Here are profiles of the fastest-growing e-retailers in the Internet Retailer Top 500 in four categories—retail chain, web only, cataloger and manufacturer. These innovative merchants show it’s possible to shine online, even in tough times.
Retail Chain: Charlotte Russe
Catching up online in a hurry
By Bill Briggs
Charlotte Russe Holding Inc. knows its demographic: young, fashion-conscious female shoppers. What the company was less sure about two years ago was how to expand into e-commerce. But by relying on vendors to provide the technology, Charlotte Russe was able to reach $11 million in web sales in 2008.
The retail chain’s web site got a late start in 2007, recording $1.5 million in online sales. But CharlotteRusse.com hit its stride last year, growing 633% and topping the list of fastest-growing e-retailers in the 2009 Internet Retailer Top 500 Guide.
Like many other retail apparel chains, Charlotte Russe suffered through a dismal 2008, as comparable-store sales fell 1.5%. But the web sales surge dovetailed with a new marketing strategy and new leadership, as Emilia Fabricant was named president and chief merchandising officer in November 2008.
Perfect harmony
“The majority of our demographic is girls from age 16 to 22,” Fabricant says. “In the past, the company was very quiet in its marketing and branding efforts, but we’ve relaunched the brand in perfect harmony with the growth of e-commerce. And we relaunched with a very focused point of view in targeting the fashion-directed customer who knows what’s in fashion and what she wants to wear.”
Reaching the targeted shoppers was the first task CharlotteRusse.com faced when it embarked on its e-commerce mission. The company had a catalog site in place, which was the jumping-off point, says Craig Gillan, director of e-commerce. “A portion of our traffic was already coming in. Our early endeavors into marketing and acquiring new customers revolved around paid search and affiliate marketing,” he says, along with e-mail campaigns to reach its online audience.
Charlotte Russe turned to third-party providers both for reaching its audience and for e-commerce technology, a necessary step for making its move quickly, Gillan says. “Long term, I’m not sure if that’s the best way, but to quickly ge t into the e-commerce game you need to partner with other folks until you can build a team in-house,” he says.
The company uses GSI Commerce Inc.’s e-commerce platform, including fulfillment, customer service and search marketing, and for the web site’s front-end tools, such as site search and order management. Other third-party providers include e-Dialog Inc. for e-mail marketing, Commission Junction for affiliate marketing, Red Door Interactive Inc. for social networking and Forrester Research Inc. for market intelligence. Fry Inc. provides consulting help in such areas as e-commerce merchandising and web analytics.
“The vendor relationships helped push our web business faster,” Gillan says. “From launch to three months into e-commerce we felt our site was as good as—or better than—some of our competitors whose sites have been up for several years.”
Since rolling out the site CharlotteRusse.com, the company has added several features that shoppers have embraced, including Design Your Outfit and ShopTogether. The design feature, developed by Polyvore, enables shoppers to assemble clothing and accessories into outfits to see what works together.
ShopTogether, built by DecisionStep Inc., lets shoppers view products at the same time from different locations. Charlotte Russe’s strategy is to test site features and survey shoppers to gauge their reactions, and it’s finding that online shoppers want more interactive tools, Gillan says.
Charlotte Russe also likes to keep current with other e-commerce sites. At a meeting every Friday, each member of the e-commerce team shares an interesting web site discovered the preceding week.
Positive sales results and customer feedback point toward e-commerce playing an increasingly important role at Charlotte Russe, notes Fabricant. “Current management is 150% behind it,” she says. “We plan to make Charlotte Russe’s web site the main destination for young, hip shoppers.”
billb@verticalwebmedia.com
Web Only: GourmetGiftBaskets.com
Better experience, bigger bucks
By Mark Brohan
For a small company, GourmetGiftBaskets.com likes pulling off big projects that make it easier for customers to assemble an assortment of foods and flowers for a holiday or special occasion.
In 2008, GourmetGiftBaskets.com (No. 446) was the fastest-growing web-only merchant in Internet Retailer’s latest annual ranking of the 500 largest online retailers. GourmetGiftBaskets.com grew web sales last year by 172% to $12 million from $4.4 million in 2007. Despite the recession, GourmetGiftBaskets.com grew because the company developed web site features and functions that enhanced content, provided greater product detail and expedited checkout, says founder and president Ryan Abood.
Hiring a pro
GourmetGiftBaskets.com spent $100,000 to hire a professional photographer to shoot sharper images of each of the 450 gourmet food, flowers and related items it carries, and added an internally designed zoom feature.
