Retailers shift their ad spending from TV, radio and print ads to digital ads.
Other investments in e-commerce also are paying off for the retailer.
Multichannel retailer Urban Outfitters Inc. says the online channel shined again in its first fiscal quarter of the year, as multichannel initiatives and other investments in e-commerce continue to pay off.
Urban Outfitters, No. 48 in the new Internet Retailer Top 500 Guide, is no longer breaking out direct-to-consumer sales—which are mostly comprised of e-commerce—but CEO Richard Hayne told investors that the web continued to grow at a “breathtaking” rate and represents a higher percentage of total retail sales. Each brand, including Urban Outfitters, Anthropologie and Free People, posted double-digit gains in online sales compared with the first quarter of last year, he said.
Moreover, web traffic rose nearly 20% compared with the first quarter of last year, mobile traffic doubled and better use of data analytics, personalization and segmentation contributed to a conversion rate increase of 56 basis points, Hayne said. Internet Retailer estimates Urban Outfitters’ conversion rate is 2.60%, so a 56 basis points increase would bring that to 3.16%—a 21.5% jump from Q1 of last year.
Multichannel initiatives that allow the merchant to ship web orders from stores are also making an impact on the business, Hayne told investors and analysts. “The pick, pack and ship initiative that came online last year accounted for approximately $9 million in additional business in the first quarter, and we're pretty pleased with that,” he said. “Yes, it is costing us a little bit extra in terms of staffing and supplies in the stores, but we feel that it's more than made up for by the fact that, that $9 million, most of it would not have been shipped because it would have been out of stock in the distribution centers."
For the fiscal quarter ended April 30, 2013, Urban Outfitters also reported:
- Net sales of $648.2 million, a 14% increase compared with $568.9 million in the first quarter of last year.
- Comparable retail segment net sales, which now includes the merchant’s comparable direct-to-consumer channel, which is mostly comprised of e-commerce, increased 9%.
- Net income of $47.1 million, a 39% increase over $34.0 million.
Also during the quarter, Urban Outfitters’ Free People brand launched FP Me, a social shopping web site aimed at encouraging shoppers to engage directly with the brand. So far, FP Me members have uploaded more than 10,000 pictures of themselves and their friends wearing Free People items, Hayne said.
The retailer is no longer breaking out direct-to-consumer sales separately from store sales because “the lines between the two are getting more and more blurred,” Hayne said.
Urban Outfitters takes the spot as the fastest-growing merchant in terms of online sales since Internet Retailer began publishing its Top 500 Guide a decade ago. The merchant grew from $7.3 million in web sales in 2003 to $663.3 last year—roughly a 9,000% increase.