Get Your Shoebuy.com Promotional Code Here!!!
There's an unusual democracy to Shoebuy.com, the e-tailer acquired in 2006 by Barry Diller's IAC/InterActive Corp., parent company of Home Shopping Network, Ticketmaster, Match.com and Ask.com.
Shoebuy has its entire 85-person organization - including customer-service phone operators - housed on one floor of an office building located in Boston's Financial District.
According to Shoebuy.com President and CEO Scott Savitz, the site has been "obsessed" with customer service since its inception in 2000 - a strategy he believes helped the company survive and thrive when many other sites faltered in the cutthroat e-tail world.
That attention to service, coupled with an impressive mix of must-have brands, has helped Shoebuy continue to show steady growth over the years. Since the January 2000 launch, the site's sales have been growing about 5 percent per month.
Savitz, who admits he's become a footwear junkie over the years, sat down with Footwear News recently to discuss Shoebuy's phenomenal growth, synergies with parent company IAC and plans for the future.
FN: Walking through your office, I was struck by the fact that your service department sits right in the middle of the action. It's not miles away or overseas somewhere.
SS: I am a huge, huge believer in customer service. I have always had customer service right next to my office because that's how important I believe it is. Sixty percent of our revenues are from repeat business. Business has been growing 5 percent month over month for the last 7 1/2 years. It doesn't matter how expensive it is [to staff people in downtown Boston]. We are consumer-feedback junkies, and our service team is one of our best sources of information. ... Each month we review thousands of transaction surveys and customer feedbacks [from] BizRate and the Shoebuy site and receive thousands of product reviews.
FN: You launched in 2000, during the height of the dot-com bubble. What led to your success when so many others famously flopped?
SS: I think it's because we were obsessed with customer service. We were also so hard on ourselves. We obsessed over feedback scores and stats. I am a crazy, crazy stats person. We were one of the first to offer free shipping. I wanted it to be a no-lose value proposition for customers if we did not live up to our promise on the product, either through sizing that didn't work or a description that wasn't right. Even with free shipping and free returns, it's not a perfect experience if the customer has to return. Right now we fulfill 99.6 percent [of orders] and 1.3 days is our average ship time [out of the warehouse].
FN: How big are you today?
SS: [IAC doesn't] break out revenues by site, but we are a lot bigger than I ever thought we would be. We get about 4 million visitors per month.
FN: You've invested in a television campaign for the first time, which prominently highlights New Balance, among other brands. What is the scope of the campaign?
SS: It is a multimillion-dollar national campaign on NBC, USA, SciFi and Bravo, generating more than 150 million impressions. There are both 15- and 30-second spots highlighting a number of top brands, which we believe is indicative of Shoebuy's terrific selection. The campaign focuses on the strong acceptance to Shoebuy and the fun, personal connection each of our visitors experiences. We thought that given where our business is today, this not only provides wonderful validation to our existing customer base but also is a way to introduce ourselves to those who have not discovered us yet.
FN: A lot of Boston companies are leaving or have been acquired recently. It's nice to see a retailer growing in the area.
SS: We're taking more space as we speak. Sixteen months ago, when IAC bought us, part of the sale was [the agreement] to not move out of Boston. Our employees are key to our business. Key individuals have helped us grow at every stage and they are still with us. I don't think we've had one employee change because of the IAC purchase. IAC is as hugely customer-centric as we are and they don't want to stop the flywheel [of our growth].
FN: How did the sale to IAC come about? And what's it like being part of a big corporate parent?
SS: Barry Diller is a huge visionary. He sees three steps ahead. We are running the business, but he makes himself totally accessible to us. We spend a lot of time with [senior executives from] Ask.com or Ticketmaster. We are always gathering together to share best practices. It's funny being in that room. It's a crazy bunch of entrepreneurs who always think they could be doing better. There is a lot of commonality among the businesses and about the approach to reaching consumers, and that's why it's been such a terrific fit.
FN: Your site is rather plain, not slick visually like some of your competitors. Is this deliberate?