While the basic design of home and product pages hasn’t changed much since the site launched in 2002, GourmetGiftBaskets.com, owned and operated by a second-generation family of florists, added customer reviews and revamped site search and page navigation. Better organized tabs on the home page give options to shop by categories such as most popular, occasions and sentiments, holidays, price, and gourmet food.
Shoppers can complete an order in as few as five steps. Besides making it easier to choose and buy an item, Abood says, “We added content on every food item we carry that states the serving or package size. That’s a detail customers told us they wanted.”
In a segment where many retailers offer similar product assortments and packaging, Abood tries to focus on initiatives that can help his site stand out.
Before the 2008 holiday shopping season, GourmetGiftBaskets.com internally developed and launched new tools and web pages that give shoppers more options to select third-party carriers and delivery dates. A calendar lets shoppers select a delivery date and the lowest shipping cost for that date, and a drop-down menu displays a fuller range of FedEx and UPS pricing and shipping options if the customer needs faster delivery.
“We have competitors that offer only a few standard shipping options and charge a big markup if a customer wants a gift basket sent for a priority delivery on Saturday,” says Abood. “We integrated our calendar pages directly with FedEx and UPS so the customer knows exactly what it would cost, from the most affordable shipping option to the most expensive.”
Quality control
GourmetGiftBaskets.com employs a full-time staff of 40 experienced fulfillment specialists to read each order, select the items, then custom wrap each item and basket based on the company’s own quality control standards.
“Each basket goes through at least two inspections, by the fulfillment specialist and a manager, before it’s approved for shipping,” Abood says. “We don’t want to be the biggest online gift basket company, just the one that gives our customers the best shopping experience.”
In the past year, the media has helped raise the company’s profile. Assortments from GourmetGiftBaskets.com have been featured on the Oprah Winfrey and Dr. Phil TV shows and mentioned in such food and dining magazines as Gourmet and Bon Appétit.
Repeat customers have grown by one-third in the past two years and now account for more than 50% of sales. The company’s personal approach is the main reason, Abood says.
“Our gift baskets are made by hand by us and we give our customers excellent service,” he says. “We’re not that big. If a customer is unhappy, they can call and get the owner anytime and not an uninterested party in a call center.”
mark@verticalwebmedia.com
Cataloger: Green Mountain Coffee
Habit-forming e-commerce sites
By Mark Brohan
Even in a deep recession, Green Mountain Coffee Roasters Inc. learned, that web shoppers will still buy their favorite gourmet blend and new brewing systems—if they get a good deal.
With that in mind, Green Mountain last year added multiple discounts and perks to Café Express, an online customer loyalty program for shoppers at GreenMountainCoffee.com, and to Coffee Club, a similar program for shoppers at Keurig.com, which sells high-end coffee brewers and related merchandise.
Keurig also used alternative tactics to find new customers such as giving serious coffee bloggers free 30-day at-home trials of new coffee brewers or including more online coupons in its packaging materials and user manuals.
The effort paid off. For the second consecutive year, Green Mountain (No. 120) was the fastest-growing catalog company on the 2009 Internet Retailer Top 500 list, as it increased its web sales by 86.1% to $111.3 million in 2008 from $59.8 million in 2007.
“We saw early on that 2008 was going to be a tough year for the economy and decided that the best strategy was developing programs that deliver better value and more perks to our most loyal customers,” says David Manly, Keurig’s vice president of away-from-home and consumer direct marketing. “We also found other ways to find new shoppers and begin turning them into repeat customers.”
A new approach
Before revamping its loyalty club program, Green Mountain sifted through more than 1,000 customer reviews at GreenMountainCoffee.com, added customer satisfaction surveys on its e-commerce sites and asked 300,000 people on its e-mail marketing list for ideas on ways to improve the online shopping experience.
Loyal customers wanted better deals and more privileges, says Ken Crites, director of consumer direct for Green Mountain’s specialty coffee business unit. “Our best online customers told us they would keep buying our coffee, tea, cups and brewers if we could find new ways to deliver more value.”
To revamp Café Express, Green Mountain gave new members the option of two bags of coffee, two boxes of cups or having a $10 donation made in their name to the Wildlife Fund, plus 50% off the regular price on each recurring order and free filters. Existing members were offered such perks as $2 discounts on cups, $1 off on a bag of coffee and a 10% discount on non-coffee items. Green Mountain also established a new platinum program that gives Café Express members deeper discounts and better customer service.
Green Mountain Coffee shoppers responded: the number of new members signing up for Café Express doubled to about 135,000 last year. “We didn’t want to be just another churn-and-burn loyalty program,” Crites says. “We achieved record web sales last year because we made the effort to reach out to our best customers.”
