An advertising watchdog’s report found dozens of claims that it says were false and deceptive. Wal-Mart blames suppliers.
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Even with sales that position Costco.com firmly among the largest online retailers, however, the web site still is a kind of a niche. “We find that the cream of the crop shop online at Costco.com,” Roeglin says.
Green Mountain wants customers to join the club
By Bill Briggs
Café Express is the web-based coffee buying service for Green Mountain Coffee Roasters customers and the company’s marketing plan begins and ends with one simple goal: Get customers to climb aboard.
Green Mountain is the fastest-growing company in the catalog/call center category of this year’s Top 500 Guide but the company’s single-minded focus on driving customers to its web site represents the kind of marketing tunnel vision shared by many of the Top 500 companies. Green Mountain’s online sales for 2006 were $17.1 million, an increase of 235.29% compared to $5.1 million in 2005. They were enough to rank Green Mountain No. 314 in the Top 500.
“When it comes to the Green Mountain coffee web site, a third of our sales come from club members,” says Ken Crites, director of the consumer direct business segment, which includes club, catalog and web sales. In essence a subscription coffee service, Café Express is the fastest growing segment in this fast-growing company, Crites says. “Everything we do is about getting people into our Café Express club,” he adds.
The company started selling coffee to consumers in 1981 and news about its product began to spread outward from its Waterbury, Vt., headquarters throughout New England, Crites says. The company sold whole and ground coffee by the bag exclusively until a few years later when the Internet began to take off. At about the same time Green Mountain invested in Keurig, a single-cup coffee and tea brewing equipment maker for commercial and consumer customers that also packages coffee from other roasting companies.
Growth has been steady since then, Crites says. Overall sales for the fiscal year ending Sept. 30, 2006, were $225.3 million, up 39% from $161.5 in fiscal 2005. Web sales accounted for 8% of total sales in fiscal 2006, compared to 3% in fiscal 2005.
Growth by acquisition
Some of Green Mountain’s web sales growth last year stemmed from its acquisition of Keurig.com in September, Crites says. Green Mountain had invested in Keurig in 1996 to gain a foothold in the office coffee business. “We liked the product so much we bought the company,” he says. Keurig.com still functions largely independently, he says, but the two businesses complement each other. They sell each other’s products, but derive the majority of their respective income from core products. “We sell brewers-at a loss. It’s the K-cup coffee where business has taken off,” he adds.
The “K-Cup” is a plastic package shaped like a pint of cottage cheese, but about a tenth the size. The cup is inserted into a Keurig brewing device and in a few -seconds yields a 7.25 oz. to 11.25 oz. hot beverage.
Green Mountain has adopted a deliberate strategy of moving customers to its web site. After an initial sale that could come from one of the company’s eight catalogs via telephone or web, new customers are encouraged to visit GreenMountainCoffee.com. Once they have completed the free sign-up, they can establish a standing order size and frequency, at a discount. Future transactions then are conducted online, where customers can change their order any time, and all subsequent orders are attributed to the web.
Green Mountain is now planning to build on its strong growth, but has few e-commerce technology plans until mid-2008. “Once we merge some back-end information systems between the companies we’ll probably look at other tools,” Crites says. Outsourcing likely will fit into the plan, but for the present the goal is to ride the wave. “Right now we’re trying to get brewers into homes, trying to seize what momentum we already have,” he says.
Crites says Green Mountain expects similar growth for 2007, if not as flashy. “Our online sales are up because we combined the two sites and they are growing like crazy. We think both will grow this year, but we won’t have that bump from the acquisition,” he says.
Plans include introducing more varieties of K-Cups on top of the 40 already on the market. The addition of cocoa was a big winner in 2006, Crites says. “Now we’re looking for other ways to bring our products into consumers’ homes. We’ll include more product innovation, such as improved brewers,” he adds.
No playing around when it comes to creating loyal customers and attracting new ones
By Bill Briggs
Triple-digit growth percentages are nothing new to Big Fish Games Inc. The web-only video game developer and merchant posted $24.1 million in sales for 2006, up 180% from $8.6 million in 2005. Big Fish Games, the fifth fastest-growing company in the Internet Retailer 2007 Top 500 Guide, also logged sales growth of 125% from 2004 to 2005.
Like many of its peers in the Top 500 Guide, this niche e-retailer has turned web analytics into marketing success. In Big Fish Games’ case, 2006 sales growth came from a combination of aggressively exploring new ideas-such as social -networking-then adding its own spin. As a result of its hefty sales increase, the company ranks No. 271 -overall this year, compared to No. 395 in the 2006 edition.
Big Fish’s sales increase for 2006 is a classic combination of explosive growth in new buyers and careful nurturing of existing customers and affiliates, says Paul Thelen, founder and CEO of the Seattle-based e-retailer. Success on both fronts can be traced to the September launch of the company’s My Game Space social networking site. “A lot of our 2006 growth came in the last four months of the year. Without My Game Space it would have been noticeably less,” Thelen says.
A twist on social networking
Registered customers can use My Game Space to set up a web site-which they can personalize to their liking-and interact with other online gamers, write reviews and build favorite game lists. Customers, in turn, have shown they like Big Fish Games. The company serves more than 500,000 casual gaming customers daily at BigFishGames.com, where it offers more than 400 interactive and regular game titles. Customers have access to online and downloadable games accessible by subscription.