The Series B round for Witherspoon’s Draper James brand was led by San Francisco-based Forerunner Ventures.
CosmeticMall.com, one of the earliest online beauty retailers, has had a successful run on the Internet. But president and founder Jay Katz is never one to sit still and continue to do things as they’ve always been done. And so as he was looking for new growth avenues his eye settled on international sales. “We were using all the standard online marketing tools-shopping portals, search engines, affiliate networks-and we were looking for what’s new,” Katz says. “International sales seemed to make a lot of sense.”
Katz opened CosmeticMall.com in 1996 as a part-time venture and by 1999 its success had allowed him to leave his other job and take on the running of the e-retailing venture full time. Sales this year will nearly double over last year’s sales. But he believes there’s more growth in international sales.
Katz has come to the same conclusion that many other online retailers have reached recently: using a U.S. platform to sell overseas offers untapped revenue opportunities. In fact, a recent Internet Retailer survey of online merchants revealed that within three years, two-thirds of merchants expect 5% or more of their sales to come from overseas customers.
But like most U.S. retailers, and especially smaller ones, CosmeticMall.com believed that dealing with the complexities of overseas sales was too daunting and too expensive. “We never wanted to sell into the international market because of all the things we are not experts in and did not want to become experts in-currency conversions, postal regulations, fulfillment and shipping, duties and tariffs,” Katz says.
Then in January 2004, CosmeticMall.com learned about Comerxia Inc., which provides a full service international sales platform. By May of last year, CosmeticMall had shipped its first overseas order and today it is processing a steady stream of profitable orders to foreign customers. “Comerxia provides all the services we need,” Katz says.
Katz is not alone in discovering not only the power of international sales, but also the power of using an outsourced provider who can offer full services in one package. Comerxia has been adding 12 to 15 merchants each quarter, says Brent Rusick, CEO of Comerxia.
To make international sales work required technical integration between CosmeticMall.com’s e-commerce platform and Comerxia’s systems. The biggest challenge, Katz notes, was integrating CosmeticMall’s shopping cart with Comerxia’s international shopping cart. “We run on a fully custom system; we have no off-the-shelf software,” Katz says. “Whenever we want to integrate with others, there are all kinds of workarounds that we need to address. But with Comerxia, it was seamless.”
Comerxia’s services include:
l the ability to quote guaranteed prices to foreign customers, including shipping, customs and taxes, in their own currencies
l processing of payments, including non-credit card payment in countries where consumers don’t use credit cards as much as they do in the U.S., and risk management in which Comerxia takes the risk and guarantees payment to the retailer in U.S. dollars
l the logistics of fulfillment, delivery and returns
l customer service on the orders, in the native language (five languages today)
l marketing campaigns, including search engine, price comparison engines, e-mail, portal and affiliate marketing through relationships Comerxia has built with overseas partners as well as foreign operations of U.S. marketing partners.
“There are a lot of variables for a retailer to consider when selling overseas apart from how to ship a product there,” Rusick says. “We do all the heavy lifting for them.”
Online retailers are well advised to take advantage of the power of the web in reaching a worldwide market and of the reputation that the U.S. has as the center of the consumer culture, Rusick says. “The U.S. is the marketplace of the world; we have access to significantly more products, often at lower prices than in other countries,” he says. “And people in foreign countries want those products.”
That’s been CosmeticMall.com’s experience. “The most popular items have been those that are hard to find in foreign countries although they are common here,” Katz says. And that will be the basis for good growth, he believes.