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Gemvara CEO Matt Lauzon says most e-retailers focus on the purely rational aspects of shopping, such as price, brand and delivery, and don't spend enough time on building relationships that compel consumers to return. "E-retailers spend 95% of their time, money and resources investing in that rational piece of the shopping process and optimizing that like crazy, but they don't give them a reason to want to return," Lauzon says. "The next generation of e-commerce is going to be spent on the emotional side of the buying process."
Gemvara.com, whose home page urges visitors to "make it personal," aims to satisfy shoppers emotionally by letting them build exactly the jewelry pieces they've been dreaming of, Lauzon says. At Gemvara.com, shoppers can customize a product, from the metal used to the gemstones set, so that they get exactly the product they want, rather than just what's available.
As a consumer builds her jewelry piece, computer-generated renderings show how the final product will look, and Gemvara's recommendation engine suggests other designs following in line with the shopper's choices. The e-retailer encourages consumers to call, e-mail or engage in a live chat with customer service agents to discuss their designs—Gemvara carries no pre-made stock—or ask questions about the product. It also refunds the purchase price to consumers who don't like their creation for any reason within 30 days. Although Lauzon declines to reveal numbers, he says consumers who interact with customer service spend more than customers who don't.
Lauzon says 80% of consumers who buy from Gemvara.com have never bought jewelry online before, which, he says, shows Gemvara's sales and service formula satisfies shoppers in ways other online jewelry retailers don't. 70% of Gemvara buyers say they are likely to buy again and recommend Gemvara to others, Lauzon says. "We're giving them the confidence to buy online and we want them to make us their jeweler for life."
For Cookie's, which operates CookiesKids.com in the crowded children's clothing category, the edge comes down to focusing on its niche of school uniforms. The e-retailer got into e-commerce in 2007 initially selling only school uniforms, a product the merchant had become an expert at selling in its seven retail stores in New York City. It subsequently expanded its online merchandise to include other children's apparel.
Thanks to its efforts in SEO, CookiesKids.com shows up on page one of a Google search for "school uniforms." The consumers seeking school uniforms are then exposed to the retailer's other children's clothing, says Al Falack, senior director of e-commerce at Cookie's. Reflecting that two-pronged strategy, the main hero image at CookiesKids.com last month showed two children dressed in navy blue and white, with the tag line "We Are School Uniforms;" the image then shifted to Baby Formal Wear or Winter Fashion.
The other edge comes down to price, he says. Cookie's has long-standing relationships with suppliers to its stores, and seeks to sell many items at lower prices than competitors do. "We are very comparative shopping-centric," Falack says. "If you look at our competitors' sites and ours, half the time we have that merchandise on our site for cheaper." FrenchToast.com, for example, which appeared one spot ahead of Cookie's last month in a Google search for "school uniforms," lists boys' polo shirts for around $9.99 and up; prices for similar products on CookiesKids.com start at $3.99.
Familiarity among New Yorkers with the Cookie's brand also bodes well for the e-retailer, as around 30% of traffic to CookiesKids.com comes from clicks on natural search results from consumers in the New York area.
CookiesKids.com, No. 626 in the Top 1000, brought in an estimated $7.5 million in web sales in 2010—a 77.6% increase compared with 2009—and is tracking for similar growth this year, Falack says. About 15% of its web sales come from school uniforms.
"The Internet is an open playing field," he adds. "There are so many different ways to compete."
Watch your back
Whatever their specific strategies, the fastest-growing retailers are those that know their categories better than anyone else, says Scot Wingo, CEO of e-commerce technology and services provider ChannelAdvisor Corp., which provides marketing services to online retailers of all sizes.
"The midsized e-retailers," he says, "tend to be very entrepreneurial and maniacally focused on something that is causing them to differentiate. These folks have a lot of passion around something."
Wingo adds that his larger clients are very much aware of the smaller players that are growing quickly and sometimes adjust their online strategies to better compete. Take niche retailer BuyCostumes.com, a unit of Liberty Interactive Corp., for example, which goes toe to toe against retailers like Wal-Mart Stores Inc., Wingo says. On BuyCostumes.com, consumers can shop by age group, category, costume type and size. The e-retailer offers thousands of costumes and a recommendation engine that suggests accessories that go with particular costumes.
"Wal-Mart has tried to keep up and has added some shopping options, but they only have 464 costumes," Wingo says. "Everyone in our industry is looking for growth. When you see in your category you are growing at 15% and someone else is growing at 60%, even if they are small, you have to care. The big guys we work with are very much in tune with that."
The fastest-growing e-retailers demonstrate that there's still plenty of market opportunity to be had in online retail. Even a very focused product assortment, when marketed to the hundreds of millions of consumers shopping online, can make for a very successful business.