Green Mountain’s typical online customer is female, age 30-50, with annual household income of $100,000 and above. Green Mountain is trying new ways to market online to serious coffee drinkers with similar demographics. For instance, Keurig monitors online coffee blogs and offers bloggers loyalty club memberships, gourmet coffee samples and trials of Keurig brewing systems.
Keurig has added nearly 1 million names to its loyalty club program in the past year, bringing the membership to 1.14 million, and the number of repeat buyers on Keurig.com has increased from 15% to 30%.
“We took the opportunity to rethink our entire approach to customer loyalty and now the web is the fastest-growing part of our business,” says Manly. “We learned that our best customers will stay with us even in bad times if we offer them better value and newer and better ways to keep shopping with us online.”
mark@verticalwebmedia.com
Manufacturer: American Apparel
Buttoning down global e-commerce
By Bill Briggs
Web merchants wishing to sell abroad don’t necessarily need to have stores on the ground to begin with. But for American Apparel Inc., it laid the foundation for success.
A global expansion initiative began in earnest in 2006 and accelerated through 2008 for the consumer brand manufacturer, which specializes in clothing and accessories for trendy young women and men in their teens and 20s. American Apparel now runs stores and e-commerce sites targeting shoppers in Australia, Canada, Europe, Japan, South Korea, Switzerland and the United Kingdom.
With the exception of Australia, where web shoppers bought products through the U.S. web site, all the other web stores serving those countries began after physical stores were established in those markets, says web director Raz Schionning. The strategy has paid off, as shown by 2008 sales results: International e-commerce sales increased 82.9% to $13.9 million in 2008 from $7.6 million in 2007 while U.S. online sales grew year over year 43.3% to $25.5 million from $17.8 million.
Sales leap
For 2008, combined e-commerce sales increased by 55% from $25.4 million in 2007 to $39.4 million. That sales jump landed American Apparel on the 2009 Top 500 Guide’s list of fastest-growing e-retailers, and led all consumer brand manufacturers.
Getting there, particularly when the international expansion plan was hatched in 2005, wasn’t easy, Schionning says. In fact, the first step was almost an afterthought. “Our motivation for expanding e-commerce internationally was initially to coincide with retail store expansion,” he says. “As we opened stores in Germany it became an obvious benefit to expand e-commerce to Europe as well.” American Apparel now operates 260 stores in 19 countries.
A different route
Other online retailers have separate sites for other countries with separate data stores, but American Apparel did not want to go that route. “We have business in eight separate countries, so that would be unmanageable,” Schionning says. The company manages is overseas operations from its headquarters in Los Angeles.
One area of global e-commerce that American Apparel is trying to improve on is payments. Through word of mouth the company learned about Netgiro Systems AB, a Swedish payments processor that does business digitally with many European banks and other payers. “We built a single integration with Netgiro and can take advantage of the integrations they have with hundreds of banks,” Schionning says. Netgiro’s U.S. headquarters is in Redondo Beach, Calif.
American Apparel, which generally accepts only credit or debit cards, plans to expand its payment methods to take into account how consumers in other countries prefer to pay.
Japan is challenging, Schionning says, because credit cards are not popular among young shoppers. Instead of paying with credit, an online customer often prints a sales receipt, brings it to the local convenience store and has the cashier ring up the sale. The payment then is transmitted to the e-retailer.
Shipping also presents hurdles. Nearly all fulfillment originates in the Los Angeles facility via consolidated shipments to each region, Schionning says.
A bulk shipment received in England, for example, is broken down and delivered through locally negotiated agreements. In England and Australia, American Apparel works with the government mail systems, and in other countries it uses courier services, he says. A bulk shipment to England can put products in customers’ hands in four to six days, he adds.
Schionning says selling internationally may not make sense for retailers of low-margin goods, such as computers and electronics, but can be profitable for other web merchants. “It’s not as complex now as some might think,” he says. “But really the web site, languages and content are the easy parts. The hard part is logistics and fulfillment.”
billb@verticalwebmedia.com
The high-growth club
Though a diverse group, these Top 500 retailers shared innovation and new business savvy to drive exceptional growth online in 2008
By Mark Brohan
Amazon.com
Last year sales at Amazon.com grew more than five times faster than the rest of the U.S. web retailing market, up by 29.5% to $19.17 billion from $14.8 billion in 2007. The biggest online retailer continues to diversify: It opened a dozen new web stores in 2008 and developed Amazon Remembers, a mobile commerce application that makes it easier for shoppers to use their iPhones and iPod Touch devices to search for products and complete an online purchase at Amazon.com and elsewhere.
