In its second-largest acquisition, Amazon buys the company for $970 million.
Williams-Sonoma sees a big chance to bulid on its base and capture more on the online home furnishings market.
Williams-Sonoma Inc. has a clear view of where to take its future e-commerce business and that vision includes making Williams-Sonoma the dominant brand in the online home furnishings space, chief marketing officer Patrick Connolly recently told Wall Street analysts.
Speaking last month at the Goldman Sachs Dot Commerce conference in New York, Connolly said Williams-Sonoma will likely generate more than $1 billion in online sales in 2010 and that e-commerce should account for about one-third of the chain retailer’s total sales. In comparison, Williams-Sonoma, No. 26 in the Internet Retailer Top 500 Guide, recorded web sales of $943 million in 2009. The Internet represented about 30.4% of Williams-Sonoma’s total 2009 sales of $3.10 billion.
But the bigger opportunity for Williams-Sonoma in e-commerce, which Connolly said is the retailer’s top capital investment priority, is gaining more market share in in the online home furnishings segment over the next several years. “We can create and sustain a true advantage,” Connolly said. “The home furnishings market on the web is under-penetrated and a retail opportunity lies ahead.”
To build on its present e-commerce base, Williams-Sonoma will capitalize on its long history as a direct marketer, cataloger and merchant of premium brands. “We have the advantage of selling strong brands and 80% of our search engine optimization traffic comes from people who search on those branded terms,” Connolly told attendees.
While promising to disclose more details around September, Connolly said Williams-Sonoma will be making several features and functions changes to its e-commerce sites, including adding better site search and rolling out a series of tools and specialized templates that will enhance product details and navigation on its merchandising pages. “We are looking at all of the elements of the shopping experience,” Connolly said.
Another asset Williams-Sonoma will leverage even more to grow its e-commerce base is a new data warehouse that the retailer can use to create more targeted marketing campaigns from its file of 52 million customer names. “Customer-based marketing is in our DNA,” Connolly said. “We generated more than 400 million impressions each month from our highly targeted messages across a variety of programs.”
Over time, Williams-Sonoma has developed a supply chain that last year allowed the company to make more than 500,000 in-home deliveries, with most orders being shipped by UPS in three business days or less. “A lot of home furnishings are heavy and fragile so developing a supply chain in the home furnishings space can be a significant barrier to entry,” Connolly told attendees. “We have worked to make our direct-to-consumer supply chain a truly special network.”
Williams-Sonoma is off to a good start for its online sales in 2010. For the quarter ended May 2, Williams-Sonoma recorded:
- Web sales increased 23.7% to $240 million from $194 million in the first quarter of 2009.
- Total sales rose 17.3% to $718 million from $612 million in the prior year.
But the bigger opportunity for Williams-Sonoma online is in the years ahead, Connolly said. “We are in a unique position to gain market share in the next five years,” he said.