If Scott Savitz has his way, Shoebuy.com might very well become the Amazon.com of shoes -- only profitable. According to Savitz, president of the site, this goal should be reached during the first quarter 2001.
Since cofounding Shoebuy in April 1999 with private capital, Savitz and Craig Starble, the company's chief financial officer, officially launched the site last January. During the past year, Boston-based Shoebuy.com has built a large following on the Net, averaging upwards of 700,000 hits a day in December.
"Shoebuy.com was born out of Craig's frustration with buying footwear online," said Savitz. "He saw that there was a unique opportunity for someone to provide a one-stop shopping option for shoes on the Internet. After trying to come up with reasons not to start a dot-com business, we saw an incredible opportunity that we could not ignore.
With a solid financial background, Savitz is resolute about taking a sound financial approach to operations, with profit margins the main focus. "We went cash-flow positive in December," he said,"with month-to-month revenues up 25 percent, a decreasing burn rate and steady margins."
From the start, we've had an incredibly disciplined business approach," she continued. "We created a sound business model that we stuck to. We don't burn through cash, and we never got involved in outrageous portal deals -- no Super Bowl ads or lavish parties."
According to Footwear industry analyst Mike Kormos, NPD Group Inc. "Shoebuy.com has been extremely methodical in their overall program development approach,"
"They're one of the only e-commerce sites I'm aware of that is set up to make a profit ."
December was Shoebuy.com's best month ever, with expenses at their lowest to date, closing out 2000 with total sales of $1.75 million.
Savitz expects sales to hit $10 million in 2001.
"The question will be whether Shoebuy.com can continue to meet the needs of the marketplace and tweak its business model as time goes on," Kormos said.
In terms of generating traffic to the site, Shoebuy has a slew of on- and offline partners, including MasterCard and Priceline.com, as well as approximately 8,000 affiliated shopping sites featuring direct links to Shoebuy.com. In addition, the company has alliances with Yahoo and Lycos. "We try to have a presence wherever people are looking to buy shoes," Savitz said.
The site offers consumers a real one-stop shopping destination. According to Savitz, the site has 160 manufacturers and more than 80,000 products.
Shoebuy doesn't ever handle the shoes it sells; rather, it acts as a middleman, selling from a vast virtual inventory. Once an order is received and processed, the actual product is shipped directly from each manufacturer to the consumer.
Savitz said relations with Shoebuy's manufacturer partners are excellent.
Savitz also acknowledged that manufacturers are taking a risk by putting their brand on the site, and that without a real partnership mentality it would be impossible for Shoebuy.com to have staying power.
"By the same token, we provide smaller and newer manufacturers with a sales outlet they hadn't had before, and access to so many potential customers," he said.
Savitz says Shoebuy's demographics are an even split between urban and more rural shoppers. "Our strength lies in being the place where shoppers can turn to find the lesser-known, harder-to-find or up-and-coming brands they are seeking and that they find more difficult to go out and specifically shop for," he said.
Shoebuy.com doesn't offer customer chat rooms, "ratings corners" or other such staples of Internet consumer sites. However, the site offers free shipping and no sales tax, as well as a 10-percent discount for first-timers and those who make repeat purchases within 30 days.
"We want to sell shoes in a user-friendly format, and customers seem to really be responding to that," he said.
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