SS: We are an extremely analytical team. That's always been our approach. We designed, built and prioritized the site around customer behavior. It's consumer driven. And what our consumer has been telling us consistently is they want it to be usable and easily navigable. We have a lot to offer: 400-plus brands, about 500,000 products and about $2.5 billion in accessible inventory. We offer numerous ways for the consumer to get to what he or she is looking for. We see a lot of sites make mistakes in trying to be too flashy and overly sexy at the expense of function.
FN: Do you plan to venture into categories beyond footwear?
SS: We already operate the site Bagsbuy.com and we're rolling out apparel by soft launching it on Shoebuy. I'm a big believer in walking before you run. With any new product [category], we test for over a year to get a good grasp of what the consumer wants. I've never been caught up in the idea that you have to be first [into a market] to be successful.
FN: Tell us more about the Bagsbuy site.
SS: Bagsbuy launched at the end of 2005. We do well with brands like Adrienne Vittadini, Bagolini, Clava, The Sak. We target the same customer as we reach on Shoebuy: an upper-middle-class professional, ages 25 to 50. [On Shoebuy], we do a huge, huge comfort and classic business, but all categories do well for us. About 52 to 54 percent of sales is women's [product], 38 to 40 percent is men's and the remainder is children's.
FN: You've said you're obsessed with numbers. What stats can you share about the business?
SS: Our average order value is $88, which is a lot higher than the average footwear sale. We don't give our gross margins, but I can tell you we went profitable in 2001 and we've become more profitable since being acquired. Our return rate is 19.5 percent against a catalog return rate of 25 to 30 percent. We speculate some of our competitors' return rates are about 30 percent.
FN: Speaking of which, how would you say Shoebuy differentiates itself from the competition?
SS: Almost everything we do is driven by improving the customer experience. We've built a number of ways for customers to quickly get what they are looking for on our site. They can search by the usual things, such as brand or width, but they can also do an advanced search that will allow them to look by heel height or by country [of manufacture]. Our site operates using proprietary algorithms, so it's teaching itself every time a customer searches for a product.
FN: How does your site teach itself?
SS: We get 2,000 to 3,000 queries per minute per day. That's when people click on a product. The site is always analyzing what people are browsing and reprioritizing what they want to see and deciding what to show [based on click rates].
FN: So does that mean that less-successful product gets pushed to the bottom and has less of a chance of selling well in the future? How do your brands feel about that?
SS: They are aware of it. They know they are always competing to get products listed higher, and the site is always reprioritizing. [But] manufacturers do like to work with us because we are representing their full catalog and a full size range.
FN: For e-tail sites, how much of a challenge is the fit of the shoe?
SS: The site flags any item that's not translating well online. We can see items with a higher return rate or negative feedback. In those cases, we know we need to either do something different - for instance, add a note to a description: "This style runs large. Order a half-size smaller" - or we need to remove the product from the site. There are some products that are just not served from being on the Internet.
FN: Would you consider moving into higher-priced assortments?
SS: We are starting to look at luxury a little. We cover about 50 percent of the footwear market with the brands we have right now. But we've had customers asking for items that are higher in price. For them to consider higher price points without seeing the product in person is a huge validation of the online model.
FN: Do you think the site would need to be more sophisticated visually to attract a luxury clientele?
SS: We've always believed for luxury we would need to do something separate. We are creating a beta site right now to explore our entry point and what luxury would look like. We would not want to go into luxury without a clear understanding of how to do it right. The look and feel will ultimately be very different from Shoebuy, but with the same functionality.
FN: What's next for Shoebuy?
SS: We continuously knock ourselves over the head not to get overzealous and go after all these other categories we think our loyal customer base would be interested in. Part of our learning is taking a deep breath and appreciating where we are. We've been in hypergrowth mode for so long - we keep hiring and we keep outgrowing our space. We are immersed in our business challenges and obsessed with our feedback. Ninety-nine out of 100 customers are happy, and it's that one unhappy customer who keeps us up at night.
