Flowers/Gifts/Jewelry
Taking a fresh approach to online sales

Internet Retailer Best of the Web 2006

1-800-Flowers.com
AmericanGreetings.com
BlueNile.com
GiftBaskets.com
Goldspeed.com
Illuminations.com
PersonalCreations.com
VermonTeddyBear.com

This year’s best of the web retail sites in the flowers, gifts and jewelry category entered the winner’s circle by taking a fresh approach to e-commerce and by not allowing their online marketing and merchandising plans to grow stale. For example, GiftBaskets.com now offers its entire site in Spanish and lists 18 categories of gift baskets to help customers find exactly what they are searching for. “The site offers a lot of selection and they make it easy for customers to find just what they want,” says Patti Freeman Evans, analyst with Jupiter Research.

In the online flowers and gifts space, customers naturally expect diversity, which is precisely the reason 1-800-Flowers.com spent 2005 focused on expanding content and pushing its branding even farther. The company devoted time and resources to developing new lines of merchandise, including popcorn, baked goods and wine, that complements its core floral business. “Our customers are from all over the U.S. and their tastes run the gamut,” says president Chris McCann.

In the jewelry space, pure play BlueNile.com paid close attention to detail by adding enhancements that allow customers to build their own five-stone diamond ring, three-stone diamond pendant and six-stone diamond earrings. “Blue Nile has created a very clean, easy to use site that doesn’t rely on glitz to sell their products,” says Curt Barry, president of F. Curtis Barry and Co.

Another online jeweler, Goldspeed.com, keeps customers coming back with an inventory of 20,000 items, including more than 1,000 versions of wedding rings, and by arranging to take orders as late as 6 p.m., have the merchandise inscribed at the factory and then shipped for next day delivery. “We try to put ourselves in the customer’s shoes,” says CEO Neil Kugelman.

On the web, especially in the highly competitive flowers and gifts space, customers return and give their repeat business to web retailers that do the best job at personalizing the shopping experience. PersonalCreations.com in 2006 is introducing a service that will enable shoppers to zoom in to see how their monogram or personalized message looks on products such as afghans before completing the purchase. Another online retailer, VermonTeddyBear.com, will make personalization a key part of its newest micro site, GiftBagBoutique.com, which carries designer handbags and accessories.

Along with personalization, best of the web retail sites are also combining merchandising and entertainment to attract customers. Illuminations.com, a merchandiser of candles and home decorating products, has adroitly deployed rich media applications that marry imagery and entertainment to drive sales. Illuminations recently used Flash applications over Halloween to show shoppers a variety of products and how they can be used to decorate the home or be packaged to create a unique gift. “It’s an entertaining way to show customers an assortment of different products using compelling imagery,” says Clay Lingo, vice president, direct-to-consumer sales.

1-800-Flowers.com realizes that, like the products it sells, its web site needs to stay fresh.

This is a company that practically invented the whole idea of selling flowers online. And while 1-800-Flowers consistently has been included in the ranks of top online retailers, it keeps trying new content and features to stay on top with its customers.

“This is one of the pioneers in Internet retailing, yet it continues to grow,” says Lauren Freedman, president of Chicago-based The E-Tailing Group Inc. “Its advanced search is excellent and it offers a lot of nice touches.”

Throughout much of 2005, 1-800-Flowers has focused on expanding content and pushing its branding even further. Next year, more changes will occur at the site itself, says Chris McCann, president.

1-800-Flowers has devoted a lot of time this year to expanding customer choices—direct-from-the-growers flowers vs. floral packages from florists or pricey designer sets vs. lower-cost assortments. “Our customers are from all over the U.S. and their tastes run the gamut,” says McCann.

Even within its well-known designer section, 1-800-Flowers has been increasing the number of well-known floral designers. Consumers can now choose from a designer who emphasizes minimalist modern pieces vs. a designer who works from a more classical perspective vs. a British designer with European flair.

As part of its content expansion, 1-800-Flowers is applying its experience with flowers to the sales of other gifts from companies it owns or is affiliated with. The company now sells popcorn, baked goods, wine and gifts online, offering, for instance, wine gift sets on its flower page. And in the near future, it expects to sell wine in the same basket as flowers, McCann says.

