May 27, 2010, 1:39 PM

Recession-busters

Despite tight times, these Top 500 merchants found ways to grow.

Lead Photo

Clockwise from top right: Diapers.com CEO Marc Lore; Anabela Perozek, vice president of marketing, Staples Business Delivery; Benchmark Brands CEO Alan Beychok; Mark Kuhns, vice president of e-commerce, Under Armour

WEB-ONLY RETAILERS

Coming of age in hard times

Diapers.com
With annual sales that increased 104.5% to $182 million in 2009, Diapers.com (No. 85) has a simple recipe for success: Deliver busy moms what they want–and fast.

To better cater to busy parents, Diapers.com last year rolled out a speedier delivery program. Diapers.com, which launched in 2005 and finished its first year in business with sales of just $2.5 million, also expanded its marketing relationships with two popular Internet destinations for young parents: BabyCenter.com, a content and community web site operated by Johnson & Johnson, and Our365.com, a new parent community and a digital provider of in-hospital newborn portraits.

"We saw an opportunity to expand our market last year and we had the resources, so we moved ahead," says Diapers.com CEO Marc Lore.

In five years, Diapers.com has spent about $10 million on technology and programs to improve fulfillment and customer service. In 2009, Diapers.com acquired an automated materials handling system for each of its three regional distribution centers. The program from Kiva Systems Inc. has helped to reduce by about 20% the time it takes to pick, pack and ship an order.

Using better warehouse management automation, and a fleet of trucks to carry packages each night to major carrier hubs, also has helped Diapers.com extend its free overnight shipping program to 70% of the U.S., a figure Diapers.com expects to hit 80% this year.

"We built this business on the basics of good customer service," says Lore. "We've never lost sight of that."

Exclusive brand boutiques

RueLaLa.com
RueLaLa.com, a members-only web retailer, offers brand name products such as women's and men's clothing, gourmet foods and wine, and travel packages in 48-hour sales at product "boutiques." More than 1.8 million members helped the web-only retailer reach 2009 web sales of $157 million, nearly double the Internet Retailer Top 500 Guide estimate of $80 million in 2008.

RueLaLa (No. 103) did it almost exclusively by word-of-mouth: existing members must recommend new members, except those who come in via a waiting list. The e-commerce site's marketing strategy guarantees a sense of urgency, says Stacey Santo, vice president of marketing communications. Members get an e-mail every day at 11 a.m. identifying what's available in the three or four product boutiques.

"It has created 'appointment shopping,'" Santo says. "Every day new boutiques open and members rush in the 'doors.'"

RETAIL CHAINS

It pays to diversify

Staples
It's not easy having a banner year for web sales in the midst of a deep recession, but diversification and a global customer base help. Just ask Staples Inc.

In 2009, Staples (No. 2) grew web sales 27.3% to $9.8 billion from $7.7 billion in 2008. The growth came from Staples' diversified and global e-commerce base, which includes Staples.com and more than two dozen other business-to-consumer and business-to-business web sites, the retailer says. Staples also reached out to new corporate web shoppers with more data center products and services, printer management services, hardware, desktop technology products, and network services.

"Our e-commerce strategy is driven by serving customers that include individuals and small businesses all the way up to large businesses," says vice president of marketing for Staples Business Delivery Anabela Perozek.

Staples won't break down how much of its e-commerce sales are generated in the U.S. versus overseas, but it's clear the web is taking center stage as the growth channel for the biggest chain retailer of office supplies. While the web grew by nearly 30% for Staples in 2009, comparable-store sales in North America and Europe declined by 2% and 9%, respectively. Last year e-commerce also accounted for 40% of Staples' total 2009 sales of $24.27 billion–the most of any Top 500 chain retailer.

In 2010, e-commerce plans call for the rollout of a mobile commerce site and more payment options on Staples.com. "We believe in continuous improvement," says Perozek.

Paying attention to shoppers

Best buy
Best Buy turned in a solid performance online in 2009 by paying attention to details and designing web tools and marketing programs to meet shoppers' needs.

BestBuy.com (No. 10) grew web sales by 20% in 2009, according to Internet Retailer Top 500 Guide estimates. Underlying that success was a desire to understand consumers and to design and deliver new marketing programs and tools to help online shoppers find what they seek, says John Thompson, senior vice president and general manager, BestBuy.com.

"We had a fairly significant test-and-learning environment in 2009," Thompson says. "There was a lot of A/B testing and competitive analysis around our relevance with our consumers. We wanted to make sure we had the customer experience, products and services, and delivery and support mechanisms to support the customers who were choosing our brands."

The desire to know its shoppers led to a number of key offerings including giving online shoppers access to local store inventory data. That helped push customers to buy on the web and picking up purchases in local stores, which accounted for 40% of web sales last year, Thompson says.

CONSUMER BRAND MANUFACTURERS

Combining education and sales

Under Armour
Under Armour Inc. designed its web site to teach consumers about sports apparel and other gear the company makes, which is designed to help athletes perform at their best. But UnderArmour.com also has a successful e-commerce component, and its 2009 online sales increased by 51%. Credit for the online sales increase goes to web site upgrades made last year, which improved both the way shoppers find products and how they are presented, says Mark Kuhns, vice president of e-commerce for Under Armour (No. 215).

"We implemented aggressively the results of the ForeSee Results customer satisfaction survey, by listening to what consumers were saying about navigation, merchandising, product views and content," Kuhns says. "For example, shoppers wanted to know what other people felt about our products and how others described the products." Under Armour deployed technology from Bazaarvoice to show customer ratings and reviews.

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