Fingerhut Direct Marketing Inc., an affiliate of Petters Group Worldwide, is reaping the rewards of a renewed e-commerce strategy.
For the past several years Fingerhut, No. 127 in the Internet Retailer Top 500 Guide, has been quietly rebuilding Fingerhut.com into an e-commerce site that appeals to its core shopper: bargain-conscious shoppers with average household income.
In 2007, Fingerhut grew its e-commerce revenue to $140 million, an increase of 70.7% from web sales of $82 million in 2006, and up 169.2% from web sales of just $52 million in 2005.
E-commerce is growing because the company, a direct marketer and consumer finance operation in business since 1948, is making a concerted effort to drive its catalog customers to shop the web. In 2007, Fingerhut completely rebuilt Fingerhut.com with a better site taxonomy and more streamlined shopping categories.
“We painstakingly reclassified our inventory of more than 25,000 SKUs,” says Fingerhut vice president of e-commerce and digital marketing Brad Smith. The company also tripled the number of names in its e-mail marketing database to about 1 million and hired more digital marketing specialists.
Going forward, Fingerhut also plans to explore more marketing and merchandising relationships with third-party shopping portals and comparison sites and open a store on Amazon.com. “We are growing the web because we are getting strong support from our senior management to do it,” Smith says.
In 2007, the web accounted for about 32% of total sales, compared with about 22% in 2006. “In 2008 we will continue to invest in online media and convert more catalog customers to the web,” Smith says.
In July Fingerhut secured more working capital in a deal that includes a $250 million line of credit from a group led by Barclays Capital Inc. and a three-year $40 million inventory line of credit from JPMorgan Chase Bank N.A.
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