While this year’s emphasis has been on content, 1-800-Flowers has not completely forgotten about site features. One big change this year was to simplify the express checkout, moving the entire process to one page, even when customers are ordering multiple gifts that go to different addresses.

“About 70% of our customers choose the express checkout and because most of our business is gifts, we need to make it as simple as possible to send to different addresses,” McCann says.

AmericanGreetings.com is a welcome destination to more than 10 million visitors who click on the site each month to purchase e-cards and view other related content for holidays and special occasions. Over time AG Interactive, the e-commerce and mobile content business arm of American Greetings Corp., has built AmericanGreetings.com and its affiliate sites, including BlueMountain.com, into an e-card and special occasion content business that generates more than $50 million in annual Internet sales.

But what makes American Greetings different from other multi-channel greeting card companies and e-card destinations is the effort American Greetings is making to identify new customer segments and diversify its interactive lines of business. AG Interactive recently updated AmericanGreetings.com with a new look. The AmericanGreetings.com home page now features links to other products, including party or special events invitations, calendars, gift cards, paper cards and wallpaper and screen savers.

“We wanted to strike a balance,” says AmericanGreetings.com senior vice president and general manager Sally Babcock. “We wanted to draw more attention to our core e-card products, but also emphasize the other merchandise we offer.”

AG Interactive is also moving into new lines of business. In August, AG Interactive launched a pair of web sites that target American Greetings’ most sought after online customers: women aged 20 to 55. The first launch, BloombyAG.com, an e-cards site aimed at women 25 to 40, features more than 300 e-cards and other features available for an annual subscription fee of $9.99. The other launch, HatterChatter.com, offers similar cards and content to women 50+.

During peak greeting-card seasons in February, May and December, online traffic to AmericanGreetings.com can swell to more than 20 million visitors. With such a large and diverse base of online customers, analysts say the timing is right for AG Interactive to diversify.

“American Greetings is enhancing its customer appeal, but more importantly increasing its cross-selling opportunities,” says Robert Antall, CEO of retail consulting firm LakeWest Group LLC.

Video and flash applications may be all the rage for some online retailers, but not BlueNile.com. The Internet pure play jeweler continues to build a potent brand the old fashioned way, by paying close attention to servicing its customers every step of the way and providing them with the tools and information needed to make an informed purchasing decision.

The company has stated it will never include a video application on its site, as such bells and whistles distract customers from making purchases. Instead, BlueNile.com’s focus is on providing information about the cut, color, clarity, and carat of a diamond, and tools throughout the site that aid the customer in making the purchasing decision, such as prominently listing its toll free number on each page. All service representatives receive four weeks of training before being allowed to interact with customers.

“Blue Nile has created a very clean, easy to use site that doesn’t rely on glitz to sell their products,” says Curt Barry, president of F. Curtis Barry & Co. “When retailers rely on glitz, it can detract from the product.”

One of the recent enhancements to the site allows customers to build their own five-stone diamond ring, three-stone diamond pendant, and six-stone diamond earrings. Customers can choose from more than 60,000 diamonds and a variety of settings. Customization, which BlueNile.com began offering in the late 1990s for engagement rings, is intended to make it easier for customers to purchase the piece of their choice. “So many times in a store customers are limited to what is in the display case, when what they want is something more distinctive,” adds Barry.

Earlier this year BlueNile.com launched two new web sites to service Canada and the United Kingdom. The jeweler’s emphasis on service, selection, and education is expected to play well with Canadian and U.K. consumers, since jewelers in those countries typically have an extremely limited selection.

Looking ahead, BlueNile insists future enhancements to the site will be based on enhancing the functionality of the site, rather than razzle-dazzle. “This is the kind of site that creates excitement for customers who are not regular online shoppers,” Barry says.

There are a lot of web sites where a shopper can order a gift basket. But most specialize—they may offer baskets of fruit or gourmet foods or wine. One site has found a niche market in the gift basket itself—GiftBaskets.com.

Its home site lists 18 categories of gift baskets to help customers find exactly what they want. Some are sorted by season or occasion. Others are sorted by the type of items in the baskets—i.e. gourmet foods or fruit or Mrs. Field cookies. Shoppers can even choose their category by price—such as a section of gifts under $50.

