Wednesday, January 31, 2007

Zappos misses mark for 2006

Okay... so I said the other day that was laying down the gauntlet in the online footwear pure-play business.

Well... it seems that Zappos was about $3m short of their "stated plan" for $600m in sales in 2006. Oh yeah... they grew at 61%, which is healthy to say the least, but... I have to think that the gravy train of growth they've been on is starting to run out of steam. According to a story on they only sold $597 in 2006. While the real reason for the press release was to say that they were going to also have free overnight shipping, they always seem to be able to slip in the sales number in their notes somewhere.

I think that the way that Zappos has built their business is admirable. They have focused on serving their customers needs, and that has proven to be very successful from a growth standpoint. I'm a big believer in that method of retailing. However, I see this as a signal that there's not a lot of room left in the space for pure-plays shoe stores that want to be the "category-killer" and in fact, that killer may have just been put into place in Seattle.

Tuesday, January 30, 2007

Dear Office Depot.... Get a clue!!

So... My wife orders some Kodak Photo Paper from They are always one of Internet Retailer's top X00 Online Retailers. They've been featured in articles about how they want to create multi-channel customers... so you would expect that at this point, there shouldn't be any issues with returning something you bought online, to your neighborhood store.

Uhh... wrong.

It seems that my wife needed a different-sized photo paper than she ordered. We were near our Office Depot in Kirkwood, MO last week, so she went in to exchange the paper she bought. When we went to the counter... you'd have thought that we asked to have all of the money out of the safe. My wife HAD her online receipt AND packing list. She asked if she could get credit for the paper, and pay the difference for the new paper. We were greeted by "did you call the 800 number first? I don't know if I can take your return." Call the 800 number? What... isn't this Office Depot? That's what the sign says outside... uhhhh... NO we didn't call the 800 #. So, after speaking with a manager, and seeing that in fact they DID recognize the SKU (I suggested to the clerk that she try scanning the bar code on it and VIOLA! it was there!!!) my wife was able to pick out other paper, charge her firm's Office Depot Card, and we left. The whole process should have taken 5 minutes.... it took 35 minutes. And, not only were WE held up, but the poor 5 people behind us were waiting much longer than they needed to as well.

The moral of the story here is simple: Systems can be in place (and at this point are EXPECTED to be by your customer). The best email marketing campaign can be rolling. You can have a wonderfully effective search marketing campaign. You can call yourself "multi-channel" all you
desire. But, if you don't execute at the store level, it is all for nothing. Multi-channel is not a marketing campaign, it is a coordinated, brand-driven way of doing business. If it is NOT in your organizations' DNA, you're NOT going to make believers out of your customers.

Maybe the loyalty findings about Multi-channel customers have less to do with their price-sensitivity, and more about the "leaders" in multi-channel retailing executing like Office Depot did. Just a thought.

As an aside, on the same trip, we returned some coffee mugs purchased from that were broken in shipping. Not only did the clerk at the return desk know about the whole situation from the packing slip we had, but we were allowed to KEEP the 2 unbroken mugs. Total time in Target, 5 minutes. Maybe the folks at Office Depot need to take a little trip to Minneapolis to see how this whole Multi-Channel thing is done.

Love to hear your take on it. Comment or MEEBOME.

Wal-Mart...err... Amazon... Endless... Strikes Again

Well, well well... the folks over at and have raised the gauntlet even further with the announcement that they will PAY YOU $5 for choosing overnight shipping.

Again... now that has followed suit with the free overnight shipping... this leaves and in a serious bind. Remember that there are only two ways you can compete in the pureplay shoe marketplace; Either more sizes, or easier shipping. The click-brick combos are the ones that can make up the best for the inherent "fear" in online shoe shopping (will it fit me?).

Why would Amazon do such a thing? Simple; They Can. As I said in my blog a few weeks ago, Amazon is VERY serious about OWNING this space. They have pulled out ALL of the stops in terms of features and they have access to almost any brand they want to get to.

The pureplay online shoe market is going to be made or broken with this year's spring business. And it goes to show you that in the online space, it is in fact Amazon, not Wal-Mart, that you should fear the most if they decide to enter your pure-play niche.

Comments or MeeboMe's welcome and encouraged!

Thursday, January 11, 2007

Sears + Gap? Imagine the Possibilities...

Saw this story today come across about Sears' war-chest of cash and the rumors that at least they have Goldman Sachs' number in their rolodex :-)

Imagine the online retailing possibilities here. Let's take Lands End's prowess, Sears' experience and now throw in GAP's Technology and if someone at GAP could hit a fashion trend or two, you'd have a REAL eCommerce/Multi-channel powerhouse. The integration tasks could be huge, but the upside is too. (Don't forget about GAP launching Piperlime a while back as well.) This would take some real discipline, and a uber ego to pull it off. Maybe someone like Mr. Lampert could do it?

