Specialty/Apparel and Accessories:
An ensemble of approaches

Internet Retailer`s Best of the Web 2003

Buckle
eBags
Hanna Andersson
J. Crew
Lands` End
Undergear

Apparel is one of those categories whose fortunes on the web rise and fall. Sometimes apparel is among the leading categories in sales volume and sometimes it`s at the bottom. But there are some apparel e-retailers who had it figured out from the start and whose individual fortunes are not dependent on what the category does.

In that group is the clear leader in online apparel sales: Lands` End. For the fourth year in a row, Lands` End appears on Internet Retailer`s Best of the Web, testament to the foresight of Lands` End`s management, the company`s stellar online execution and the power of the web in apparel retailing. Lands` End is one of those sites that others learn from. It pioneered on the web, it was the first major retailer to adopt online fitting technology, it was the first to make a business of the online sale of custom clothing, and it`s highly regarded for its excellent fulfillment—a strength it carried over from its years as a catalog operation. The quality of its online execution is so widely recognized that when Sears, Roebuck and Co. bought Lands` End, it put Lands` End executives in charge of Sears` online and catalog operations, over Sears executives. "That recognition of Lands` End`s leadership shows what the web can do with good merchandising and marketing," says Chris Merritt, a principal with consultants Kurt Salmon Associates.

Part of Lands` End online success is the result of its catalog background, where the infrastructure for remote selling already existed. But a catalog background is not a prerequisite for success on the web. Buckle.com, a 300-store chain of apparel for young people, also has found unique ways to leverage the web. For instance, it engages shoppers by asking them to identify emerging trends and say why they think that fashion trend will take hold. It then posts the opinions along with an example from the Buckle inventory, if it exists. It also links the web and the stores in interesting ways. One of the most innovative is to award concert tickets to contest winners online, then require that they pick up the tickets in stores. "It drives excitement both online and offline," says Lydia Pierson, director of e-commerce.

And then there are the sites that are neither chains nor catalogs. They succeed by virtue of focusing on a category and executing well, such as eBags. Depth of selection, creative marketing that ties directly into their products and persistence all add up to profits for the pure-play bag retailer. In an acknowledgement of the inevitable, though, eBags mailed its first catalog last month.

The Buckle Inc., with more than 300 stores in 37 states, specializes in selling apparel as a lifestyle to the under-30 crowd. An important part of its strategy is to communicate directly and on several levels with its young, fashion-conscious customers, making Buckle.com a key part of its success. “The younger consumer is very savvy,” says Lydia Pierson, director of e-commerce. And Buckle.com uses several means to both understand and leverage that savvy in ways that aren’t possible in stores.

A TrendWatch program offered on the web site, for example, elicits direct input from the 12-to-24-year-old customer base on what styles they see becoming popular. Buckle invites shoppers to write a note explaining why they think a certain style will emerge, and then posts their comments on Buckle.com. It’s both fun and serious business, Pierson says. The young shoppers make up a playful nickname to identify themselves, and if Buckle has a product that fits their predicted trend it will display it alongside the posted comments.

“It’s a great way for guests to interact with us, and it’s a great way for us to learn about trends,” Pierson says. She adds that TrendWatch comments are forwarded to Buckle’s merchandising experts to make them aware of potential trends. “We take it very seriously,” she says.

Buckle.com leverages its communication with customers in other ways too. It acted on a customer’s suggestion to improve its Send to a Friend service, which enables shoppers to e-mail information on Buckle products. Thanks to the customer’s suggestion, shoppers now can also send links to product images so their friends can see what they’re writing about.

Buckle.com also works closely with Buckle stores to coordinate sweepstakes, such as for rock concert tickets. In several cases, tickets won online must be picked up at a store. “It really drives excitement both online and in stores,” Pierson says.

At the same time, Buckle.com has been working hard to make online shopping easier and more enjoyable. It offers a search function that allows shoppers to search by style, brand and price, and when searching for denim, also by fabric finish. Shoppers can also browse by gender or brand or a combination of the two. A Go Figure section for women offers tips on choosing clothes that complement particular body types.

As part of a recent site redesign, Buckle has upped the quality of its images, adopting 3D technology in addition to its See a Larger View feature. “We like to show the wonderful details on products and get as close to hand-feel as we can online.” says Pierson.

Buckle.com

Date
April 1999
Unique Visitors
100,000/mo.*
Design By
Multimedia Live
Site Search
Multimedia Live
CRM
in-house
Affiliate Management
Multimedia Live, LinkShare Corp.
Fulfillment
in-house
Order Management
in-house
Returns Liquidation
in-house
Web Analytics
in-house
Payment Processor
First National Bank of Omaha
Content Management
Multimedia Live
E-mail Management
Multimedia Live
*As reported by comScore Networks Inc.

