February 21, 2008
E-tailing 2.0
Not many internet retailers have made it to $1bn in revenues. Amazon got there in less than four years and didn’t look back, but for most others the going has been tough. After the first flurry of dotcom hopefuls it was left to the bricks-and-mortar brigade to invade the internet.
It’s been a long wait, but a second generation of virtual retailers looks like it is about to break through. Tony Hsieh of online shoe store Zappos now says he expects to hit $1bn in revenues this year. Then there is Newegg, the electronics site that claims to have made it to $1.5bn in revenues in six years (according to these figures, Newegg is second only to Amazon in the US among pure internet retailers.)
These companies have something in common: a fanatical attention to customer service. For both, a wide selection and low prices are the basic price of entry, but it is superior service that makes the real difference.
Zappos started with shoes in 1999 but, like Amazon with books, this was always seen as a starting point. By the end of this year it will have branched out into clothing, accessories, and eventually categories like luggage and electronics. Tellingly, Hsieh says Zappos made “a decent operating profit” for the first time last year. He had earlier run the company for growth, at break-even. The clear message: this new generation of internet retailers is getting ready for its debut on Wall Street, and this one looks like it should have more staying power than the Webvans that came before.
I’ve found that most small companies that have internet retail sites give a far better level of service than the high street stores. In my experience they get the order, despatch it and it turns up a day or two later. A few years ago I ordered a pair of trainers a few days before Christmas not expecting them to turn up until the New Year. I was amazed when they turned up before Christmas Day. I’m sure some of the bigger companies wouldn’t have matched that.
Posted by: Phil Connolly | February 21st, 2008 at 12:37 pm | Report this commentA quality product and great customer service is the key to any business success.
Posted by: N.Walter | February 21st, 2008 at 7:53 pm | Report this commentin my recent career as an operations manager for a Canadian apparel retail chain, there were times when I was at odds with upper management about the importance to be more present online and cut down times on deliveries to our customers…My analyses on trends in RFID,SEARCH ENGINE OPTIMIZATION,CLICK PER RATE MEASURABILITY etc. were often perceived as too technical in detail.Since then the demise of brick and mortar retailers has been obvious…when industry leaders like Wal Mart report tepid same sales growth of 1% and 2 % in the US
Posted by: Bojidar Dobrilovic | February 21st, 2008 at 8:46 pm | Report this comment( international sales notwithstanding )I agree with Mr. Hsieh’s strategy fully… One Canadian success story is e commerce solutions provider,Cactus Commerce, which managed not only to sign on with some well established international retailers and Fortune 1000 Companies but it is also involved with B2B and Multi Channel Retail solutions,in industries like Manufacturing and Health Care.
Zappos is an unbelievably good service, it doesn’t surprise me that they’ve got as far as they have in such a short period of time. I’ve ordered nearly a dozen pairs of shoes from them, and every time I couldn’t be happier with the speed of delivery and customer service - not to mention the solid selection on their site.
While I’m ranting, I wanted to let you know about a newsreader out there that exists that bases it’s content on what the user actually WANTS to see. It’s called ‘Sprout’. Very intuitive, quickly learns what you like to read and what doesn’t interest you. There’s a free trial on now. You can find it here: www.yoursprout.ca.
Posted by: Steve | February 22nd, 2008 at 6:45 pm | Report this commentI agree with the comment above me. Zappos is a great store. No wonder it’s doing so well. I’ve bought so many shoes from there.
Posted by: Evan | February 24th, 2008 at 5:51 pm | Report this comment