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How the web-only merchants, retail chains, manufacturers and catalogers growing fastest online trump their rivals.
A members-only retailer for the masses
Beyond The Rack Enterprises Inc.
Beyond The Rack Enterprises Inc., the fastest-growing online retailer in the 2011 Internet Retailer Top 500 Guide, is reaping a handsome dividend for being a free spirit in the often cookie-cutter world of private-sale web retailers.
In 2010, Montreal-based Beyond The Rack, No. 191 in the Top 500 Guide, posted web sales of C$75.2 million (US$76.9 million), up around 1,150% from web sales of C$5.9 million (US$6.1 million) in 2009. In 2011 Beyond The Rack expects annual revenue to reach about C$134.4 million (US$138.6 million), says CEO Yona Shtern. "We plan on about doubling our sales this year," he says.
The North American private-event sales space is a growing—but increasingly crowded—online retailing category. Last year the combined sales for the three biggest members-only sales companies—Gilt Groupe (No. 49), HauteLook (No. 156) and RueLaLa.com (No. 82)—grew 95.6% to $760 million.
But Beyond The Rack is growing by putting a different spin on the private sale, says Shtern. While rivals concentrate primarily on selling apparel and accessories to affluent buyers of luxury goods, Beyond the Rack's core customers are middle-income women looking for bargains. "We concentrate on the off-brand shoppers," says Shtern.
Beyond the Rack, which has raised $16.5 million in venture capital since launching in February 2009, also is diversifying its product offerings well beyond apparel and accessories. "The new housewares and home furnishings we've launched could approach about 40% of our total sales in 2011," says Shtern.
Economy plays its part
U.S. Auto Parts Network
U.S. Auto Parts Network rode economic conditions and the acquisition of Whitney Automotive Group to new e-commerce heights in 2010.
"It started with a good macro-economic environment for auto parts in general," says Shane Evangelist, CEO. "Fewer people are buying new cars, so cars are getting older and need more repairs. And more people are doing repair work themselves."
Those conditions helped U.S. Auto Parts Network (No. 59) record 2010 web sales of $333.5 million, an 89.2% increase from $176.3 million in 2009.
The August acquisition of Whitney Automotive Group contributed about $71.2 million in 2010 revenue. But even without Whitney, U.S. Auto Parts still grew sales by 48.8% to $262.3 million.
U.S. Auto Parts' business model emphasizes fast delivery, competitive prices and millions of SKUs, Evangelist says. "Our average shipping days have decreased from five to 2.3 and, with the Whitney acquisition, we have three distribution centers instead of one." Combined with new Asia-based product sources that added 250,000 SKUs, including 4,000 engine parts to a previously limited product line, the upgrades have been substantial.
Finding new suppliers also helped U.S. Auto Parts keep prices low, and more SKUs translated into a higher conversion rate, which has climbed from 1.1% in 2008 to 1.65% by the end of 2010, Evangelist says.
Web site improvements in 2010 included enhanced navigation and product category structures, developed in-house, to accommodate the Whitney product additions, as well as new private-label products from overseas.
More committed to e-commerce
Compared to the big national department stores, Belk Inc. is a smaller regional chain. But there's nothing small about Belk's approach to e-commerce.
In the last two years, Belk, No. 296 in the Internet Retailer Top 500 Guide, has brought in a veteran web executive recruited from QVC Inc. (No. 8), committed about $150 million to upgrade its information technology infrastructure, especially the e-commerce platform, and introduced incentives to attract more online shoppers such as free shipping on orders of $99 or more and a flat shipping fee of $8 for orders less than $99.
The heightened focus on the web and e-commerce is paying dividends. E-commerce sales for Belk, which is headquartered in Charlotte, N.C., and operates 305 stores in 16 southern states, grew about 70% to $34.8 million in 2010 from $20.5 million in 2009. In January 2010, Belk named Ivy Chin, former QVC Inc. vice president, strategic and multimedia operations, as its senior vice president of e-commerce.
In the past 18 months, Chin has updated major portions of Belk.com and introduced more sophisticated digital marketing programs such as a Facebook page and a Twitter feed, both dubbed Belk Fashion Buzz. Chin also has aligned the newest fashion and accessories available in stores with the inventory on Belk.com. "The shopping experience is now seamless across both of our channels," says Chin.
With more free and reduced-rate shipping, Belk.com is easier to shop, she says. "The launch of everyday free shipping means customers no longer have to worry about coupons or limited dates on free shipping offers," says Chin.
Liking its online look
The Men's Wearhouse Inc.
In late 2009, George Zimmer, CEO of The Men's Wearhouse Inc., vowed to make up for missed opportunities in e-commerce. True to form, Zimmer guaranteed it.
"Our e-commerce site traffic and business is surging," Zimmer told Wall Street analysts at the time. "As a technology Luddite, I accept responsibility for the lateness in aggressively entering into Internet marketing and social networking. It will not happen again."
The Men's Wearhouse (No. 363) is living up to Zimmer's promise with 2010 web sales of $25.5 million, a 155% increase from $10.0 million in 2009, according to Internet Retailer estimates.
As part of its renewed commitment to e-commerce, The Men's Wearhouse added two industry veterans in 2010. In August, the men's apparel retailer hired Susan G. Neal as senior vice president, e-business and digital strategies. She is responsible for enhancing the company's e-business initiatives, expanding its online presence and launching digital marketing programs. Prior to joining The Men's Wearhouse, Neal served as vice president of e-commerce and business development at The Gymboree Corp.
In February, Diane Ridgway-Cross joined as senior vice president and chief marketing officer. Ridgway-Cross previously worked at Mullen Advertising where she worked on campaigns for the T.J. Maxx and Marshalls discount chains, as well as multichannel footwear retailer DSW and toy manufacturer Hasbro Inc.
The Men's Wearhouse operates 1,248 bricks-and-mortar stores across its Men's Wearhouse, Moores Clothing for Men (in Canada) and K&G store brands. K&G carries fashions for men, women and children.