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Recession Is An Opportunity for Online Retailers

Online retailers may find some golden opportunities hidden in the current retail malaise.

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Blogger

Like addicts trying to avoid their vice, formerly free-spending consumers are trying to save money by avoiding stores all together. But what happens when they really need to buy something?

Some are turning to the Internet so they can target the item they need without being too tempted by other merchandise, according to Scott Savitz, chief executive of Shoebuy.com, a retailer of footwear and related apparel.

Consumers are putting a lot more thought into their purchases, he said. On Shoebuy.com, shoppers are reading customer reviews and researching purchases extensively before buying, Savitz said.

It may be counterintuitive, but Shoebuy.com, a unit of IAC InterActive , has actually seen the average value of its customers’ purchases rise in recent months. Savitz declined to provide specific numbers, but the Website has continued to experience double-digit, year-over-year revenue growth, while profits have risen at an even faster pace.

One trend helping to drive higher receipts at checkout is that more families are shopping online together, Savitz said. He suspects this is because parents want to be sure that their children will wear the items they are buying.

“Parents are being smart about every dollar they spend,” Savitz said.

In this environment, Savitz said he plans to keep the focus on customer service and selection. The company has continued to add brands and items to its selection, and it’s attracting higher sales of related items. For example, over the past four-to-five months, the retailer has added 75 brands and 5,000 products in the watch category alone.

This is in sharp contrast to many “brick and mortar” stores that have been keeping inventories lean and selection very targeted.

Shoebuy.com is helped by the fact that it ships many of these products to its customers straight from the manufacturer. This means it can offer its customers more than $3.5 billion in inventory for purchase.

“It’s more important than ever to focus on the customer,” he said. “We continue to have good success, but we’re in unknown territory.”

Still, Savitz expects that consumer demand can snap back like a rubber band once they see some stabilization.

“People do like to shop,” he said. “People are very passionate about the category.”

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