PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
(Page 2 of 4)
Like eHobbies.com 2003, which rose from the ashes of eHobbies.com 2000. “You couldn’t run the company then the way we’re doing it now,” says Seth Greenberg, co-CEO of eHobbies along with partner Ken Kikkawa. “There were no inexpensive, outsourced third party solutions.”
A group of investors launched eHobbies in 1999 with the goal of being a destination site. They funded it with $30 million and, at the peak, employed 175. A year later, Greenberg was urging investors to re-think their approach. Nine months after that, Greenberg and Kikkawa were picking up $1 million in hobbies and toys inventory-“that we paid very little for”-and re-launching the company with three employees as a Yahoo store. “We’re big on outsourcing,” Greenberg says. “That clears our plate so we can focus on marketing and merchandising.”
That focus has served eHobbies.com well. It allows the company to target in on 60,000+ items in categories such as radio-controlled vehicles, astronomy, model trains and slot cars, while avoiding products that mass merchants sell at lower prices. “When the person who buys the train at Wal-Mart wants parts, he comes to us,” Greenberg says. “Wal-Mart can’t support that but we can. And the margin is better with parts.”
EHobbies outsources several functions, including web hosting and CRM. But it also undertakes in-house initiatives when it can build on strengths. For instance, it manages Internet search functions in-house, and Greenberg directly oversees a new effort to market via commercials on local cable TV channels.
Now that it has the basics in place, eHobbies is turning to add-ons. It offers store-pick-up at a store attached to its warehouse and plans to open a second store. It recently started a lay-away plan though I4 Commerce Inc.’s Bill-Me-Later service. And it’s accepting international orders through Comerxia Inc., which is funded by UPS.
In spite of one analyst’s observation that the site is too visually complex, Greenberg expects sales to more than double this year over last. “We’ve surpassed the original company’s sales,” he says, “and we’re doing it with a staff of 15.” m
Unique Visitors (monthly)
Search Engine Management
A seamless transition
For Hancock Fabrics Inc., its web site is an extension of its 430 stores. “The web site’s primary objective is to provide people with the Hancock Fabrics experience,” says David Uptagrafft, manager of online services at Hancock. That’s one of the reasons that HancockFabrics.com offers an innovation like online purchase of fractional-length fabrics-just like customers buy fabric in the store. And why it’s beefed up a feature common to most web sites operated by chains-the store locator. “We operate this web site to drive customers to retail and to grow sales,” Uptagrafft says.
While he won’t reveal sales at the site, Uptagrafft says Hancock-Fabrics.com has succeeded in both driving customers to the stores and boosting online sales. The store locator is one of the most heavily trafficked portions of the site, and an e-mail coupon to be redeemed in stores has been successful.
“This is a nice site overall,” says Jim Olamura, partner with retail consultants J.C. Williams Group. “The multi-channel tie-in with the store locator is especially good.” Nevertheless, the web site holds its own, Uptagrafft notes. “The web is consistently the top store,” he says.
While Hancock has had to refine the user interface, one of the most innovative features at the site is the fractional yard option. Especially with a higher priced fabric, shoppers don’t want to buy a whole yard if they need only a fraction of a yard. Thus Hancock believed it could increase web sales by allowing customers to buy fabric in quarter-yard increments.
But customers had a difficult time with the presentation, Uptagrafft says, because it required making two choices in two boxes-one with the full yards and the other with the fractional yards. Hancock has posted a box with a sample order above the quantity boxes.
In addition to selling fractional yards, Hancock has taken other steps to replicate store fabric shopping online. For instance, it provides multiple views of swatches, from thumbnails up to enlarged views. And rather than just shooting photos of the fabr
ic, it actually scans a 1-inch square piece of each fabric and delivers the scanned image to shoppers. When she enlarges the image, the shopper can see the texture and weave of the fabric.
Okamura also notes that the site does a good job of establishing Hancock as an authority in fabrics and sewing projects. “I like the added content, such as the free projects,” he says. “That kind of informational and educational content provides additional value, brings authority to the site and helps position the site as a leader.”
Unique Visitors (monthly)
*As reported by comScore Networks Inc.
Exercising the web to expand a brand
Buying a $1,500 treadmill is not something most consumers do on a whim, nor, naturally, is buying a bunch of things to go with it. But selling a broad range of high-ticket treadmills and other exercise equipment-plus a growing array of complementary products-is the retail growth strategy of ICON Health & Fitness and its NordicTrack.com.
The NordicTrack brand itself has changed drastically since ICON acquired it seven years ago. Back then, NordicTrack was known for a single product category-ski-style exercise machines. Although known for quality, the machines served a limited market of consumers who could afford to pay $1,000 or more for exercise equipment that, designed to mimic actual cross-country skiing, took skill and patience to learn how to use.