A recent report from eBay sheds some new light on its payments arm, set to go solo later this year.
Bella of Cape Cod moves the Tupperware Party to the web, letting consumers invite friends to its web site for special shopping days.
Megan Murphy and Catherine Bean like to describe themselves as two stay-at-home moms from Cape Cod who started a jewelry retailing business. But now, they admit, they’re not home all that much.
That’s because of the sudden success of their business, Bella of Cape Cod, which melds the traditional home Tupperware party with the Internet. Instead of a woman inviting her friends over to her house to shop, a consumer invites her friends via e-mail to shop at BellaOfCapeCod.com on a certain day. Shipping is free for the friends, and the hostess receives a credit equal to 20% of the sales.
Murphy and Bean only started selling online in fall 2005, after tiring of organizing house parties to sell their inexpensive jewelry, all items under $25. They had accumulated 1,500 e-mail addresses from house parties and their stalls at flea markets, many of them of consumers from other parts of the country who vacationed in Cape Cod. Their initial e-mail newsletters generated a lot of traffic to the site, and that led them to the idea of organizing virtual house parties online.
The concept has taken off. Largely as a result of the online parties, there were nearly 883,000 visits to Bella’s site in November, more than triple the 260,000 visits in November 2006. In fact, the heavy traffic over the Thanksgiving weekend crashed Bella’s server, putting the site out of action for five days.
It wasn’t the first time that Bella’s founders learned the hard way lessons about online retailing.
In their first attempt at e-mail marketing in December 2005, they tried to send a newsletter to their 1,500 e-mail addresses from Bean’s personal e-mail account. The mailing looked like spam to her Internet service provider, Verizon, which shut down her service. “It was a real mess,” Bean says.
That led the neophyte e-retailers to look around for a company that could handle its e-mail promotions, and they came up with e-mail service provider Constant Contact. “Once we did our first e-mail blast we got a great response,” Murphy says. “We heard back from customers, and people placed orders.”
Constant Contact charges a monthly fee based on the size of the e-mail marketing list. For 500 to 2,500 addresses, the fee is $30 per month. By December, Bella’s list had grown to over 7,600 names, which would raise the monthly fee to $75.
They also learned about the rules of payment processing in December 2006 when they far exceeded their monthly limit of $10,000 in credit card orders, causing their payment processor to shut them down four days before Christmas. Bella is a privately held company and does not report its sales.
Once they began organizing online parties, Murphy and Bean quickly realized that customers would be reluctant to share their friends’ e-mail addresses if they thought Bella was going to bombard those friends with e-mail. Murphy and Bean made clear that anyone can opt out from receiving their e-mails, and emphasized that they didn’t even want the friends’ names, just their e-mail addresses.
“This builds trust with people who are hosting the e-party,” Murphy says. “That makes them feel okay to give up their friends’ e-mail addresses.”
This approach may work for consumers who have attended a Bella party and thus gained confidence in the organizers, but would be trickier for larger merchants, says Patti Freeman Evans, an e-commerce analyst with JupiterResearch. “A lot of major retailers try to get customers to refer friends, but that’s a tough scenario because people don’t want to give major corporations their address books so their friends can get spammed,” Evans says. “The personal approach these guys are taking gives them a different opportunity.”
Once a consumer agrees to host a party, she sends Bella her address book with friends’ e-mails. Bella sends out an invitation three days before the event, and a reminder that morning. Friends who shop that day at the site receive free shipping and a surprise gift if they buy at least $50 worth of merchandise. The hostess receives a pair of earrings as well as a credit equal to 20% of the day’s sales.
Bella extended the concept to fundraisers last March, inspired by the plight of a local family with a son with cancer, and by fall was doing more fundraisers for schools, churches, and other causes than private parties. The only difference is that, instead of giving the hostess a credit for use on the site, Bella writes a check for 20% of the proceeds to the sponsoring organization. By December, Bella had sent out $6,000 in checks from those fundraisers.
A new incentive
Bean and Murphy initially recruited hostesses from customers who inquired about house parties. They later printed up business cards promoting their online parties and handed them out at their flea market stalls and at the store in Hyannis, Mass., they opened last summer-mainly because their operation had gotten too large to operate out of their homes. They also include a card in every order they send out.
But a major way they recruit hostesses is from people who attend an online party. They say they usually book at least one new event from each e-party or fundraiser.
In fact, one of their plans for the new year is to encourage hostesses to talk up how easy it was to host a party by offering them a 50% discount on a piece of jewelry if one of their invited guests agrees to host her own online event.