celebrities and fashion as well as extensive feedback of teen subscribers. The 3 million to 5 million catalogs (Alloy for girls and CCS for boys) mailed each month merchandise product, too, but they also are designed to drive traffic to the site. Catalog users, for example, can earn loyalty points toward the purchase of products on the web simply by keying in at the site source codes printed on the catalog.
The web site itself has editorial “in teen speak” on recommended fashions, TV shows and products. But through advertising and other content, it is clear that the purpose of the periodicals is to drive its young shoppers to the web site. But here, too, Alloy remembers its primary mission. “The editorial on the web is a key selling tool because it gets our customers to come back to the site,” explained Diamond. “But we never lose sight of the fact that the purpose of the web site is to sell. We design every page so that the merchandise jumps out at viewers and we get them to look at what we want them to look at.”
And it uses the interactive capabilities of its web site to read the pulse of its teen market. One feature prompts web visitors to play interactive games. Another page entitled “Dig or Dis” asks teens to vote thumbs up or down on a pictured product that Alloy is considering for the site. “These interactive capabilities are the things you can do to obtain and react to feedback from your customers,” said Diamond. “So many e-retailers under utilize the interactive capabilities of the Internet.”