Martha Stewart develops niche e-commerce strategy

Martha Stewart Living Omnimedia Inc. once again sees the Internet as a good thing.

For the second quarter Martha Stewart is reporting a sharp rise in Internet revenue as it shifts away from selling lifestyle-oriented merchandise online to a web model based on advertising and targeted e-commerce niches.

For instance, the company, No. 365 in the Internet Retailer Top 500 Guide to Retail Web Sites, is redesigning MarthaStewart.com. The redesign will be completed by February and feature a new digital photography section.

Under an agreement Martha Stewart has with Eastman Kodak Co., the two companies are launching a new line of personalized photo products such as cards, stationery, invitations, photo books, calendars and stickers. Martha Stewart will design the product line and carry the items online at MarthaStewart.com while Kodak will supply materials and photo processing services.

With the new service, customers will be able to upload personal photos, choose from a menu of design templates, and create personalized cards and other items. “We see a big opportunity in the growth market for high-quality, digital products that will appeal to the Martha Stewart customer and raise the bar for what`s available in the digital photography space,” says Martha Stewart president and CEO Susan Lyne. “It also is an important step in our Internet strategy to empower users to find, learn, act, create and share online.”

The company reported web revenue in the second quarter of $4.6 million, an increase of 107% from e-commerce sales of $2.2 million in Q2 2005. Online flower sales in Q2 grew 19% to $2.5 million from $2.1 million in the second quarter of 2005. “We have successfully navigated a difficult period and are enjoying significant gains in advertising revenue and new business opportunities," Lyne says.