In its second-largest acquisition, Amazon buys the company for $970 million.
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Shapiro also plans to use the company’s web site to test new product lines. Already, he has tried that with adult Halloween costumes. “We’re known for our kids’ costumes and we wanted to see if we could successfully expand into the adult costume business,” Shapiro says. By offering costumes on the Internet first, which is a lot less costly than spending valuable catalog space on an unknown commodity, Lillian Vernon was able to gauge interest. Once the firm saw that adult costume sales did indeed meet expectations, the firm committed to listing them in the catalog. “If a product does not resonate on the Internet, it is a good bet it won’t work in our books either,” Shapiro says.
That said, he admits there are some products that just lend themselves better to the Internet and will be sold only there. For example, the company had been contemplating a product that allows customers to create signs that reflect their favorite quotations. Offering such a product in a catalog would require customers to call in their favorite quotes and that process runs the risk that a service rep will write down the quote wrong or misspell some words. Having customers mail in the orders creates another problem of having the staff be able to read the handwriting accurately. But with the web, customers type in their own quotes and verify them themselves for accuracy.
Similarly, Lillian Vernon plans to begin offering consumers the ability to have photos printed on items, such as mouse pads and coffee mugs. By using the Internet to offer this service, customers can e-mail digital images to Lillian Vernon. Not only are digital downloads more expedient to process than mailed photos, but the quality of reprint is better, Shapiro explains.
One final component of Shapiro’s strategy relates to improved use of search engines. “We need to look closer at finding what terms customers are using in their searches that best fit our products so that when customers ask for a particular item, we show up near the top of the list,” he says.
And while a lot of companies are making large investments to make sure they’re listed first on search engines, Shapiro believes that it’s important to be near the top, but being first is not always essential. “We may not need to be on the first line, but we want to try to figure out what is the most economical placement for us,” he says.
Shapiro brings search engine experience to his new position. “During his time with DoubleClick, he worked with such search companies as Google to develop more highly focused online marketing campaigns,” Ryan notes.
As part of these search engine efforts, Lillian Vernon also is forging portal deals with such companies as MSN.com and paying other search engines for advertisement placement.
For the future, Shapiro is looking at more advanced Internet applications that might help the catalog business, such as a commercial application of live chat. Such technology could detect if a customer is looking at a specific page on the Lillian Vernon web site for more than 30 seconds. If so, a banner would pop up to ask if the customer has questions and would like to chat with a customer service representative about any offering.
He is also looking at how to better mine customer databases to customize what individuals see when they go to the Lillian Vernon web site. “Page one might look different to various customers depending on their profile,” he says.
All these ideas for revitalizing Lillian Vernon come from a decade of looking at Internet applications and database management.
After finishing graduate school in 1994, Shapiro worked as a consultant with McKinsey & Co. where part of his responsibility was to develop Internet strategies for clients, including Time Inc. It was during such work that Shapiro concluded, “This Internet thing was going to be pretty big.”
To get in on the action, he accepted a position in 1996 with United Media to set up that firm’s Dilbertzone web site, based on the popular comic strip character. He quickly moved Dilbertzone into the top 50 news and information sites. And even more important to his current efforts, he turned Dilbertzone into a top commerce site. “In our first year, we sold more than $1 million worth of Dilbert memorabilia,” he says, including books, calendars, coffee cups, ties and t-shirts. “That experience got me excited about the potential of the Internet as a sales channel.”
In 1998, he wanted a different Internet experience and so joined DoubleClick. From Abacus, Shapiro learned how direct mailings could be targeted better and he also looked at how Internet data could be combined with the conventional consumer databases retained by Abacus to gain even greater insights into consumer behavior. “The notion was to pool information about customers to make direct mailing more targeted,” Shapiro says. “A lot of what I learned at Abacus can be put into practice elsewhere.”
In addition to the Abacus experience, Shapiro provided “instrumental site analysis and marketing services,” to other units within DoubleClick, according to Ryan. “During the five years he was a senior member of our management team, he worked with a number of our business units and showed a lot of versatility,” Ryan says.
From DoubleClick, Shapiro went to ZelnickMedia, a private equity firm that previously had been known for its involvement in the entertainment industry. “I believed in the multi-channel sales aspect of e-commerce and I wanted an opportunity to build a great multi-channel marketing company,” Shapiro says in explaining his decision to go with ZelnickMedia.
Meanwhile, having just purchased Lillian Vernon and taken it private in April 2003, ZelnickMedia was looking for someone who could turn the operation around. At first, ZelnickMedia assigned Shapiro to consult with Lillian Vernon, both the company and its namesake founder, who was and still is involved in its operation. She and her family still owned 40% of the stock at the time of the sale and they received $24 million. Six months later, impressed with early results, ZelnickMedia appointed him president.