Groupon says its focus is on the bottom line, rather than top-line growth.
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That online selection is already growing. Maternity clothes, sunglasses and furniture were scheduled to be added to the web site offerings by early summer, and a new Martha Stewart line of home products is promised for the fall.
The other big advantage of having distribution centers around the country is that Macy’s will be able to tell customers when to expect their purchases, Anderson says. While Macys.com promises to ship an order within three days, it cannot say when it will be delivered, Anderson says, because goods coming from the East Coast may have to cross seven UPS zones to get to a customer on the West Coast. The new distribution centers will cut that to two UPS zones.
“That will shorten the time it will take the product to arrive and allow us to make a delivery commitment as part of checkout,” he says. “If I buy it I can expect it in X number of days, which is frankly much more of the Internet standard than what we’re doing today.”
Web traffic jumps
Macy’s expects to keep those distribution centers busy, shipping 4 million online and catalog orders this year. As part of the company’s adoption of Macy’s as the primary brand in September, Macys.com has become the flagship web site, and that’s showing up in more traffic. The number of unique visitors to Macys.com grew to 7.8 million in April, up 24% from a year earlier, according to comScore Media Metrix. Traffic to department store sites as a whole was up only 4% during that time.
Macy’s says online sales were $620 million in 2006, up 38% from the year before, and projects $1 billion in web sales by 2008. “In the next two years, Macys.com alone should be the fastest growing part of Federated, not only in percentage terms but very close to No. 1 in absolute dollars as well,” Sachse told analysts in April.
From four employees when the web site launched in 1998, Macy’s online staff has grown to 350, 90 of them involved in planning and buying the online selection. Sachse says the company has added to its staff recently by recruiting e-commerce personnel from Amazon.com Inc., the Land’s End unit of Sears Holding Corp., and Gap Inc.
Macys.com has been redesigned and got good reviews in the annual mystery shopper survey of 150 retail web sites late last year by consultants and researchers The e-Tailing Group Inc. “They do a lot of savvy things,” says Lauren Freedman, president.
She gives Macys.com strong marks for allowing customers to search by price and brand and to compare many items side by side, for highlighting promotional items in search results, for store locators that show which stores have such items as furniture and mattresses, for highlighting in-store events like make-up demonstrations and fashion shows, and for lots of seasonal promotions that continually change.
“It feels like Macy’s,” Freedman said as she clicked around the web site. “Buy one pair of shoes and save 50% on a second pair. Those are things you would expect from a Macy’s promotion.”
Jeffrey Grau, senior analyst at research firm eMarketer, singled out the Easy Returns link on the Macy’s home page that clicks through to a page explaining how goods ordered online can be returned in stores or by mail. That can help boost online sales of products consumers often want to see in person, like apparel. “If it’s easy to return, that’s one barrier removed,” Grau says.
Desperately seeking Danielle
Macy’s is using e-mail marketing aggressively, and regularly tests two promotional e-mails against each other, sending the winner out broadly the next day. “In the traditional retail world it would take weeks or months to test something like this,” Sachse says. “As an Internet retailer we can turn it around in 24 hours.”
As it adds features to Macys.com, Sachse says Macy’s pictures a prototypical young woman shopper he calls Danielle. She’s 25, gets her news online rather than from a printed newspaper, uses video recorders so she can watch TV shows on her own schedule, doesn’t own a landline phone, and uses only text and instant messaging. “E-mail is for her parents,” Sachse says.
“Danielle is all about Web 2.0,” says Sachse, who says Macy’s had customers like Danielle in mind in September when Macys.com introduced customer product reviews, using technology from Bazaarvoice Inc. He says 50,000 reviews had been posted by April. Future enhancements under consideration include video, customer blogs and commentaries by shopping-savvy “power users” whose opinions Danielle might value.
Consumers like Danielle are the future. Attract her and Macy’s itself could guarantee its own.