There's an unusual democracy to Shoebuy.com, the e-tailer acquired in 2006 by Barry Diller's IAC/InterActive Corp., parent company of Home Shopping Network, Ticketmaster, Match.com and Ask.com.
Shoebuy has its entire 85-person organization - including customer-service phone operators - housed on one floor of an office building located in Boston's Financial District.
According to Shoebuy.com President and CEO Scott Savitz, the site has been "obsessed" with customer service since its inception in 2000 - a strategy he believes helped the company survive and thrive when many other sites faltered in the cutthroat e-tail world.
That attention to service, coupled with an impressive mix of must-have brands, has helped Shoebuy continue to show steady growth over the years. Since the January 2000 launch, the site's sales have been growing about 5 percent per month.
Savitz, who admits he's become a footwear junkie over the years, sat down with Footwear News recently to discuss Shoebuy's phenomenal growth, synergies with parent company IAC and plans for the future.
FN: Walking through your office, I was struck by the fact that your service department sits right in the middle of the action. It's not miles away or overseas somewhere.
SS: I am a huge, huge believer in customer service. I have always had customer service right next to my office because that's how important I believe it is. Sixty percent of our revenues are from repeat business. Business has been growing 5 percent month over month for the last 7 1/2 years. It doesn't matter how expensive it is [to staff people in downtown Boston]. We are consumer-feedback junkies, and our service team is one of our best sources of information. ... Each month we review thousands of transaction surveys and customer feedbacks [from] BizRate and the Shoebuy site and receive thousands of product reviews.
FN: You launched in 2000, during the height of the dot-com bubble. What led to your success when so many others famously flopped?
SS: I think it's because we were obsessed with customer service. We were also so hard on ourselves. We obsessed over feedback scores and stats. I am a crazy, crazy stats person. We were one of the first to offer free shipping. I wanted it to be a no-lose value proposition for customers if we did not live up to our promise on the product, either through sizing that didn't work or a description that wasn't right. Even with free shipping and free returns, it's not a perfect experience if the customer has to return. Right now we fulfill 99.6 percent [of orders] and 1.3 days is our average ship time [out of the warehouse].
FN: How big are you today?
SS: [IAC doesn't] break out revenues by site, but we are a lot bigger than I ever thought we would be. We get about 4 million visitors per month.
FN: You've invested in a television campaign for the first time, which prominently highlights New Balance, among other brands. What is the scope of the campaign?
SS: It is a multimillion-dollar national campaign on NBC, USA, SciFi and Bravo, generating more than 150 million impressions. There are both 15- and 30-second spots highlighting a number of top brands, which we believe is indicative of Shoebuy's terrific selection. The campaign focuses on the strong acceptance to Shoebuy and the fun, personal connection each of our visitors experiences. We thought that given where our business is today, this not only provides wonderful validation to our existing customer base but also is a way to introduce ourselves to those who have not discovered us yet.
FN: A lot of Boston companies are leaving or have been acquired recently. It's nice to see a retailer growing in the area.
SS: We're taking more space as we speak. Sixteen months ago, when IAC bought us, part of the sale was [the agreement] to not move out of Boston. Our employees are key to our business. Key individuals have helped us grow at every stage and they are still with us. I don't think we've had one employee change because of the IAC purchase. IAC is as hugely customer-centric as we are and they don't want to stop the flywheel [of our growth].
FN: How did the sale to IAC come about? And what's it like being part of a big corporate parent?
SS: Barry Diller is a huge visionary. He sees three steps ahead. We are running the business, but he makes himself totally accessible to us. We spend a lot of time with [senior executives from] Ask.com or Ticketmaster. We are always gathering together to share best practices. It's funny being in that room. It's a crazy bunch of entrepreneurs who always think they could be doing better. There is a lot of commonality among the businesses and about the approach to reaching consumers, and that's why it's been such a terrific fit.
FN: Your site is rather plain, not slick visually like some of your competitors. Is this deliberate?
