PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Unique Visitors (monthly)
Search Engine Management
*As reported by comScore Networks Inc.
The `Big O` discovered
Overstock.com’s national multimedia ad campaign asks consumers if they’ve discovered the secret of the “Big O,” and it looks like they have. Since the campaign launched in TV, radio and print in August, Overstock’s unprompted name recognition has jumped from 4% to 12% of American adults while prompted recognition jumped from 10% to 23%. Traffic to the site is up 50% over pre-campaign levels.
The multi-million-dollar ad campaign is just one reason the brash 1999 pure-play start-up is looking like a mature business. Of course, media buying like a big player doesn’t necessarily mean you’re in the club: just ask the ghost of Pets.com. But add in last year’s IPO, its earlier launch of a complementary b2b site, and its growing expansion into new categories, and it’s clear that Overstock is doing what it takes to make good on what it set out to do; that is, use the Internet to become a dominant closeout solution for holders of brand-name merchandise.
“They’ve taken a fragmented, niche industry and made it a more efficient liquidation market for both consumers and businesses,” says Retail Forward analyst Rob Gallo. Besides increased product breadth and assortment, Gallo singles out recent improvements to site organization. If a sweater is available only in one size, for example, that information is displayed immediately so shoppers needn’t click further to find that out. Given the disparity of products offered at any given time, such functionality is critical for liquidators. “Everything is set up to encourage frequent visits, and they are trying to make it as convenient as possible,” says Gallo.
Overstock buys surplus merchandise at up to 80% off retail prices and sells it at an average 50% off. “We have been very careful about squeezing cost out of our system and passing it on to the consumer,” says CEO Patrick Byrne. Overstock has applied that model to a growing number of categories, including a year-old expansion into books, DVDs, CDs and videos. It prices books at 23% below Amazon on average; best sellers at 25% below. With some 400,000 titles, the media category represents 10% of sales in its first year, Byrne says.
Overstock this summer won Palm’s liquidation business from another site and more recently expanded into travel services, partnering with consolidators of unsold airline tickets, hotel rooms and rental cars to give Overstock shoppers access to those partners’ deals with air carriers, hotel chains and rental agencies. Both moves support Overstock’s core strategy. “Our goal is to be the first place consumers go to save on everything they buy,” Byrne says.
New fuel for Sears.com
As recently as six months ago, Sears.com was unlikely to come up on anyone’s list of top web sites. The retailer’s Internet offering was not well organized and it was sluggish. Then in October 2003, the site underwent a major redesign that improved the navigational capabilities and download speeds and increased the amount of visual and written information about each product.
“The new site is much better organized and products are laid out much better to make it easier for consumers to find what they are looking for,” says Heather Brilliant, stock analyst for Morningstar Inc.
The new site greatly improved the shopping experience. Bill Bass, vice president and general manager of Sears Direct, says pages can be downloaded two to seven times faster, even though the graphic and written content on each product has been increased by a factor of about five. “We saw a dramatic improvement in speed and customer satisfaction the day the new site went live,” Bass says. The increase in speed came as the result of new caching technology and a lighter HTML code.
Much of the improvements at Sears.com came as the result of bringing in Internet experts, including Bass, from Lands’ End, the apparel retailer Sears acquired last year. In addition to the improved site functionality, analysts laud Sears.com for an effective integration with stores. The site’s database is linked to the inventory of the company’s 870 stores so customers can order online and pick up at a local store the same day. “About 40% of our web sales are situations where the order is placed online and the customer picks it up in the store,” Bass says.
Sears has also found a lot of store sales are the result of online research. “One-fifth of the people who buy a major appliance at our store have previously researched the product at our web site,” Bass says.
The Sears site allows customers to call up two models of an appliance on the screen then get a detailed comparison of features. Customers can also call up a model and ask to see the next higher and lower priced models to compare features. By the time they visit a store to view the models, they have narrowed down their selection.
With all the attention on appliances, electronics, tools, home goods and auto accessories, there is still one big hole in the Sears online offering: apparel. The chain does not plan to offer apparel online until next year. Then, Sears is likely to rely even more on the expertise of Lands’ End in satisfying the consumer demands unique to that product line.