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EBags.com knows the power of brands. It features 170-and-growing brands of luggage and accessories, it’s tied its fortunes to the power of well known travel brands like Hilton Hotels and Northwest Airlines and it’s just repeated a successful advertising campaign on bags of Frito-Lay products.

The relationships fit together in the marketing scenario that eBags executives envision: After planning air travel and hotel accommodations on Expedia.com, a traveler checks into a Hilton Hotel room and finds a promotional card co-branded by Hilton and eBags and offering a deal on new luggage. Seeing the eBags logo on the card, the traveler recalls seeing it on Expedia.com as well as on the Northwest Airlines site. If the traveler hadn’t heard of eBags before, he suddenly realizes it travels with good company. “When they’re unpacking their luggage, and they realize they need new luggage, it helps us to be associated with these other brands,” says Peter Cobb, vice president of marketing and co-founder of eBags.

Sales at eBags.com, which also maintains co-branding partnerships with DoubleTree Hotels and several major airlines, have grown an average of 40% a month since it launched in March 1999. After earning its first profits in the second and third quarters of this year, the Denver-based company expects to set a record in the fourth quarter due to holiday sales.

Moreover, eBags has entered the multi-channel world with a 40-page catalog that it launched last month with a mailing to 250,000 households.

EBags maintains traffic flow of 1 million to 2 million unique visitors every month, depending on the season. Cobb attributes most of the site’s traffic and sales to its broad selection of brands such as Samsonite, Jansport and Liz Claiborne—no brand accounts for more than 10% of sales, he says—along with its aggressive marketing. “There’s not a brick-and-mortar retailer that can offer the depth of selection that eBags can,” says Ken Cassar, senior analyst with Jupiter Research Inc.

But eBags also works hard at understanding customers’ shopping behavior and continuously upgrading their online shopping experience. With as many as 60,000 visitors a day, eBags routinely researches the impact of different merchandising techniques on buying behavior and profit margins by showing half of visitors a site that includes new merchandising techniques, while the other half sees the old version of the site. EBags executives then sit back and watch which version is more effective. “We know how many purchases were made on each site, the average order size and profit margins,” Cobb says. “Whichever one wins becomes the new site.”

eBags.com

Date
March 1999
Unique Visitors
1-2 million/mo.
Design By
in-house
Site Search
Mercado Software Inc.
CRM
Kana Software Inc.
Affiliate Management
Be Free Inc.
Fulfillment
in-house
Order Management
in-house
Returns Liquidation
in-house
Web Analytics
Kana Software Inc.
Payment Processor
Paymentech L.P.
Content Management
in-house
E-mail Management
Kana Software Inc.

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If family values are important to a retailer’s image—and few would doubt they are—Hanna Andersson has the formula down pat. Clicking through Hanna Andersson Corp.’s HannaAndersson.com, it’s difficult not to experience a feel-good aura seeing babies and kids decked out in casual yet quality clothes, often coordinated with what Mom and Dad are wearing.

Hanna Andersson specializes in quality European clothes for families with higher-than-average incomes. “They offer wonderful products and a great brand,” says Duif Calvin, a retail analyst based in San Francisco. Given the Swedish spelling of the name—founders Gun and Tom Denhart named the company after Gun’s grandmother—the company has been smart to register several spellings of HannaAndersson.com so people can misspell it and still find it, Calvin says. With 150,000 unique visitors each month, HannaAndersson.com accounts for about 40% of company sales of $67 million.

The company’s online strategy is in perfect sync with its offline: it sells all-cotton, durable clothes designed to be comfortable for all ages and it dresses up its web site with images from the catalog of parents and children in coordinated outfits. It’s been a successful strategy that resonates with its target market, says Phillip Bulebar, vice president of marketing. “More than half of our customers repeat within 12 months,” he says. And those loyal customers pass the word along: “A fair percentage of our new customers come through referrals from existing customers,” he says.

The web site also plays an important role in offering specialty products, the primary example being school uniforms, which do not sell in enough quantities to warrant space in the company’s handful of stores or in its catalogs.

HannaAndersson.com has been intentional in not creating too fancy a web site—and that image fits with the simplicity of its products for young children and families. But it also leads to some dead-ends, as some of the images aren’t linked to descriptions. “They’re not following the conventions of web shopping—that is, if you see something you can click to it,” Calvin says.