Fun fun fun in the online world.

Care to share any thoughts?

Surprise! Online Retailing Works

Well, in case you hadn't noticed we got more proof today that this year online retailing actually works. (Okay... this shouldn't come as a big surprise but... hey... I like sarcasm every once in a while.)

The folks over at ComScore released their study of the 2006 online retailing results for both the holiday season and 2006 as a whole. For the year, online sales were up 24% over 2005. The holiday season was up 26% over 2005. So... both strong gains. Thinking of this in the ever popular "store-for-store" retail measurement, I'd surely like to be a part of a retailer that has consistently shown 20-plus percent year over year, for the past 3 years. It seems that just over $26 billion was spent this year online during the holiday season. The other noticeable trend was that the spending was LATER this year than in the previous few years.

So, for all of you out there... how did your online business fare in 2006? Were you up the "mendoza line" of 24% for the year and 26% for the holiday?

Comment or MEEBOME on the right. Would love to hear from you.

Wednesday, January 10, 2007

Well... there goes the neighborhood - for shoes...

Welcome to the new year. Lots to catch up on... but I wanted to hit this first.

Yes... it was only a matter of time but the "new wal-mart" has come to the online shoe selling market. Amazon announced that they've opened an online only shoe marketplace called The store pretty much lays down the gauntlet for the online pure play Shoe Retailers like,,,, etc. With it's advanced (and usable!) search, 24/7 customer service, the free overnight shipping and the always popular Amazon personalization, they've pretty much blasted their way into the market. It was only a matter of time before Amazon did this. Their own footwear category has been going well since it's inception, and I'm sure Mr. Bezos and gang have been watching with great interest all the e-retailing media hype about zappos' success every quarter.

Here's why I think the free ride for the online pure-plays in the footwear segment is pretty much over. Think of these online shoe stores as... the local and regional stores that used to populate the rural landscape in the US. Remember... you'd drive through a small town and "dave's general store" or "Robinson's Family Clothing Store" used to be downtown on the square. Then, the bentonville gang started sprouting supercenters everywhere they could. Bringing "always low prices" to the masses, and right off the square where the land is cheap. What happened to the smaller stores? The ones that tried to compete head on... for the most part... went by the wayside. Only the savvy few were able to survive if they had a TRUE NICHE. Walmart won these battles with fair quality goods... at unbelievable prices... with razor-like precision when it came to logistics and operations.

The same thing can be said for Amazon. They have all of the logistics going for them. They set the standard in experience in the online sector, and now they've come to the shoe neighborhood to wipe out the "mom-n'-pop's" of the footwear world. And in the footwear world... Amazon has a "leg up" because unlike walmart... the amazon folks have literally an unlimited access to brands. So in a sense... they're even STRONGER than a walmart supercenter. I think that once Amazon gets going, you'll quickly see consolidation in the online pure play sector. The operating margins behind, and cannot sustain the free overnight shipping that Endless is offering. They eventually will have very little brand exclusivity, and at some point, when Amazon starts "crossing the streams" and using the rest of their apparel inventory to bring you a "full fashion experience" they will have all of the fashion footwear brands in their pocket. Brilliant plans by Amazon. (insert Guinness Guys here)

So... who's going to lose the most? Well... my guess is that you'll see either or start to decline quickly. There's just not enough room in the pure-play market, and now that Endless has raised the shipping barrier to "free overnight" they have the most to lose and the least wiggle room. Both of these online superstores have been under profit pressures since their inception and with Amazon now going after the business, long term survival of these will be tough. at least has Brown Shoe Company behind them. Zappos can only continue to go to the "venture capital" well so long. I think that getting purchased by IAC last year has enough resources behind it, that they can stick it out for a while based on the strength of the rest of their portfolio.

How do you win? Multi-channel footwear purveyors like Foot Locker, Finish Line, even Famous Footwear, have the key to surviving and the position to market against Amazon if they can move quickly to the "Shop online-pickup in store" model. That model resolves the one fear people have of online shoe shopping: What if it doesn't fit? If I were responsible for one of these chains... I'd be looking at how fast I can implement the instore pickup model. Otherwise... well... just ask Mr. Robinson what happens when walmart puts a supercenter in your neighborhood.

Worth just what you paid for them... those are my thoughts. Got any of your own? Feel free to comment or MEEBOME on the right.