SS: We are an extremely analytical team. That's always been our approach. We designed, built and prioritized the site around customer behavior. It's consumer driven. And what our consumer has been telling us consistently is they want it to be usable and easily navigable. We have a lot to offer: 400-plus brands, about 500,000 products and about $2.5 billion in accessible inventory. We offer numerous ways for the consumer to get to what he or she is looking for. We see a lot of sites make mistakes in trying to be too flashy and overly sexy at the expense of function.
FN: Do you plan to venture into categories beyond footwear?
SS: We already operate the site Bagsbuy.com and we're rolling out apparel by soft launching it on Shoebuy. I'm a big believer in walking before you run. With any new product [category], we test for over a year to get a good grasp of what the consumer wants. I've never been caught up in the idea that you have to be first [into a market] to be successful.
FN: Tell us more about the Bagsbuy site.
SS: Bagsbuy launched at the end of 2005. We do well with brands like Adrienne Vittadini, Bagolini, Clava, The Sak. We target the same customer as we reach on Shoebuy: an upper-middle-class professional, ages 25 to 50. [On Shoebuy], we do a huge, huge comfort and classic business, but all categories do well for us. About 52 to 54 percent of sales is women's [product], 38 to 40 percent is men's and the remainder is children's.
FN: You've said you're obsessed with numbers. What stats can you share about the business?
SS: Our average order value is $88, which is a lot higher than the average footwear sale. We don't give our gross margins, but I can tell you we went profitable in 2001 and we've become more profitable since being acquired. Our return rate is 19.5 percent against a catalog return rate of 25 to 30 percent. We speculate some of our competitors' return rates are about 30 percent.
FN: Speaking of which, how would you say Shoebuy differentiates itself from the competition?
SS: Almost everything we do is driven by improving the customer experience. We've built a number of ways for customers to quickly get what they are looking for on our site. They can search by the usual things, such as brand or width, but they can also do an advanced search that will allow them to look by heel height or by country [of manufacture]. Our site operates using proprietary algorithms, so it's teaching itself every time a customer searches for a product.
FN: How does your site teach itself?
SS: We get 2,000 to 3,000 queries per minute per day. That's when people click on a product. The site is always analyzing what people are browsing and reprioritizing what they want to see and deciding what to show [based on click rates].
FN: So does that mean that less-successful product gets pushed to the bottom and has less of a chance of selling well in the future? How do your brands feel about that?
SS: They are aware of it. They know they are always competing to get products listed higher, and the site is always reprioritizing. [But] manufacturers do like to work with us because we are representing their full catalog and a full size range.
FN: For e-tail sites, how much of a challenge is the fit of the shoe?
SS: The site flags any item that's not translating well online. We can see items with a higher return rate or negative feedback. In those cases, we know we need to either do something different - for instance, add a note to a description: "This style runs large. Order a half-size smaller" - or we need to remove the product from the site. There are some products that are just not served from being on the Internet.
FN: Would you consider moving into higher-priced assortments?
SS: We are starting to look at luxury a little. We cover about 50 percent of the footwear market with the brands we have right now. But we've had customers asking for items that are higher in price. For them to consider higher price points without seeing the product in person is a huge validation of the online model.
FN: Do you think the site would need to be more sophisticated visually to attract a luxury clientele?
SS: We've always believed for luxury we would need to do something separate. We are creating a beta site right now to explore our entry point and what luxury would look like. We would not want to go into luxury without a clear understanding of how to do it right. The look and feel will ultimately be very different from Shoebuy, but with the same functionality.
FN: What's next for Shoebuy?
SS: We continuously knock ourselves over the head not to get overzealous and go after all these other categories we think our loyal customer base would be interested in. Part of our learning is taking a deep breath and appreciating where we are. We've been in hypergrowth mode for so long - we keep hiring and we keep outgrowing our space. We are immersed in our business challenges and obsessed with our feedback. Ninety-nine out of 100 customers are happy, and it's that one unhappy customer who keeps us up at night.
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