Amazon also made key acquisitions in 2008 to grow its digital content business, including AbeBooks.com and audio books retailer Audible Inc. Amazon relied on a worldwide audience to drive its total sales higher in 2008. Overseas sales, which now account for almost one-half of all revenue, grew by 33.3% to $8.93 billion in 2008 from $6.7 billion in the prior year.
Dell
Dell significantly enhanced its e-commerce program in 2008 and the effort paid dividends. In 2008, consumer web sales for Dell grew year over year by 15% to an estimated $4.83 billion from $4.2 billion. That’s a big improvement over 2007 and 2006 when e-commerce only grew by about 6% annually. In previous years the web channel lagged as Dell struggled and lost market share to Hewlett-Packard Co. and other personal computer manufacturers.
But in 2008 Dell rejuvenated Dell.com with new programs such as the Dell Download Store, an online software site that lets shoppers purchase and download popular software titles at 10% or more below list price from 12 publishers including Microsoft Corp. Last year Dell also launched Dell.com/Bestofweb, a one-stop shopping portal that features a variety of social networking tools, digital content and daily web deals.
Apple
It was iTunes that kept Apple’s web sales singing in 2008 and the primary reason e-commerce revenue increased 34.9% from an estimated $2.7 billion in 2007 to $3.64 billion in 2008. The iTunes store now stocks an inventory of more than 10 million songs, 30,000 TV episodes and 2,500 films. Apple made several key improvements to iTunes last year such as adding an application that assembles compatible tunes based on a user’s existing digital music library and selling new movie releases from major film studios on the same day as their release on DVD.
Apple also changed its pricing and made many songs available for 69 cents, priced others at 99 cents, and sells hits and new releases for $1.29. Music from the four largest record labels—EMI Group, Universal Music Group, Sony BMG and Warner Music Group—now are offered on iTunes without digital rights management restrictions that limit how many times music can be copied and the devices on which it can be played.
Costco
Costco.com grew sales by 41.7% to $1.7 billion in fiscal 2008 from $1.2 billion in fiscal 2007. Costco members are upscale web shoppers. About 74% of Costco.com’s customers are college graduates with annual household income of more than $78,000 and 90% are homeowners. 50% of customers who shop online also are executive members who pay a higher annual fee for perks such as annual rewards and lower prices on services such as check printing, auto financing and long-distance phone service.
Costco drove web sales higher in 2008 by doing a better job of reaching out to its best, affluent customers with more personalized and targeted e-mail and print marketing campaigns, the retailer says. Costco now carries about 4,000 products online.
Macy’s
The web did what stores couldn’t for Macy’s in 2008: generate sales increases. Macy’s online sales grew 28% in 2008 while total sales were down 5.4% and comparable-store sales were down 4.6%. Macy’s didn’t break out dollar numbers for online sales, but the Internet Retailer Top 500 Guide estimated Macy’s 2007 web sales at $812.2 million. Growth of 28% put Macys.com’s 2008 sales at $1.04 billion, an increase of about $230 million. Total sales in 2008 equaled $24.89 billion versus $26.31 billion in 2007.
Macy’s has invested $300 million in its direct marketing channel in recent years, including various upgrades to both Macys.com and Bloomingdales.com. In 2008 Macy’s began updating stores with web-enabled POS terminals, improved the Find It In Store application, and upgraded Bloomingdales.com with speedier checkout, better images and updated style guides.
VistaPrint
For the 2008 fiscal year, VistaPrint increased web sales by 56.6% to $400.7 million from $255.9 million in fiscal 2007. VistaPrint used updated web site features and new business development to drive growth. Last year VistaPrint upgraded its design gallery of templates that customers use to create personalized business cards and stationery. The new gallery helped VistaPrint acquire 4.5 million customers overall and double daily orders to about 33,000.
The company also is expanding internationally, recently announcing plans to change its place of incorporation from Bermuda to the Netherlands and to set up a new senior management office in Paris.
Kohl’s
The chain retailer won’t talk publically about e-commerce, but the fact that the Internet was the only growth driver in 2008 speaks volumes about the web’s strategic importance to Kohl’s. While comparable-store sales declined by 6.9% and total revenue remained flat at about $16.4 billion, e-commerce sales at Kohl’s increased by 58.9% to $356 million in 2008 from $224 million in 2007.
To generate sales, Kohl’s updated its e-commerce program last year with discounts of 50% and higher on multiple items and increased the number of daily web specials. Kohl’s also expanded its e-commerce site to include an interactive dressing room that lets shoppers view apparel worn by famous models, mix and match clothes and accessories using product zoom, and complete an online purchase.
mark@verticalwebmedia.com
