September 29, 2009, 12:00 AM

Taking on the big dogs

(Page 2 of 3)

‘If there’s anything we can do’

At the online health and beauty products site AmericaRX.com, which did $14.3 million in 2008 sales and competes against the 25-times larger Drugstore.com and Drugstore’s sister site Beauty.com, founder and CEO Pavankumar Darisi says he’s expecting to eventually hit $100 million in sales through an emphasis on value and personalized customer service.

“We have a 30-40% repeat customer rate,” he says. “When customers come to us the first time, they often don’t go back to other sites.”

AmericaRX.com emphasizes value in ongoing promotions across the top of its home page, as well as in other prominent positions, including free-shipping offers and a 5% discount on any repeat order within 60 days.

When callers to its customer service line are put on hold, they hear recorded messages such as, “If there is anything we can do to improve the quality of our relationship, please let us know. In today’s automated and impersonal world, we still retain that old-fashioned personal touch.”

Building customer loyalty

Customer service and free shipping offers also play important roles at CWDkids.com, the e-commerce site of cataloger Children’s Wear Digest Inc. With $15.8 million in 2008 web sales and competing against major apparel retailers like Gap Inc.’s GapKids.com and Walmart.com, CWDkids has been growing sales through promotions that increase average order values, such as free shipping on orders of $125 or more, says Tracy Schneider, vice president of marketing and operations.

“If a customer knows she is going to receive free shipping on an order of $125, she’s more likely to add an extra item or two to her order to hit that cutoff,” she says.

The retailer has also found shoppers are willing to pay more for items they perceive as offering extra value. “For example, search results and comments from customers have let us know that ‘Made in the USA’ is important,” Schneider says. “We plan to continue to offer items made domestically to meet the demand.”

Some smaller retailers believe they can offer shoppers a better experience than the giants can, which will ensure loyalty in good times and bad.

Powell’s Books Inc., No. 364 in the Internet Retailer Top 500 Guide, for instance, competes in the same market with Amazon.com and web-savvy, industry-leading retail chains Barnes & Noble Inc. and Borders Group Inc.

But Powell’s, with six stores and about $19.3 million in 2008 online sales, knows it has something its rivals don’t-an in-store shopping experience based around its own style of coordinating categories of books and media products-and it’s determined to improve how it offers that shopping experience online as well as in its stores, says Emily Powell, vice president and head of e-commerce, who is taking over leadership of the company following the pending retirement next year of her father, company founder Michael Powell.

“We can’t compete on the same level with Borders and Barnes & Noble because we’re not in everyone’s backyard like they are, and we can’t compete on the same scale as Amazon,” Emily Powell says. “But we’re doing what we do best online as well as in our stores. Our stores offer a wonderful process of discovery-for example, a customer might walk in one of our stores looking for a book on how to repair cars, then also find books on old cars, on travel destinations, then how to learn a foreign language-almost like walking through a Google search. We plan to offer that kind of shopping experience online too through improved site layout and site search and navigation.”

Also leveraging its multichannel expertise to grow sales both online and in stores is Christopher & Banks Corp., No. 403 in the Internet Retailer Top 500 Guide. To compete against retailers like J.C. Penney Co. Inc. and Macy’s Inc., Christopher & Banks has deployed new online gift centers that are increasing click-through rates on its e-commerce sites. That web feature also expands product offerings in stores, as shoppers can check computer monitors for suggested gift arrangements.

The multichannel strategy, launched earlier this year, boosted click-through rates in a special Mother’s Day gift center on ChristopherBanks.com, the retailer’s main e-commerce site, and cjbanks.com, its plus-size women’s apparel site. “It also drove more store sales,” says Monica Dahl, senior vice president of planning, allocation and e-commerce.

She adds, “2009 will be the first holiday shopping season that we’ve had this multichannel functionality, and we believe there will be a myriad of benefits.” Christopher & Banks operates its e-commerce sites on a platform developed and hosted by GSI Commerce Inc.

The retailer is also beginning to test self-service online kiosks in stores, in addition to existing monitors on checkout counters that promote displays of merchandise not available in stores.

Bringing the e-commerce experience into stores, where shoppers can place online orders for items not available in the store, Dahl says, is helping Christopher & Banks compete against larger rivals by increasing selection without expanding in-store inventory. “This allows us to say ‘yes’ to every customer, and to show them entire assortments of products they otherwise wouldn’t have seen in the store,” she says.

Technology choices

Carrying out an e-retailing strategy that can compete effectively against the largest retailers requires the right mix of technology that can help a relatively small retailer stand out against the behemoths with much greater resources.

One advantage small retailers have to start off, Redlich says, is the ability to view and compare the merchandising and marketing strategies across the e-retailing industry. “The great thing about the Internet is that everything is visible,” he says.

The challenge is to adopt growth strategies that match a small retailer’s resources.

ReStockit operates on a homegrown e-commerce platform based on ASP.net, a web site development technology that Microsoft Corp. makes available for free to developers who use Microsoft’s .Net technology environment.

While also developing its own personalization and cross-selling applications, the retailer has selectively chosen commercial technology that it figures add more value than it could develop in-house. These include: Omniture Inc.’s Test and Target analytics and page optimization, Silverpop e-mail marketing, Bold Software’s BoldChat live chat application, and Endeca Technologies Inc.’s site search and navigation system, which ReStockit gets at a discounted rate through marketing services and software reseller Thanx Media Inc.

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