Because GiftBaskets.com has been selling gift baskets online since 1994, it has learned a lot about what customers want in gift baskets. Its presentation is very simple—it doesn’t romance the product; rather it stresses efficient shopping with few images and super fast page downloads. “This site offers a lot of selection and they make it easy for customers to find just what they want,” says Patti Freeman Evans, analyst with Jupiter Research. That ease is important in a field where there are a lot of choices and shoppers typically want to get to a narrow list of offerings.

Buying gift baskets online is a growing market. “It makes a lot of sense to order gift baskets online since it is a product that often has to be shipped anyway,” says Evans. “But while this site competes with a lot of sites—from gourmet food companies to wine companies or florists—what sets it apart is that it appeals to shoppers who haven’t decided what kind of gift they want to give.”

GiftBaskets.com also offers its entire site in Spanish. “The number of consumers who prefer to interact in Spanish is growing and while this is not a feature that every retailer needs to offer, this site appears to be making a strong appeal to that market,” says Evans.

The site also features an interesting promotion: If a shopper selects a product, then backs away from the order form to shop more, the shopper receives a pop-up window offering a $7.50 discount to complete the order. Close it and it doesn’t come back.

It’s not easy competing in the discount online jewelry business, where there’s ample competition, where often heart-struck customers are particularly demanding, and where showing the intricacies of gold patterns and diamonds challenge any virtual storefront.

It doesn’t help that a surprisingly large number of buyers want an engagement ring inscribed and delivered the next day.

But Neil Kugelman has figured out how to do that and more, which is why his Goldspeed.com is winning praise from industry observers for uncommon service. “Most retailers fret about improving customer loyalty,” says Paula Rosenblum, director of retail research for analysis firm Aberdeen Group Inc. “The rare retailer, like Goldspeed.com, actually does something about it.”

Goldspeed gets about half of its business from repeat customers, even while its overall number of orders continues to surge from both new and existing customers. This year, it expects to process about 50,000 orders, a rise of 60% over 2004, says Kugelman, founder and CEO.

Goldspeed takes several steps to keep customers coming back. It offers some 20,000 items, including more than 1,000 versions of wedding rings. But its real secret to success is finding out what customers want in a shopping experience, and delivering on it, Kugelman says. “We try to put ourselves in our customers’ shoes, figuring out what would motivate us to purchase from Goldspeed rather than from a local store,” he says.

Goldspeed gets a lot of orders for wedding rings from people who want to get married the next day, for instance, so it has arranged with several suppliers to take orders as late as 6 p.m. for rings that get inscribed at the factory and shipped for next-day delivery.

Each Goldspeed employee must spend at least four hours per month in the call center talking with customers, learning first-hand how to improve service. When a staff graphic artist heard customers complain that they couldn’t see enough details on products, she worked on displaying product images from more angles.

“We’re going to bring customer service to a higher level, and significantly impact the way people purchase jewelry,” he says.

In today’s multi-media driven society, consumers expect a more entertaining shopping experience, especially online. Recognizing this trend, Illuminations.com, a merchandiser of candles and home decorating products, has adroitly deployed rich media applications that marry imagery and entertainment to create a powerful sales tool that enhances the presentation of its lifestyle products.

The aim, according to Clay Lingo, vice president, direct to consumer sales for Illuminations.com, is to create a compelling sales story that dazzles shoppers’ senses, rather than forces them to plod through blocks of visually dull copy.

Illuminations.com successfully used Flash applications during the recent Halloween season to show shoppers a variety of products and how they can be used to decorate the home or be packaged to create a unique gift. “It’s an entertaining way to show customers an assortment of different products and uses for those products using compelling imagery,” says Lingo.

Prior to 2005, Illuminations.com had resisted the use of Flash applications because of what it perceived to be a low penetration of broadband Internet into homes. “Once we saw data that showed 60% of U.S. homes have broadband Internet connections, we decided to proceed,” explains Lingo.

As for the remaining 40% of households without broadband Internet, Lingo says many of these consumers have broadband Internet at work and will shop online when in the office.

In addition to creating flash presentations for seasonal items, Illuminations.com has created a digital version of its catalog. Consumers can flip through the pages, enlarge and zoom-in on images. Lingo is betting the digital catalog will reach more customers than its traditional print catalog, while lowering its catalog production and distribution costs. “We have a larger customer base than we can realistically mail to, and this is a more efficient and entertaining way to put our catalog in their hands,” says Lingo.

