Like many other online gifts retailers early on, San Francisco-based RedEnvelope used to focus primarily on sales linked to key holidays such as Valentine’s Day, Mother’s Day and Christmas. The major holidays are still paramount to RedEnvelope's ongoing business development, but RedEnvelope is also developing a marketing and merchandising strategy that is designed to personalize online gift giving for both major holidays and individual milestones.
For Mother’s Day, for instance, RedEnvelope is rolling out a program by which customers purchasing an upscale picture frame can e-mail the retailer a digital image of the recipient or an event in the person’s life. RedEnvelope will then insert the picture into the frame along with a personal note before shipping the order to the recipient.
RedEnvelope also believes that a new and constantly updated assortment of merchandise is essential to keeping pace in the competitive online gifts space. The retailer carries more than 300 SKUs in 14 merchandising categories, but about 40% of the products offered are new to the site for that quarter.
“We are looking at ways to enhance and personalize the brand,” says CEO Alison May. “We are putting a lot more emphasis on the personalized gift giving experience.”
Along with personalization, RedEnvelope is also expanding its product lines to include more men’s accessories and new-baby merchandise. “The key to effective merchandising is telling customers we know who you are and what you are looking for,” she says. Increased personalization helped RedEnvelope grow its annual web sales 13% from $70 million in 2003 to $79 million in 2004.
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