E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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“We had no idea it would take off like that, but we got everything done,” he says. “I haven’t gone to Germany at Christmas since.” Taking the successful holiday season as a promising sign, and the presence of retail giants as a not-so-promising sign, Ronick in spring 1999 decided to make the leap: close five of his six stores and focus on e-commerce. The sole remaining location resides in a mall in Santa Rosa, Calif., that Ronick himself had originally developed when in real estate. The store is profitable, he says, and it serves as a reminder of the company’s 23-year history in retailing.
Stacks and Stacks today boasts 800,000 unique visitors a month, 16,000 SKUs from more than 1,000 vendors, 65 employees, and a ranking of No. 286 in the Internet Retailer Top 500 Guide, which estimates the company’s 2005 sales north of $16 million (a figure Ronick declines to confirm). Several new domains supplement the original site, including Stacks-Home-Furnishings.com, Storage-and-Organization.com and Patio-and-Garden.com. Stacks and Stacks also sells through Amazon.com and SkyMall.
The retailer adds 2,000 to 3,000 products every year. However, Stacks and Stacks’ warehouse ships only 16% of SKUs; the manufacturers drop-ship the rest, enabling the merchant to offer a selection that would have been unheard of in its bricks-and-mortar days.
Stacks and Stacks plays the scrappy card against big-name rivals like Target and Bed, Bath & Beyond, says e-commerce analyst Lauren Freedman of The E-tailing Group. “They’re not a destination site, and they don’t have the visibility of a traditional retailer,” she says. “But they drive business off of search-and when you get there, it’s a functional site with a mix of decent brands and unique items.”
Banking on search
Ronick confirms organic search is his most reliable source of new customers. “We come up first or second with many terms because we learned how to do that early on, and we have good help” from Thyfault & Associates, he says. “We’re constantly reviewing how we do on organic search and making changes to do better.” Indeed, Google search terms like “closet organizer” and “underbed storage” bring up Stacks and Stacks first, second or third-higher than any of its big-box competitors.
Good organic search strategy is key for the smaller retailer that doesn’t have the destination recognition of an Amazon.com or Target.com, Ronick says. “My feeling is that most people go to a search engine to look for a sofa or a bed or an office desk, find a site and buy the thing, and may not remember where they bought it,” he contends. “The next time they’re looking for a chair or lamp, they’ll just Google it again. So it’s our job to get them to come back, which we do by sending catalogs and e-mails to keep ourselves in their minds.”
To that end, Stacks and Stacks makes customer service paramount. Ronick says the Internet has raised the bar for great customer service, even as service standards deteriorate in stores. “The in-store experience has been dumbed down so much that you don’t even expect good service anymore,” he says. “But on the Internet, because people can order something in five microseconds, they expect to have it delivered in a day, and to have their e-mails answered immediately.”
Almost 20% of Ronick’s employees are devoted to customer service, and they’re put through an extensive training process. They’re also empowered to offer up to about $50 worth of consolation or compensation-a credit, a gift certificate, free shipping-to unhappy customers without having to clear it with a supervisor. “It all comes down to the golden rule of treating people the way you would like to be treated,” he says. “If that spirit permeates customer service, people feel like they want to come back.”
On a related customer service staffing note, Ronick has six employees devoted to developing product pages with as much information as possible: extra images, measurements, detailed descriptions. “The customer expects to get a maximum amount of information on a product page because the Internet doesn’t let them touch and feel,” he says. “They really want to know a lot.”
Tell me about it
Among Stacks and Stacks’ other customer-oriented features are live chat, an “Ask the Product Expert” e-mail service, the ability to shop by brand name, and an “As Seen In” section where people can identify the products they spotted in Real Simple magazine or on the television program “Extreme Makeover Home Edition.” To help boost its credentials as a destination for storage and organization, the site also features “Ask Our Organizer,” where organizing guru Harriet Schecter, author of “Let Go of Clutter,” answers e-mailed questions on how to organize every room in the house. She gets a slow but steady stream of queries, Ronick says, and her answers are archived by category for easy browsing. They’re also rife with links to Stacks and Stacks product pages, though Ronick values the feature more for public relations than its ability to drive sales. “Sometimes she’ll send people to other sites if we don’t have the thing she recommends,” he says.
The site also has several features that address the security concerns of many Internet users. It’s scanned every day by ScanAlert Inc.’s HackerSafe system, whose banner appears at the top of the menu bar. Other security badges adorn the bottom of the home page, including “Verisign Secured,” “Verified by Visa” and “Mastercard SecureCode.” PayPal is a payment option, as is Bill Me Later.
Though he’s pleased with his market position, Ronick never considers himself home free-not while more famous competitors have room to improve their online marketing strategies. His preeminence in organic search will last only as long as none of the big names take aim at it. But he’s philosophical. “Companies like Amazon or Wal-Mart or Target can hire the best minds available,” he says. “One day they will probably replace me. But not yet.”
Elizabeth Gardner is a Riverside, Ill.-based freelance business writer.