Guide to E-Commerce Technology

Bulebar says HannaAnder-sson.com kept its pages simple to avoid long downloads for customers without broadband Internet access. At the same time, it has also found ways to make shopping easier, he adds. For example, it recently launched a Baby Gift Ideas section that groups products with a package price. “That makes it easy for the customer to pick out a great gift without having to go through the site and put together a coordinated package themselves,” Bulebar says. Grandma Hanna wouldn’t have it any other way.

HannaAndersson.com

Date
1998
Unique Visitors
150,000/mo.
Sales
$27 million/yr.
Design By
in-house
Site Search
none
CRM
in-house
Affiliate Management
none
Fulfillment
in-house
Order Management
in-house
Returns Liquidation
in-house
Web Analytics
Coremetrics Inc.
Payment Processor
Paymentech L.P.
Content Management
in-house
E-mail Management
in-house

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J.Crew

Although J. Crew Inc. specializes in merchandising comfortable clothes, there’s nothing casual about the way it has been growing its online business.

In its current fiscal year, the company expects sales at JCrew.com to surpass catalog sales for the first time, says David Towers, vice president of electronic commerce operations. “People are very comfortable with our web site,” he says, sounding as if he were selling a pair of chinos and matching sweater instead of promoting his online strategy.

Towers notes that online sales for the 12 months that will end Feb. 28, 2003, are projected to hit $130 million to $140 million, surpassing expected catalog sales of $125 million to $130 million. If online sales reach $140 million, the increase over the prior year’s online sales will be 12%, up from $123 million.

But J. Crew doesn’t take for granted the hike in online sales. After building most of its site’s technology between 1999 and 2001, it concentrated in the past year on improving its merchandising strategy to build relationships with the more than 100,000 unique visitors to its site each day.

“The strongest thing we’ve found is showing a lot of images of our products, placing our catalog images throughout the site,” Towers says. By extending catalog imagery to the site, including extensive photographs of models in settings that show multiple products and categories, JCrew.com is more effective at cross-selling from its broad selections of apparel and accessories, he adds. “We’re really trying to assist the customer in making decisions,” Towers says.

The company is also working on a new web site personalization program. “We’re moving forward with personalization so we can make one-to-one recommendations,” Towers says.

J. Crew still does most of its overall sales in stores, which accounted for 60% of fiscal 2002 sales, or $398 million out of a total of $656 million. But its sharpest growth has been online, where sales have increased more than five times since 1998 from $22 million.

To keep sales growing in all channels, the company has stepped up e-mail marketing campaigns and run ads on Yahoo.com. “Their web site has been very effective for J. Crew, but they have to realize, and I think they do, that the catalog is still the primary driver of sales to the web,” says Ken Cassar, senior analyst with Jupiter Research Inc. For the near future, J. Crew is looking into improving how it monitors, analyzes and leverages information on customer behavior across all channels. “We want to drive people to the channel that works best for them,” Towers says.

JCrew.com

Date
1996
Unique Visitors
949,914/mo.*
Sales
$130 million/yr.
Design By
in-house
Site Search
Oracle Corp.’s Intermedia
CRM
Art Technology Group Inc.
Affiliate Management
LinkShare Corp.
Fulfillment
EDS Corp.
Order Management
Art Technology Group Inc.
Returns Liquidation
in-house
Web Analytics
in-house
Payment Processor
Paymentech L.P.
Content Management
Akamai Technologies Inc.,
in-house
E-mail Management
Kana Software Inc.
*As reported by comScore Networks Inc.

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Lands’ End

The recognized leader in online retail innovation, Lands’ End needed no further acknowledgement of its web-merchandising prowess. But then Sears called.

Now the famed online merchandiser’s new parent, Sears, Roebuck and Co., has put Lands’ End CEO David F. Dyer in charge of all online and catalog operations, reporting directly to Sears CEO Alan J. Lacy. “That recognition of Lands’ End’s leadership shows what the web can do with good merchandising and product marketing,” says Chris Merritt, principal at Kurt Salmon Associates.

Still, the news of the acquisition was taken with a mixture of hurrahs and gasps. Among those expressing the latter is former Lands’ End vice chairman Bill Ferry, now a consultant to start-up e-retailers. “I’m afraid Sears could put a monkey wrench into Lands’ End,” he says. “The strength of the Lands’ End brand is in quality, value, service and innovation, and that’s at risk in the current environment.”

