August 1, 2005, 12:00 AM

Internet Retailer 2005: Report from the Conference

(Page 6 of 10)

Fanlo noted that four comparison-shopping sites are among the top visited web sites and that shows their appeal and staying power. "Comparison shopping is not just a fad," he said. "It`s about taking the power of information and letting people do something with it." He added that consolidation of comparison-shopping sites with other web properties is beneficial to consumers. "Consolidation gives consumers a more complete and comprehensive experience," he said.

While the prices for Shopzilla and may seem high--17.5 times Shopzilla`s 2004 EBITDA and 50 times`s 2004 earnings--Fanlo said the multiples were not high, given the potential of comparison-shopping sites.


General Sessions
June 7


Winning on the web
The 2005 Internet Retailer Top 400
Kurt Peters, editor-in-chief, Internet Retailer
Larry Freed, president, ForeSee Results

Underscoring the importance of the web to the retail industry, the Internet Retailer Top 400 Guide to Retail Web Sites reveals the scope of the channel`s size and growth: 1.1 billion visitors per month to the Top 400, annual growth rates of more than 100% for many individual sites, and the web`s 28% market share of total sales in the categories of mass merchants and consumer electronics. The results were presented at the Internet Retailer Conference & Exhibition by Kurt Peters, editor-in-chief of Internet Retailer.

The Guide also notes the substantial increases in web sales, 2004 over 2003, among individual retailers--for example, $1.6 billion at Inc., $600 million at Staples Inc. and $500 million at And it gives the year-over-year growth at leading sites like, 163%; West Marine Inc., 124%; Northern Tool & Equipment Co., 110% and Inc., 107%.

To help retailers better prepare for continued growth, the Guide this year includes a performance analysis by ForeSee Results and FGI Research of the Top 40 e-retailers regarding their ability to provide customer satisfaction. Larry Freed, president and CEO of ForeSee Results, joined Peters to share insight on how online retailers can build growth by providing a satisfactory shopping experience to browsers as well as customers.

Using methodology developed by the University of Michigan, ForeSee and FGI assessed web browser satisfaction related to such areas as product information, navigation and overall site performance.

Browsers, or those who may be just window shopping or comparison shopping, represent 95% of site visitors and offer the greatest opportunity for increasing sales, Freed said.

Store meets web
Day Two Keynote: Bringing the Internet into the Store
Fiona Dias, president, Circuit City Direct

When you have a strong web site and a well-known national chain of stores, you have all the ingredients to cook up one of the most lucrative prizes of retailing: the multi-channel shopper. The trick is to get the right recipe--and to keep trying until you get it just right, Fiona Dias, senior vice president of marketing of Circuit City Stores Inc. and president of Circuit City Direct, said in the day two keynote address at Internet Retailer 2005.

Dias told how Circuit City, which also sells through a call center and catalogs, forged ahead several years ago to pioneer multi-channel strategies like in-store pick-up of online orders. The bold move paid off. "Multi-channel customers are by far our best customers, five to six times more valuable than single-channel customers, largely due to in-store pick-up," Dias said.

The program is designed to make products ordered online available for pick-up at a store within 15 minutes. But even with a technology system in place, Circuit City realized it also needed to implement a method of training and motivating store employees. "It`s all about people," Dias said. "If they can`t do it or won`t do it, it just won`t happen."

Circuit City has developed a system of granting credit for store pick-up sales to both web and store employees, who receive either a sales commission or credit for meeting sales goals. It has also developed an internal "The Web is Your Friend" campaign to get store employees to think of how online orders help the entire company.

To help stores better leverage the web, Circuit City is also working on a program that lets in-store shoppers order additional products online for home delivery. It`s still working out some kinks in the program, however.

But Dias said it`s worth the trouble to work out the intricacies of multi-channel programs. "It`s not easy to get the right recipe," she said. "But hang in there. It can be a real plus when it does work and customers reward us with their dollars."

The small web wonders
The Small Retailer Experience: Success Stories from Scratch
Donald Cohen, managing partner, Tool King
Ron Henderson, CEO, Auntie`s Beads
Jeff Binder, president and CEO, Saffron Rouge

If there`s one thing that Auntie`s Beads, Saffron Rouge and Tool King have in common, it`s an entrepreneurial spirit fueled by a passion for retailing on the web. "Anyone can test an idea on the web, and if it works, scale up quickly," said Ron Henderson, co-founder and CEO of Auntie`s Beads, a retailer of jewelry-making supplies that emerged on the web four years ago out of Henderson`s garage.

Henderson helped his wife build a web presence for her budding beads business, and quickly realized they had a growth business. With a second site called for entertainment products, Auntie`s Beads did about $6 million in sales last year. "Listen to your customers, and do what they tell you," Henderson said at the conference.

By analyzing web site activity to determine customer demand in particular geographic areas, Auntie`s Beads has opened four stores and expects to launch more.

At Tool King, managing partner Don Cohen has taken the opposite route. Having started with several stores, Tool King has cut back to a single store while building a web site that did $15 million in sales in its third year. "The Internet can be a great equalizer," he said, adding that on the web he can compete with major national chains.

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