China is one of more than 20 countries to which Newegg plans to expand its marketplace in 2017.
With more than 200 web storefronts, CSN’s recipe for success: Niche the sites, unify the back-end.
Shoppers looking to buy a coffee table online could go to some place like Amazon.com, the online equivalent of a big-box or department store, and find a nice selection. But many start by typing “coffee table” into Google and seeing what comes up.
Because Google loves relevance and focus, the top of the results includes several retailers that seem highly focused indeed: AllCoffeeTables.com, CoffeeTablesGalore.com, CoffeeTables-Store.com, CoffeeTableShowroom.com. Some of them are the niche shops they appear to be: the proprietors are all about coffee tables and nothing but.
But visit AllCoffeeTables.com. While it certainly looks like a specialty retailer, with every imaginable coffee table on virtual display, a note at the top right of its home page reveals it to be “Part of CSN Stores.” Click on the logo and be transported to the parent’s home page, where hundreds of product categories beckon. Many roads lead to CSN Stores, and they have their own highly specialized domain names: FutonMattress, JustWoolRugs, FirePit Central.
A unified organization
CSN Stores is a conglomerate of more than 200 web storefronts, with more being added all the time. Behind those storefronts is a unified marketing and customer service organization and a web of vendor relationships that makes it possible to offer almost every available coffee table, fire pit, Adirondack chair, TV mount, or whatever-all drop-shipped directly from the manufacturers. It’s a strategy that’s paying off big. With 2007 revenues topping $202 million (up 87% from 2006), CSN is No. 69 in The Internet Retailer Top 500 Guide.
“I look at their list of stores and I’m floored,” says J.P. Werlin, a consultant with Downtown e-Commerce, Westchester, Pa., who specializes in marketing and search-engine optimization. “They’re the sleeping giant that a lot of people don’t know about.”
CSN founders Niraj Shah and Steve Conine, both Cornell University class of 1995, were the quintessential dot-commers: they started an Internet consulting firm right out of school and designed key web and intranet applications for blue-chip clients like the New York Times and Merrill Lynch. In 1998 they sold their venture (only the first example of their excellent timing), staying with the buyer as employees.
But entrepreneurship lured them back, and by 2000, they found themselves in Boston looking for the next big thing. In their research, they noticed something interesting.
“We kept running across small e-commerce companies that were growing at 20% to 30% a year, and they weren’t even particularly sophisticated with their technology or online marketing,” Shah says. “It seemed odd that they were growing so fast.” Even though Internet companies in general were pariahs in the investment community at that time, Internet retailing was booming.
Sorting through opportunities
Shah and Conine figured that with their back-end development skills, they could take an e-commerce venture to the next level. But what venture? Amazon, Dell and many others had already established themselves with the easy stuff: books, music, movies, software, electronics, and other seen-one-seen-‘em-all items.
Furniture and housewares, on the other hand, were ripe for some kind of systematic approach. Many of the players were either very small-mom-and-pop shops without the resources to grow-or too unfocused to make their way consistently to the top of search engine results. “We realized that if we could figure out how to sell these things effectively, we could build a bigger barrier between us and the rest of the market,” says Conine. “And demand was only going to grow as people migrated up the risk profile curve for online shopping, and became comfortable buying a sofa or an armoire online.”
Despite the profusion of small web storefronts on the market at the time, Shah and Conine saw no point in growing by acquisition.
“There wasn’t a lot to acquire,” Shah says. “These small operations didn’t have much inventory or exclusive relationships, or anything worth buying. We didn’t want to be one of those stores-we wanted to be a hundred or a thousand of those stores.”
So, starting in 2002, they busied themselves building an e-commerce platform that would support as many stores as they wanted. Using their own money, they started small: their first launch in 2003 was RacksandStands, a comprehensive selection of TV tables, CD carousels, and other items for holding electronics and media. New storefronts followed, one by one, and then dozens.
“The idea is that if you’re a consumer looking for, say, a stroller, and you go to a search engine to shop for strollers, a site where everything is focused on strollers is going to be more relevant to you than a store where strollers are just one subcategory,” Shah says.
A store for each purpose
Not that each storefront is mutually exclusive. There’s plenty of overlap. Some are almost straight duplicates, like AdirondackFurnitureDirect.com and EveryAdirondackChair.com (though there are subtle differences in the two sites). Some are subsets of others: AllBarstools.com has a number of even more specialized offspring, like AllSwivelBarstools, AllLeatherBarstools and AllOutdoorBarstools. And some are umbrella sites for a number of categories, like Cookware.com or CSNFurniture.com.
“We try to have each store for a purpose,” Shah says. “We don’t have stores just to have them.” CSNFurniture works well for shoppers who may be browsing for a number of different pieces, whereas EveryHighChair or JustDaybeds captures those with specific goals.
Great minds think alike, and whether from imitation or convergent evolution, a number of companies are pursuing the same model in the furniture/household goods space. CSN’s nearest competitor is Netshops, which also started in 2002 with Hammocks.com. (“It was a couple of years before we were even aware of each other,” Shah says.) Netshops now boasts more than 200 storefronts as well, many competing head to head with those of CSN, and ranks 82 in The Internet Retailer Top 500 Guide. Others include IVG Stores, with 190 storefronts, and Canada’s Cymax Stores, with 50.