E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Increased volume is prompting a move to outsourced fulfillment, while a bid to lower the rising cost of new customer acquisition online launches plans for TShirtKing’s first-ever catalogs.
Internet t-shirt retailer TShirtKing.com in 2003 tripled its annual sales over the previous year, president Bill Broadbent tells Internet Retailer. The increase is prompting a change to an outsourced fulfillment solution as sales volume stretches beyond the in-house picking, packing and shipping capacities of the 18-employee, New Mexico-based company. Increased sales volume also stretched inventory to the point that an initial catalog launch originally considered for the holiday season has been delayed until this spring.
TShirtKing plans to issue its first-ever catalogs in the spring and summer, to segmented customer lists of 50,000 for each mailing. The lists will be drawn according to what the customers purchase, with the first 8-10-page catalog, featuring about 200 of the company’s 2000 products, targeting a younger audience with music-related and humorous t-shirts. The second catalog, targeting a different audience, will feature more lifestyle-oriented t-shirt messages, and the performance of each catalog will be tested against the other.
One of Broadbent’s objectives in trying catalogs is to bring down his cost of new customer acquisition online, which now averages about $2 to $3 using search, and is as high as $5 to $6 for some campaigns. “We are a $20 gift item,” Broadbent says of his all t-shirt inventory. “We have to be very careful with what we spend.” TShirtKing is keeping costs down by shooting product images for the catalog in-house and working with a local printer on production.
The prices in the catalogs will initially be slightly cheaper than those on the web site, and the catalog will provide a code for each item that shoppers can use to get the listed catalog price when placing an order online. “That will allow us to see how many people go from the catalog to the web site to order,” he says. He anticipates that catalog orders will be larger on average than online orders, based on input from other catalogers, something he’ll help along by selecting for catalog promotion products that tend to make the best margins and move the most quickly.
TShirtKing will gauge the catalogs’ success in part by whether sales generated bring in new customers at a rate the same as or below the cost of customer acquisition online. “If we can even break even initially, we’ll just keep on tweaking it,” he says. “I have confidence in catalogs. T-shirts are a good catalog item, and a lot of our customers have been asking for them.”