PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Log on and drop me a line
American Greetings Corp. has been a greeting card publisher for decades, but the web has extended its reach far beyond paper cards. The company was online as early as 1995 and experimented with various business models. Today, AmericanGreetings.com operates a network of e-card sites that includes acquired former rivals BlueMountain.com and Egreetings. Sales for the year ended in February were $24.4 million, a 69% increase over the previous year. Though almost all of that is in ad sales rather than merchandise, American Greetings has created a fun and functional web site that uses the online channel to leverage a decades-old retail brand in an entirely new way.
“The company recognized from its offline relationships that distribution was important. They knew there was an opportunity on the Internet,” says Sharon Schneider, senior vice president of marketing at AmericanGreetings.com. In launching its own site, the company first settled on a free model supported by advertising, but, like other publishers online and off, has seen a decline in ad sales. So last December it launched a new model on all three sites making some online cards available for free and others available only to paying subscribers. And since then, it’s done what many industry watchers believe is near impossible: gotten users accustomed to free content to pay for it. One year into the hybrid model, the subscriber base numbers about 2 million, a significant portion of the estimated 10 million to 15 million monthly visitors across the e-card network.
“They’ve been successful in migrating consumers to a pay-for-content model,” says Mary Brett Whitfield, senior vice president at Retail Forward Inc. “While they’ve left enough of the site free that they will draw traffic to justify the site as a place for advertising, they’ve also made it attractive and low-priced enough to convert a lot of customers to paying customers.”
American Greetings entices subscriptions with member benefits such as a reminder service, address book, the ability to save favorite cards in a personalized online scrapbook and other features. While working to build its subscriber base, it’s also working with its parent to develop marketing programs to monetize that online traffic in the offline world, and vice versa. The company has a rotating roster of offers that blend free subscriptions with partner offers, and it’s looking to expand merchandise on the site. “We’re continuing to build brand awareness between the online and offline worlds as we grow our distribution in both places,” says Schneider.
Kana Software Inc.
Commission Junction Inc.
Ariba for web logs
E.piphany Inc., DoubleClick Inc.
Clear sailing on the Blue Nile
Forget Halloween. Buying an engagement ring can be one of the scariest experiences of a man’s life-but it’s less so if it takes place where he’s probably comfortable already: online. Blue Nile Inc. came up with that brainstorm and executes it with consumer education, interactive tools for diamond selection, world-class customer service and prices up to 40% below retail.
The core of BlueNile’s business and more than 50% of its revenues are from sale of diamond engagement rings. In focus groups sponsored by the company, men faced with the prospect of buying a ring reported feeling like “a deer in the headlights,” says CEO Mark Vadon. “They said they didn’t even know what questions to ask in a store to get started. So in that environment, their reaction is to go online for information.”
BlueNile offers customers interactive tools that guide selection in a process not unlike configuring a PC online. “We offer men a chance to learn all they can learn,” Vadon says. “We have 13,600 certified diamonds on the site, 70 ring settings, and once they make their selection we show them visually what it will look like. Then we manufacture exactly the ring they want and deliver it to them in about four days. It’s the same kind of customized, just-in-time manufacturing process Dell would use.”
Though Mary Brett Whitfield, senior vice president of consultants Retail Forward Inc., views product customization as still only a niche application on the web, she says BlueNile’s model makes perfect use of it. “Blue Nile’s ability to create your own engagement ring is exactly the kind of application that the Internet is uniquely suited for,” she says. “You can do that in a store but for a lot of men it’s very intimidating. To do it in a more anonymous way online is probably a godsend for them.”