Ferry can breathe a sigh a relief, at least for now, because Lands’ End, which appears on Internet Retailer’s Best of the Web for the fourth year in a row, a distinction it shares only with Amazon, hasn’t let up with its innovative, service-oriented ways. In November, for instance, five months after coming under Sears’s umbrella, Lands’ End took another step ahead of its competitors by expanding its custom-fitting apparel service to include dress shirts and tailored twill pants. “In a simple process that takes just a few minutes, customers choose the features they want, input some key measurements, answer a few questions and then confirm the order,” says Bill Bass, Lands’ End senior vice president for e-commerce and international.

He adds that the custom shirts are made with Lands’ End features such as several collar styles, bowling-ball-material buttons, long tails, a 7-button front and extra room in the shoulders. The Tailored Twills feature dressier-than-usual belt loops and taped pocket seams for a smoother touch. “Going forward, the most important innovation for us will be custom clothes,” Bass says.

And no wonder. Available only online, the custom-fitting service has proven a vital means of acquiring customers. Among the service’s users, 25% are new customers, the company says.

Lands’ End is raising the bar of online apparel selling, and it shows no sign of letting up. And with the ability to leverage Sears’s supply chain for sourcing products, it should strengthen its hand in retailing, analysts say. “As long as Sears recognizes that and allows Lands’ End to do its own thing, it will continue doing the most for the customer,” KSA’s Merritt says.

LandsEnd.com

Date
August 1995
Unique Visitors
737,629/mo.*
Sales
$300 million (last FY)
Design By
N/A
Site Search
EasyAsk Inc.
CRM
Accrue Software, Unica Corp.
Affiliate Management
N/A
Fulfillment
Page Digital Inc.
Order Management
Page Digital Inc.
Returns Liquidation
N/A
Web Analytics
comScore Networks Inc.
Payment Processor
I4 Commerce Inc.’s Bill Me Later, Page Digital Inc.’s Synaro
Content Management
N/A
E-mail Management
N/A
*As reported by comScore Networks Inc.

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Knowing your market is key to retail success. Nowhere is that better demonstrated than at Undergear.com. Sales at the men’s underwear and workout apparel site will grow 15%-20% this year, on top of 30% growth last year. “We have seen phenomenal growth every year and we have no expectations it will flatten next year,” says Steve Seymour, president of Undergear and International Male, two brands of Hanover Direct Inc.

Undergear, which has had a web site since 1996, already gets half of its sales from the web. That high proportion is partly the result of having a base of customers who are prime Internet users. The typical Undergear customer is a 25- to 45-year-old man, with average to slightly above average income, who likes to shop for apparel. “We have a good understanding of what our customers like to see in graphics and presentation,” Seymour says.

The high proportion of web sales is also the result of a strong brand. The Undergear catalog has been in existence for 20 years and half of the volume of the web site is sparked by the catalog.

Further testimony to the power of the site and the brand is that over 50% of web sales are to repeat customers. Undergear also drives customers to the site through e-mail marketing, including newsletters, as well as by an affiliate network. Search accounts for only about 10% of sales.

Part of the appeal of Under-gear.com is its clean design. Shoppers are presented on the home page with Underwear, Workout and Casual options, further broken down by subcategories. All the information fits in a single screen with no scrolling. Clicking an option takes the shopper directly to quick loading shopping pages with thumbnails of products. “It’s a very sparse site, which is good for the image they are trying to project,” says Duif Calvin, a San Francisco-based retail analyst. Calvin says Undergear’s image is in direct contrast to sister brand International Male, which is about fashion. “The Undergear audience is about sports and fitness and the site is making a statement about being a non-fashion site,” she says. “The Undergear concept is an interesting way of taking a successful category at International Male and spinning it off for a different audience.”

For the coming year, Undergear plans a broader range of products in more fabrics and styles. It also plans to expand its Advantage Club loyalty program and establish web-based marketing partnerships with other Hanover Direct brands. After the past couple years, Seymour says he won’t be surprised by further growth next year. “I don’t know how high it can go,” he says. “If you had told me three years ago we would have 50% of our sales on the Internet today, I wouldn’t have believed you.”

Undergear.com

Date
1996
Unique Visitors
150,000/mo.
Design By
in-house
Site Search
Microsoft Commerce Server
CRM
Microsoft Commerce Server
Affiliate Management
LinkShare Corp.
Fulfillment
in-house
Order Management
in-house
Returns Liquidation
in-house
Web Analytics
Coremetrics Inc.
Payment Processor
Paymentech L.P.
Content Management
Microsoft Commerce Server
E-mail Management
DoubleClick Inc.’s Unity Mai

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