Customer acquisition costs take a tumble at Bluefly, while the average order grows 25%. The results: Revenue is up 65%; losses narrow by 75%.
New York-based discount fashion retailer Bluefly Inc.’s business was booming in the first quarter of 2002 thanks to new customers that are costing less to acquire and repeat customers who are spending more. Customer acquisition costs hit an all-time low of $9.40, down 77% from a high of $40.84, the company reported. And the site gained 24,873 new customers during the quarter despite a 76% cut in advertising spending. The average order increased 25% to $161.76 from $129.11. Revenue increased 65% to $7.64 million in Q1 2002 from $4.64 million in Q1 2001.
CEO Ken Seiff noted that licensing software to build the next generation of the Bluefly.com web site and new zoom technology that allows customers to see more product details have helped improve business, especially from repeat customers who accounted for 67% of gross sales. The company also says it has hit its highest gross margin increase, which was 32.7% in the first quarter, up from 27.6%.
Bluefly also reported lower operating losses for the sixth consecutive quarter. The operating loss narrowed to $998,000 in Q1 from $3.91 million in Q1 2001. The company attributes its 75% improvement in operating loss to several factors: the increased sales; a 94% increase in gross profit to $2.5 million in Q1 2002 from $1.3 million in Q1 2001; and a 33% reduction in selling, general and administrative expenses to $3.5 million from $5.2 million in the first quarter of 2001.