August 30, 2004, 12:00 AM

Harnessing Hot Trends

Gift Collector, a small gift shop in Charlottesville, Va., goes online and creates a national customer base.

GiftCollector.com expects to do $10 million in sales this year. While that is a small portion of sales at online behemoths like Amazon.com Inc. ($5.4 billion, No. 1 in Internet Retailer’s Top 300 web retailers) and Office Depot Inc. ($2.6 billion, No. 3), it’s a big deal for the small Charlottesville, Va.-based retailer. If it reaches that level, sales will be twice what they were last year and four times what they were the year before.

While her friends and family were skeptical when she took to her basement in 1998 to build an e-commerce site, owner Sara Blakewood Norment was convinced that the new selling medium was the wave of the future. Her faith was bolstered by the convergence of two hot retailing trends of the late ‘90s: The Internet, which turned out to have staying power, and Beanie Babies, which turned out to be a fad. “It was amazing to see the power of the Internet even at that early date,” she says.

The power of registries

Moving early to the Internet was not out of character for Norment. In 1987, she left a career as a director of pharmacy at a hospital in Washington, D.C., to buy the Chimney Corner, a gift shop with sales of $150,000 in Charlottesville. The business did OK, but Norment was looking for growth. And so, despite the doubts of friends and family, in the late 1990s, she pushed her business into the online world.

She hasn’t looked back since. “I’ve been surprised every year at what we could accomplish,” she says, “and now some of the big competitors we once had are not here anymore.”

In addition to spotting the power of the web in selling merchandise early on, Norment recognized some of the new ways the web would allow her to compete. For instance, she quickly understood the allure of online gift registries. National brands such as Macys.com were allowing brides to register online and Norment’s customers were requesting the same functionality. “I realized I had to do the gift registry online to keep that business,” she says.

Norment’s IT consultant, Mike Wright, built an interface from GiftCollector.com to the Chimney Corner’s registry database. Now, in addition to retaining the business of local brides who want to register online, the gift registry is allowing Norment to expand her business outside of her immediate market. In fact, her registry business stretches coast to coast. “We get registries from people who find us while searching the web for gifts,” she says.

No VC money

While her timing was right in going online in the late 1990s, her timing was off when she sought expansion funds. She applied for venture capital in early 2001 to keep pace with the surge of e-commerce, but investment firms were beginning to shun unproven dot-coms. “We had done all the paperwork for venture capital, so I was disappointed when we couldn’t pull that off,” Norment says.

So instead of funding the hyper expansion that many venture capital companies had expected of dot-coms in the ‘90s, she tackled the intricacies of web-selling one step at a time, figuring out its challenges in staffing, customer service and infrastructure. “We just did it step by step,” Norment says, noting that GiftCollector.com is profitable. “We never had a cash-flow problem, and just added to our site as we made more sales.”

She used store employees to fulfill orders from inventory in the 1,700-square-foot backroom. Norment handled fulfillment by printing out online orders and handing them to employees who would pick, pack and ship products. “They did double-duty, but it was fun for them,” she says. “They enjoyed the feeling of the new technology bringing in the calls from all over.”

GiftCollector.com now operates with a dedicated Internet customer service staff that ranges from six to 12 reps depending on the season. Norment still relies on store employees as customer service back-up, and calls to her customer service department automatically roll over to the store if the Internet reps can’t answer calls fast enough.

Competing for staffers

But in Charlottesville, which is home to several leading direct merchants including consumer electronics retailer Crutchfield Corp., which operates Crutchfield.com, and the Plow & Hearth catalog and online unit of 1-800-Flowers.com, Norment says she must compete for new employees and so is considering outsourcing for additional help. “It’s a challenge to get qualified customer service reps in a small town with great catalogers,” she says. “Salaries are probably higher because we are all competing for the same work force.”

Growth has allowed GiftCollector.com to become more sophisticated in its operations. No longer is the retailer printing out orders for fulfillment. Instead, Norment this summer will implement Mail Order Manager, an order management system from Dydacomp that will cost under $100,000 and take about five weeks to install. The M.O.M. system will operate on the retailer’s own web servers and process orders for both the store and web site, providing management with more visibility into customer demand for particular products. It will also provide customer service reps with information on customer purchasing activity from both channels and provide suggested cross-selling opportunities when reps are talking to customers.

The new functionality of Mail Order Manager and the growing reach of broadband Internet access from home will help GiftCollector create a better online customer experience. In the early days, its customer service reps could not even view web pages while simultaneously talking with online customers. “If someone called with questions about the web site, we would have to look at printed web pages to help the caller,” Norment says.

Implementing the Mail Order Manager system also represents a new phase in the development of GiftCollector.com: Norment is willing to go outside the expertise that she and Wright, her web site developer, have acquired. In 1997, Norment retained Wright after he was recommended in an online discussion group. Impressed with his knowledge of web technology, she commissioned him to build her site, including its shopping cart and site search function, rather than taking the time to research and invest in ready-made applications.

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