Down the road, Illuminations.com plans to launch a Spanish language web site with the same rich media features. “Rich media applications give online retailers more control over product presentation by showcasing merchandise in the best manner,” says Jim Okamura, senior partner with J.C. Williams Group. “The increased use of rich media reflects the broader understanding online retailers have of multi-channel shoppers.”

Personal Creations is entering its second decade as a web retailer and expects to generate e-commerce sales of $40 million in 2005. But rather than remain static, PersonalCreations.com gets better with age with a knack for reinventing itself in the ultra-competitive online gifts space.

Among the latest innovations is live chat with a twist. On most web sites, the live chat button sits passively on a page waiting for a customer to click on the icon and begin a dialogue. But as part of a stepped up marketing effort to reach its core customers, women 25 to 49 with annual household income of about $78,000, Personal Creations runs a float box across the home page that invites customers to engage in a dialogue. By actively engaging customers in an immediate e-mail conversation, PersonalCreations.com is gathering feedback on promotions and merchandising-related content, says director of e-commerce Tom Denison. “We can quickly and easily switch out our creative and any current offers,” he says. “We can A/B test new offers and content to optimize against our customers.”

Personal Creations is also enhancing its e-commerce operation with more personalization tools. For instance, just before Father’s Day, it tested new rich media applications from Scene7 Inc. that allow shoppers to see monogrammed merchandise before making a purchase.

The program, which Personal Creations expects to roll out during the first quarter of 2006, lets customers select type font and other details, then zoom in to see how the monogram or personalized message looks on the merchandise. The Father’s Day pilot allowed shoppers to see how their personalized message would look on a sample afghan and produced dramatic results: 50% of the shoppers who tried the new tool made a purchase. “We are always looking for new ways to personalize merchandise,” Denison says.

That PersonalCreations.com is willing to try new online merchandising strategies after 10 years of successful results impresses retail analysts with the site’s staying power. “There’s very good attention to product detail,” says Shari Altman, president of direct marketing consulting firm Altman Dedicated Direct. “It’s little touches such as getting a personalized greeting card and gift box right from any product page that makes the site work so well.”

After almost a decade of selling online, The Vermont Teddy Bear Co. can feel warm and fuzzy about its e-commerce success for a very simple reason: It builds niche sites that stick. When Vermont Teddy Bear first took to the web in 1997 it brought along its eclectic assortment of stuffed bears and a personalized approach to online merchandising that proved to be a hit with online gift buyers.

Since then Vermont Teddy Bear, which generates annual web sales of more than $40 million, has taken that winning formula and launched four other niche sites, including its latest, GiftBagBoutique.com, a web store that carries designer bags and accessories. Vermont Teddy Bear has developed a knack for getting it right in the ultra competitive online gifts space because its various e-commerce sites offer straightforward navigation and ways that shoppers can customize and personalize their purchase. The company also listens closely to its core female customers to launch niche sites that sell personalized merchandise at a reasonable price point.

For instance, at GiftBagBoutique.com, customers who complete a purchase receive their order along with a free gift card and lip conditioner and delivered in a purse-shaped shipping box. “Women are terrific gift buyers who buy multiple times throughout the year, not just during peak holidays like Christmas and Mother’s Day,” says Irene Steiner, vice president of marketing for Vermont Teddy Bear. “We feel confident we can repeat the success with GiftBagBoutique.com we’ve had with our other sites such as PajamaGram.com.”

Vermont Teddy Bear is updating VermonTeddyBear.com with pages in Spanish to attract more Hispanic shoppers and adding more personalization options such as letting customers monogram pajamas, says web manager Tom Funk.

But as long as Vermont Teddy Bear sticks to its proven web strategy and chooses its retail niches carefully, its web traffic and sales conversions will continue to grow, says Robert Antall, CEO of retail consulting firm LakeWest Group LLC. “Vermont Teddy Bear does a great job of enticing customers to their online stores via print and radio advertising, and more recently through successful online advertising,” Antall says. “They live up to their advertising by offering easy-to-navigate and customizable sites.”