Bluefly slashes customer acquisition costs

Online discount fashion retailer Bluefly Inc. reduced customer acquisition costs last year to $17.04 per customer vs. $39.32 the year before, the company reported today. It also slashed its marketing budget by 57%, yet acquired 101,000 new customers, only 1% fewer than the prior year. In addition, the company reported that revenues from repeat customers increased to 67% of sales vs. 60% the year before.

As previously reported, sales for Bluefly in 2002 increased 33% to $30.6 million. Net loss for the year totaled $6.5 million, down 74% from $25 million in 2001.

Fourth quarter did not keep pace with the rest of the year, however. Sales were up 25% vs. Q4 2001 and net loss increased 20% to $1.66 million.

Bluefly said the increase in losses for the fourth quarter was driven by costs in dealing with problems with the company’s new web site, which launched Sept. 15; increased customer service costs as Bluefly attempted to minimize the impact of the post-launch web site problems; amortization of the investment in the new web site; and the addition of 16 employees during 2002, four of whom joined in the fourth quarter. Bluefly also reported that it believes some of the increase in losses for the fourth quarter was attributable to lost sales related to the post-launch web site problems. Bluefly also said it believes many of the problems that customers encountered after the launch of the web site had a lingering effect throughout the fourth quarter.