Binoculars.com grows 123% in year, but not without pain

Sales at Binoculars.com grew 123% last year to $6 million, the company reports. The pace of growth has continued this year with sales up 130% in January and February.

The company attributes its growth to the use of search engines and continual testing to make sure search terms and page display remain relevant. “A good deal of our marketing success rests with our presence at the forefront of high profile search engines,” says Jonathan Thralow, director of marketing and technology. “But it’s more than that. We continuously test our marketing efforts and use only what works.”

The company reports that such steep increases in sales have brought about growth pains. “This kind of sales growth does not occur without its share of challenges,” says Thralow. “During the holiday season especially, we had to quickly adapt to overcome issues of server instability, inventory allocation and adequate staffing.”

The company says server instability posed the largest and most immediate problem during the holiday shopping rush, as traffic counts on the company’s web server grew from 5,000 to 50,000 people per day. “Our server was prepared for 5,000, not 50,000, visitors. The fact that it handled such a massive influx is a tribute to its stability,” Thralow says. “That said, there’s no doubt that we experienced instability at times, and that may have compromised the customer’s experience.”

Binoculars.com is addressing the problem by rebuilding the core of its entire web site in 2004. In seeking to handle server loads and spikes, the company says it is considering a migration to a Linux OS and Apache web server from Microsoft SQL and ASP.

The company says lack of inventory and allocating inventory too heavily toward bestsellers was the second largest issue that restricted the company’s sales last year. “We learned a lot after posting inventory status as an online feature early in 2003,” Thralow says. “People tend to order products they know we have in stock, which we suspected. But we discovered that our honesty also hurt us, as customers actually order more from a web site that does not list inventory status at all – rather than displaying ‘not in stock’ with an estimated shipping time.

Thralow says that Binoculars.com tested customers` propensity to order merchandise when they did not know the inventory status by displaying inventory status at Binoculars.com and not displaying it at another site it owns, Binocular.com. Customers ordered at a rate twice as high on the site where they did not know inventory status.

“This was extremely disappointing, because it meant that competitors that actually provided customers less information were taking the sale from us. While this might lead us to conclude we should only show the status of in-stock items, we are justifying continuing to show true inventory status on the long-term bet that withholding information will catch up to competitors and create a more fanatical following for us,” Thralow says.

Allocating inventory differently helped address the problem, but it also created additional challenges. Because the company began stocking a wider range of products, inventory carrying costs rose and the amount of physical warehouse space declined. “We’ve moved our location five times, and now we’re running out of room again,” Thralow says. “We are tired of moving: it’s a big, expensive disruption. Now we’re looking at purchasing six acres of land and constructing a building that will allow us to expand our warehouse when needed.”

Growth also affected the shipping department, which faced a labor shortage during the holiday rush, the company says. The company rotated most of the staff, from the CEO to tech support into shipping during the holidays. “When you are shipping out 1,000 packages a day with only two full-time shippers, the rest of the staff has to pick up slack – myself included,” Thralow says. “If we cannot get all the products out the door that were ordered that day, we sure don’t need more marketing at the moment. Marketing had better help out in shipping.”

The downfall, Thralow points out, was that inexperience and a lack of training resulted in more errors, including an increase in incomplete orders. Despite this, he says, the overall number of errors was reduced from previous holiday seasons due to technologies that minimized or eliminated human error.

Thralow also says the company took steps to deal with staffing and morale as the workload increased. It added four employees last year, bringing the staff to 21. Steps to boost morale--including creating a party atmosphere on the day everyone worked overtime to fulfill orders on the company’s first 1,000-package day, have resulted in the company not losing a single employee last year, Thralow says.

Binoculars.com is a division of Thralow Inc., Duluth, MN-based company that owns and operates 12 e-commerce businesses, including telescopes.com, Peepers.com, Pans.com and Eyewear.com.