RedEnvelope mulls a loyalty program

Upscale gift retailer RedEnvelope.com is planning a loyalty program next year to snag more of its average customers’ 20 to 50 gift-giving occasions a year. While the company has not yet settled on a particular program, Chairman and Chief Marketing Officer Hillary Billings says the program could involve free gift wrapping. “Our most loyal customers order gift wrap often,” she says. “It’s an important part of our brand.”

Gift wrap fits nicely into the RedEnvelope experience, analysts say. “It’s really not about the product,” says San Francisco-based analyst Duif Calvin, “it’s about the experience of getting the product. It’s about how the product will fit into your life or your recipient’s life.”

RedEnvelope’s average customer--60% are female in their 40s in two-wage-earner households with income above, $75,000--buys two or three times a year from RedEnvelope, Billings says. But the average customer gives 20 to 50 gifts a year, so part of the focus next year will be on increasing frequency.

Adding free gift wrap will increase demands on RedEnvelope’s fulfillment operation, which it runs itself out of a new 200,000-square-foot warehouse in Columbus, OH. “Gift wrap is not automated,” Billings says. “Our packages are hand wrapped and the ribbons are hand tied. It takes quite a bit of labor to get the package to be perfect every time.”

RedEnvelope also is planning to boost frequency by expanding its gifts for everyday occasions, such as birthdays, weddings and new babies. In addition, it is considering adding party items for those occasions.