The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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It’s not easy competing in the discount online jewelry business, where there’s ample competition, where often heart-struck customers are particularly demanding, and where showing the intricacies of gold patterns and diamonds challenge any virtual storefront.
It doesn’t help that a surprisingly large number of buyers want an engagement ring inscribed and delivered the next day.
But Neil Kugelman has figured out how to do that and more, which is why his Goldspeed.com is winning praise from industry observers for uncommon service. “Most retailers fret about improving customer loyalty,” says Paula Rosenblum, director of retail research for analysis firm Aberdeen Group Inc. “The rare retailer, like Goldspeed.com, actually does something about it.”
Goldspeed gets about half of its business from repeat customers, even while its overall number of orders continues to surge from both new and existing customers. This year, it expects to process about 50,000 orders, a rise of 60% over 2004, says Kugelman, founder and CEO.
Goldspeed takes several steps to keep customers coming back. It offers some 20,000 items, including more than 1,000 versions of wedding rings. But its real secret to success is finding out what customers want in a shopping experience, and delivering on it, Kugelman says. “We try to put ourselves in our customers’ shoes, figuring out what would motivate us to purchase from Goldspeed rather than from a local store,” he says.
Goldspeed gets a lot of orders for wedding rings from people who want to get married the next day, for instance, so it has arranged with several suppliers to take orders as late as 6 p.m. for rings that get inscribed at the factory and shipped for next-day delivery.
Each Goldspeed employee must spend at least four hours per month in the call center talking with customers, learning first-hand how to improve service. When a staff graphic artist heard customers complain that they couldn’t see enough details on products, she worked on displaying product images from more angles.
“We’re going to bring customer service to a higher level, and significantly impact the way people purchase jewelry,” he says.
In today’s multi-media driven society, consumers expect a more entertaining shopping experience, especially online. Recognizing this trend, Illuminations.com, a merchandiser of candles and home decorating products, has adroitly deployed rich media applications that marry imagery and entertainment to create a powerful sales tool that enhances the presentation of its lifestyle products.
The aim, according to Clay Lingo, vice president, direct to consumer sales for Illuminations.com, is to create a compelling sales story that dazzles shoppers’ senses, rather than forces them to plod through blocks of visually dull copy.
Illuminations.com successfully used Flash applications during the recent Halloween season to show shoppers a variety of products and how they can be used to decorate the home or be packaged to create a unique gift. “It’s an entertaining way to show customers an assortment of different products and uses for those products using compelling imagery,” says Lingo.
Prior to 2005, Illuminations.com had resisted the use of Flash applications because of what it perceived to be a low penetration of broadband Internet into homes. “Once we saw data that showed 60% of U.S. homes have broadband Internet connections, we decided to proceed,” explains Lingo.
As for the remaining 40% of households without broadband Internet, Lingo says many of these consumers have broadband Internet at work and will shop online when in the office.
In addition to creating flash presentations for seasonal items, Illuminations.com has created a digital version of its catalog. Consumers can flip through the pages, enlarge and zoom-in on images. Lingo is betting the digital catalog will reach more customers than its traditional print catalog, while lowering its catalog production and distribution costs. “We have a larger customer base than we can realistically mail to, and this is a more efficient and entertaining way to put our catalog in their hands,” says Lingo.
Down the road, Illuminations.com plans to launch a Spanish language web site with the same rich media features. “Rich media applications give online retailers more control over product presentation by showcasing merchandise in the best manner,” says Jim Okamura, senior partner with J.C. Williams Group. “The increased use of rich media reflects the broader understanding online retailers have of multi-channel shoppers.”
Personal Creations is entering its second decade as a web retailer and expects to generate e-commerce sales of $40 million in 2005. But rather than remain static, PersonalCreations.com gets better with age with a knack for reinventing itself in the ultra-competitive online gifts space.
Among the latest innovations is live chat with a twist. On most web sites, the live chat button sits passively on a page waiting for a customer to click on the icon and begin a dialogue. But as part of a stepped up marketing effort to reach its core customers, women 25 to 49 with annual household income of about $78,000, Personal Creations runs a float box across the home page that invites customers to engage in a dialogue. By actively engaging customers in an immediate e-mail conversation, PersonalCreations.com is gathering feedback on promotions and merchandising-related content, says director of e-commerce Tom Denison. “We can quickly and easily switch out our creative and any current offers,” he says. “We can A/B test new offers and content to optimize against our customers.”
Personal Creations is also enhancing its e-commerce operation with more personalization tools. For instance, just before Father’s Day, it tested new rich media applications from Scene7 Inc. that allow shoppers to see monogrammed merchandise before making a purchase.
The program, which Personal Creations expects to roll out during the first quarter of 2006, lets customers select type font and other details, then zoom in to see how the monogram or personalized message looks on the merchandise. The Father’s Day pilot allowed shoppers to see how their personalized message would look on a sample afghan and produced dramatic results: 50% of the shoppers who tried the new tool made a purchase. “We are always looking for new ways to personalize merchandise,” Denison says.