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 a connection between friends and the referring customer gets notification that a friend has placed an order,” Bharara says. The credits-and sales-can continue for years, he says.
The credits also can continue beyond the diaper years, because Diapers.com is adding products for older children. New offerings include baby skin care, home cleaning, potty training and home safety products.
“We’re moving into age-based products beyond baby consumables,” Bharara says. “If the baby is 5 months old, we show returning customers information on solid foods. When the child reaches 11 months and is starting to walk we’ll show products that focus on baby safety.”
Diapers.com had about 850 SKUs in May and plans to double that number by year’s end. The expansion is part of a plan to personalize product offerings to customers based on what the company knows about their needs. New merchandising technology from Mercado this year will help personalize the site and show specific products and search.
Keep it simple
Also new in 2008 is an application from Coremetrics Inc. that enables web analytics by product. That will enable Diapers.com to analyze specific metrics by SKU, Bharara says.
A site redesign also is under way as Diapers.com continues to make the site as “simple, professional and easy to use as possible,” Bharara says. The new version will enable the company to add products easily as well. Early fall is the relaunch target.
Also new for 2008 is the opening of a third warehouse in the Midwest planned for this summer. “That will enable us to ship orders placed before 6:00 p.m. to be received within two days, and to reach most major metro area customers in one day,” Bharara says.
Diapers.com has come a long way from its first full year on the Internet. “In 2006, we had a very basic site, products were not well organized and there was no search function,” Bharara says. Since then, the company has focused on making sure operations are delivering sales growth.
Simple approach to going global
By Mark Brohan
Doing more with less is how American Apparel Inc. conducts business online, but that’s perfectly fine with web director Raz Schionning.
Using home-made applications that run on a Yahoo Stores platform, American Apparel, one of the largest U.S. manufacturers of T-shirts and related apparel, is on an e-commerce roll. In 2007, the company grew its web sales by 121% to $29.3 million from $13.3 million in 2006.
The web accounted for 8% of total sales while generating 16% of the total growth. “We think we can keep on growing our online sales at a very aggressive rate for several more years,” Schionning says. “There’s a growing demand for our products and we are using the Internet and e-commerce to build a global brand.”
Industry analysts and others have criticized consumer brand manufacturers as the laggards of online retailing. But someone apparently forgot to tell American Apparel, which in just over five years has grown a small Internet start-up operation into an established web business that draws more than 1.5 million web visits each month and carries an online inventory of 20,500 SKUs.
Within a few months, American Apparel (No. 262) expects monthly web traffic to exceed 2 million visits. “We launched the site as a business-to-consumer experiment and we were very surprised by the level of growth at first,” says Schionning. “Now we see an opportunity to build up our online business into a very significant channel.”
American Apparel, which also owns and operates 187 stores in 15 countries, keeps its e-commerce infrastructure internal and simple to maximize efficiency and make design changes quickly and easily, Schionning says. The company designs its own pages, creates its own content and images and builds its own applications, including a forthcoming content management system and advanced rich media. All transactions are still processed on American Apparel’s original Yahoo Stores platform.
“Yahoo may have some shortcomings, but it has proved to be undeniably stable and efficient and it has also handled our rapid growth,” Schionning says. “We’ve extended the platform well beyond anything that was ever intended such as adding multi-lingual and multi-currency support. Yet with all this tinkering we’ve done, it never misses a beat.”
In 2007, the company also internally designed and then launched a new order management system that’s reduced by about 50% the time it takes American Apparel to post new products online and ship orders. “The online store was previously just an order taking system that tossed orders over the wall to the warehouse,” Schionning says. “Last year we merged our e-commerce operation with the fulfillment side of the business and built a very integrated and advanced order management system. We redesigned and optimized each touch point from the order update e-mails to packaging.”
Clear, clean, simple
American Apparel, which makes all clothing at its 800,000-square-foot facility in Los Angles and at other knitting, dyeing and finishing sites in Southern California, sees itself as a niche apparel retailer. The e-commerce site targets an audience of young urban shoppers ages 20 to 36 with garments that are simple, straightforward and priced under $100. “The web site is intended to deliver an online shopping experience that is clear, clean and simple to use,” Schionning says.
As an online retailer American Apparel also takes advantage of its manufacturing operation to react quickly to changes in shopper behavior and introduce complete new product lines, sometimes in as few as 90 days. “Our products are made in Los Angeles in the same building where the entire web development and web marketing staff is located,” Schionning says. “I can eat my lunch alongside the same men and women who made the product.”
American Apparel’s approach to e-commerce is using available resources to foster growth, he says. By sticking with its own internally designed technology and leveraging its expertise as a wholesaler, manufacturer and chain retailer, American Apparel expects web sales to keep on accelerating. “The biggest challenge we have is keeping up with the growth,” Schionning says. “Our online store is an important part of bringing our products to the world.”