In its second-largest acquisition, Amazon buys the company for $970 million.
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The solution grew out of Replacement’s existing e-mail marketing infrastructure. The company depends on e-mail and paper mail to deliver price information to customers as it doesn’t list prices on the web site for the top 5,000 patterns featured there, which represent 70% of inventory. That’s partly for competitive reasons, says Whitley, and also because prices fluctuate with supply and demand. Prices are based on a complex formula that also factors in historical sales data on each china, silver or crystal pattern. “We don’t go 50 or 100 items deep in every SKU,” says Whitley. “We may just have three or four. So the algorithms that we have to run to price the merchandise times a million SKUs is pretty mind-boggling.”
Mind-boggling, and for now, impractical to put on the web in real time. Instead, Replacements gets pricing information to customers by sending them mail and e-mail updates on the inventory status of their registered patterns as inventory changes. “Those updates are generated every night based on what has gone out and what comes in. They take a snapshot of our current inventory from the system,” says Whitley. “We thought, why not take those pages and write a script that converts them to HTML and then automatically publish them to our web site in the early morning hours?”
Now, as soon as the back-end system reads new inventory data based on sales or new arrivals, it automatically updates the customer mailings and e-mails being prepared for distribution that night, then pushes the pages to the web site. Each morning, when customers access the site, they see inventory levels no more than 24 hours old.
The enabling script was written in-house in Dream Weaver. Under the “more functionality at less cost” challenge, Whitley’s in-house IS team has used the authoring tool multiple times over to enhance the site while keeping costs down.
They’ve been able to speed downloads, for example, by lightening up pages versus paying for content acceleration. “We served 2.6 million pages in August versus 1.4 million a year ago,” he says. “But that data transfer-the amount of data that had to be served up with the pages-only went up to 62 gigabytes from 58 gigabytes, a very small increase. That’s because we were able to write pages that are extremely clean in terms of code, so they load faster, are easier to view across more browsers, and take fewer server resources to serve up correctly.” The cost? Staff time, and six software licenses-one for each web developer-at about $600 each.
Replacements doesn’t transact most of its sales online, but the web is emerging as its most cost-effective marketing tool and its biggest source of new customers. Through tracking codes attached to every shopper file, the company segments customers as they’re added to its database according to how they arrive. Last year, it added more than 198,000 new customers directly from the web site, about 25% of the year’s 800,000-plus new customers. Some 51,000 new customers learned of the company from print ads that year, a few hundred thousand were added from lists acquired at other companies, and the rest came from an affiliate program and other means.
The number of new customers who come through the web site will be even larger this year, says Whitley. “We’re on pace for that to be the number one source for adding new customers to the database,” he adds. “The power of that is the cost is fairly low and we can measure our return very accurately.”
The ultimate goal
As customers’ expectations rise, so will the web-site capacities of Replacements.com. Registered customers already can click through to buy specific items on e-mails received from the company. If Replacements eventually decides to put its entire inventory on the web-not just the 5,000 top patterns-or if it wants to let customers mange their own profiles on the web, the necessary architecture is already in place. Bringing its 1 million SKUs and 4.2 million customers together on the web in real time is, Whitley says, the company’s ultimate goal and challenge. But for now, he says, the company’s web development is exactly where it should be, for while the site is designed to get users to their pattern in one click, the demand for online ordering is not pervasive.
“For our particular business, we think we’ve proceeded at the right pace,” he says. “We’ve used the web for lead generation and e-mail marketing, which didn’t warrant large investments. We offer a form on the web for people to use to get the price list from us if they want to order from the site. We’re using that as a gauge to tell us when to make the larger expenditure on the e-commerce database.”