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A Tale of Two (E-Commerce) Retailers

by Chris Fletcher  |  February 4, 2012  |  Comments Off on A Tale of Two (E-Commerce) Retailers

Last week I attended the Massachusetts Internet & Technology Exchange (www.mitx.org) conference on E-Commerce, held at Microsoft’s R&D Center in Cambridge MA and on the other side of the Charles River from Gartner’s Boston offices. MITX is a non-profit trade association for digital marketing and the Internet business industry, with a membership of technology vendors, user organizations, students, developers, consultants, and the occasional tech industry analyst makes it a unique place to get a fresh perspective on things related to the web .

The two best presentations of the day came from retailers at opposite ends of the e-tailing spectrum. At one end, Staples, the #2 internet retail according to the Internet Retailer 500 (http://www.internetretailer.com/top500/list) and seller of all things office supply (and, soon of SMB services – see below). At the other end, Newbury Comics, a Boston – based purveyor of music, comic books, and apparel, and for more than two decades one of the things that makes Boston a great town to live in.

Staples: According to Brian Tilzer, VP of E-Commerce at Staples, 40% of Staples’ sales touch their web or e-commerce sites. To keep pace with their projected growth Staples is looking to expand its web and e-commerce team from around 700 associates today, by 3X, or about 2,100 professionals total. To support this growth in personnel, and to attract the right kind of talent, Staples also announced plans to open a Cambridge research center and innovation hub. (Note to real estate professionals and headhunters: Not so confidential rumors have it that Amazon is looking to open a Cambridge-based R&D center early in 2012 to fuel – guess – digital research and development. With Microsoft’s R&D Center already established in Cambridge there is a real-time land and talent rush going on in Cambridge, which is an interesting, if somewhat sad, counterpoint to some of the job and real estate trends in other parts of the country).
Staples also plans to spur substantial revenue growth by providing office solutions and services (think: payroll services, web and hosting services, payment services, and related Cloud-based applications for SMBs) through its web properties to fuel future growth and augment their staple (sorry) business in office supplies.
Core Takeaway: Think Digital commerce.

Newbury Comics: The best part of the day for me was, by far, the fireside chat with Mike Dreese, CEO and founder of Newbury Comics(http://www.newburycomics.com) , and Scott Dirsner of the Boston Globe. First, if you don’t know anything about Newbury Comics, it used to be the place to go for records you couldn’t find anywhere else: Think – Punk, Ska, Thrash Metal, and Imports (Full disclosure: I am one of the few people around that still buys CDs. At a store. Almost always Newbury. I rip my own MP3s. Go figure). Today they sell alternative lifestyle stuff, which roughly translates to “We sell fun stuff to people that like music and comic books, and are likely to like other fun stuff.”
Newbury is a privately held company and as such has the luxury of being candid and honest about what’s going on behind the covers. Plus, it is pretty hard to imagine Mike as being anything less than candid about what he thinks. Really refreshing, especially when it runs across the grain of most conventional e-commerce thinking. Revenue: About $75 Million last year, with about 1/3 of that online. Comments from Mike:
When he first started selling records and comic books “…scarcity was our friend” because they sold things you couldn’t find anywhere else. Punk LPs imported from England. Japanese comic books. They charged a premium for this. Still do.
They do a lot of e-commerce selling, not only through their own site, but through Amazon and eBay. How do they maintain their margins? Scarcity – selling product you can’t find easily anywhere else. This is sometimes risky: sometimes edgy products fail and you end up eating the inventory. A few pay off.
“I don’t really care about mobile commerce.” He does, of course, he just doesn’t have to support mobile devices on his own web site. Most of Newbury Comics’ mobile presence is provided for them through their 40,000 Facebook followers, 320k social media contacts, and through affiliate sales on Amazon and eBay. Which, of course, all support mobile. Why invest money in building mobile when someone else he can sell through has already done it?
He expects the majority of their brick and mortar stores will go away, and a majority of the business will go to the web and e-commerce.  Why do you still see so many Newbury Comics stores in strip malls around the Boston area? Because there is lots of mall space available, partly due to the recession, partly due to other competitors moving their business to the web. Of course.
Core Takeaway: Question conventional wisdom.

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Tags: e-commerce-digital-e-commerce-mobile-cloud-retail-staples-newbury-comix  

Chris Fletcher
Research Director
4 years at Gartner
30+ years IT industry

Chris Fletcher brings more than 30 years of industry experience to his role as research director at Gartner. He has worked in both the analyst and vendor sides of the IT industry in CRM, e-commerce and enterprise applications. He is part of Gartner's CRM and E-Commerce research team and publishes research on CRM and e-commerce segments, including lead management, B2B and B2B2C e-commerce ...Read Full Bio




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