In its second-largest acquisition, Amazon buys the company for $970 million.
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American Eagle Outfitters now operates three web retailing brands and will end 2008 with two new e-commerce sites: 77kids.com and MartinandOsa.com, which launched in March as an online shopping destination for fashion-conscious men and women 28 to 40. The retailer can launch two new major Internet initiatives in the same year because it has the e-commerce infrastructure and business expertise to roll out a new brand quickly.
With the redesign of AE.com, American Eagle Outfitters found new ways to work with video and advanced rich media. On MartinandOsa.com, American Eagle Outfitters used that expertise to build a shop-by-outfit function that includes product videos linked to the shopping cart and another tool that lets a shopper layer an outfit with different looks or accessories in three dimensions and then proceed directly to checkout. “We spend a lot of time developing new technology, but when it’s ready to use we can leverage the applications across all of our sites fairly quickly,” Grover says.
American Eagle Outfitters operates a diverse and wide ranging e-commerce operation. Last year AEO Direct, its wholly owned e-commerce subsidiary, shipped web orders to customers in 41 countries. American Eagle Outfitters also is using the Internet as a component of its stores. The retailer has equipped about 500 American Eagle Outfitters stores with updated web-enabled point-of-sale terminals and will roll out new terminals to the rest of the chain by the end of the year.
The web-enabled terminals are now fully integrated with American Eagle Outfitters’ back-end systems and e-commerce platform. If a store customer can’t find a particular item, American Eagle Outfitters has trained sales associates to use the web-enabled POS terminals to locate the merchandise online and have the item sent to the customer’s home. American Eagle Outfitters pays for free delivery and return shipping.
Easy store shopping
The new POS terminals can complete the order in a single transaction and eliminates phone calls to a customer service center. “We use the Internet to make shopping in the store as easy as possible,” Grover says. “Even if they are at the mall in one of our stores, we always want them to have an Internet option.”
American Eagle Outfitters plans to open 77kids stores in the U.S. in 2010. But to build up the brand during the holiday shopping season and gain momentum into 2009, American Eagle Outfitters is also counting on its Internet channel to make 77kids an international brand. “The online launch of 77 kids will enable us to gather broad information on styling and sizing while establishing an immediate global presence,” Savitt says. “We are leveraging our e-commerce operation first, with bricks-and-mortar following next. We know what it takes to create a compelling online shopping experience for customers. With our e-commerce expertise, we are going after new opportunities.”
Web success for traditional cataloger comes from a new way of thinking
By Bill Briggs
A common requirement for catalogers who make the successful shift to the Internet is changing their way of thinking. That hasn’t been easy for retailers who mastered the ins and outs of direct mail but failed to keep up with their customers’ shift to the Internet. But for some catalogers the transition has been very rewarding.
Fingerhut Direct Marketing Inc. is one of them. The cataloger, which traces its history to 1948, has grown e-commerce sales by leaps and bounds from $52 million in 2005 to $82 million in 2006 and $144 million in 2007. It has steadily honed its merchandising strategy on product pages and upgraded its web site’s technology, features and functions, all of which contributed to sales growth last year.
But it has been a growing understanding that driving more business to Fingerhut.com, its e-commerce site, required a change of thinking that was responsible for achieving 75.6% growth last year, says Brad Smith, vice president, e-commerce and digital marketing.
“We wanted to think like and become more of a web marketer, knowing it’s an interactive medium,” Smith says. “We invested a lot of time and energy optimizing all of our online marketing activities including paid search, e-mail marketing, and the affiliate program. Each returned triple-digit growth in 2007 and fueled a lot of the online sales. ”
Remembering the basics
But Fingerhut also didn’t want to lose sight of the fact that, as e-commerce marketers, management still needed to think like direct marketers. “The web is, at its heart, a direct marketing medium and I don’t think enough web retailers think about it with the same kind of discipline that those of us in the catalog business have long thought about it,” Smith says. “So that means things like a lot more advanced and more frequent testing. At any given time we’ll be testing two, three or four things, whether different home page concepts, different treatments of the add-to-cart button, or different ways to present warranty offers. It’s all part of our daily DNA to make sure the site is as effective and usable as it can possibly be.”
Fingerhut’s 2007 web sales were enough to catapult the company into the Top 100-No. 96-in the 2008 Internet Retailer Top 500 Guide. The company’s growth was second-highest among Catalog/Call center retailers and the 23rd highest among this year’s Top 500 e-retailers.
Not bad for a company that was on the scrap heap in 2001.
After operating independently for 52 years, Fingerhut was bought in 2000 by Federated Department Stores hoping to gain some direct marketing insight. Fingerhut was shut down less than two years later after turning in low sales numbers. Buyers were waiting in the wings, however, and acquired the rights to the Fingerhut name from Federated in 2002.
Fingerhut has rebuilt itself as a direct marketer and consumer credit business and its growth is based on applying new technology to electronic marketing, warehousing and other operations that have streamlined product ordering and shipping.
Its web business targets a core base: price-conscious shoppers with average household income. In 2007, Fingerhut restructured Fingerhut.com with better site taxonomy and more streamlined shopping categories. The company reclassified its inventory of more than 25,000 SKUs, tripled the number of names in its e-mail marketing database to about 1 million and hired more digital marketing specialists.