February 22, 2002, 12:00 AM

The web supplants catalogs as a growth engine at ColdwaterCreek.com

Coldwater Creek`s marketing agreements with 3,100 web sites have driven $6.3 million in Internet sales since April. 35% of customers who have come through affiliate arrangements are new to Coldwater Creek.


Talk about going full circle--and in Internet time yet. Two years ago, pure-play online retailers suddenly realized that they needed catalogs to drive customers to their web sites. Online advertising wasn’t going to be enough. So they began producing and mailing paper catalogs. Meanwhile, catalogers realized they already had a powerful medium and encouraged catalog users to go to the web--and they made it easy by incorporating such features as shop by catalog product number.

Today, Coldwater Creek Inc., a leading catalog seller of women’s apparel, says the web site’s growth no longer relies on catalog circulation. The driver of traffic to the site? Online marketing.

From a modest affiliate marketing program 10 months ago, Coldwater Creek now has marketing agreements with 3,100 search engines and consumer and charitable sites. Those arrangements have driven $6.3 million in Internet sales since April, almost 2% of Coldwater Creek’s approximate $350 million in sales in that period. Furthermore, 35% of customers who have come through affiliate arrangements are new to Coldwater Creek.

"The dynamic combination of these affiliate relationships, along with our effective e-mail promotions and national magazine advertising, has developed our web presence to the point where it is no longer reliant on catalog circulation for growth," said Georgia Shonk-Simmons, chief executive officer. "And because we are conducting virtually all of these promotions using in-house talent, we are realizing this growth in a very cost-effective manner."

The Internet now accounts for a third of Coldwater Creek’s revenue. Differentiating the web from other channels is important to the continued success of retailers, Coldwater Creek says. “At some point, the investment community will ask are you really growing with the Internet or are you just making a lateral move with your customers,” says a Coldwater Creek spokesman. “You need to demonstrate that you are acquiring new customers.”

Coldwater Creek has search engine agreements with Yahoo, Excite and InfoSpace as well as affiliate marketing agreements with such sites as AOL, General Mills, iVillage, LookSmart and Catalog City. Coldwater Creek pays a commission to affiliate sites. "The real beauty of this program is that it costs us nothing to establish these links, and we only pay a small commission after the customer makes a purchase on our Web site,” Shonk-Simmons says.

In addition, 85% of customers who are asked for an e-mail address in any channel provide one, the spokesman says.


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