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Business 11th Edition by William Pride,Robert Hughes ,Jack Kapoor
Edition 11ISBN: 978-1111526207Business 11th Edition by William Pride,Robert Hughes ,Jack Kapoor
Edition 11ISBN: 978-1111526207 Exercise 3
How eBags Does e-Business
More than 500 luggage stores in the United States closed in the travel slump that began September 11, 2001. eBags, the online luggage and handbag retailer, was just a few years old at the time, and a few thousand dollars away from turning its first profit. However, like many other firms, it immediately set up a way for customers to donate money in the wake of the terrorist attacks, collecting almost a quarter of a million dollars.
"We were about four days into it," remembers co-founder Jon Nordmark," when we realized 'Oh my God, we're not getting any orders."'As fellow co-founder and senior vice president Peter Cobb describes the situation, the fall off in travel hurt luggage sales, and troubled economic times compounded the firm's bad news. "We were really just in a foxhole waiting for nuclear winter to end," he says.
The company moved fast, however, expanding its product offerings to include "day" bags such as briefcases, backpacks, purses, and laptop carriers. Another strength was its policy of drop shipping, ordering from suppliers only when customers order from eBags and letting suppliers ship products directly to customers. As a result, eBags avoids the usual retail problem of needing to have a lot of stock on hand to meet demand. "This drop ship model is the reason we're alive," Cobb says. "We don't have to spend tens of millions [of dollars] buying products and putting them in a warehouse."Thanks to quick action and good business planning, the company managed to turn a profit that year and never looked back.
Today, eBags is a $100 million company with about 100 employees and has sold over 7 million bags since its founding. As the biggest online retailer of luggage and bags of all kinds and a leader in the use of Internet technology, it offers 40,000 different products from 520 brands. Inspired by its fund-raising success after 9/11, the company also continues its commitment to the community, giving more than $500,000 to breast cancer research and donating thousands of bags and packs to foster children around the United States.
As eBags has grown, it's become more sophisticated in its use of technology. For example, the company segments its database of 1 million customers and can target individuals in different groups with personalized messages based on their previous purchases and other details. It also offers its products through eBay and other online channels.
Hallmarks of eBags' award-winning Web site are multiple photographs of each product, full-color images in every available color instead of mere swatches, and videos starring employees who seek out and interview up-and-coming New York and Los Angeles designers to showcase their products on the site. Google Maps help shoppers locate other new designers around the country. Specialized search tools locate specific products, like airline-approved carry-on luggage. Unlimited customer reviews-as many as 4,000 for one popular product and more than 1.5 million overall-encourage customers to rate products and read others' comments. Visitors can even post their own videos. "What we're really saying is, 'It's your whiteboard,"' says Cobb.
The company developed most of these interactive software-applications in-house. They're costly to maintain, requiring a staff of 40 people and an annual budget of about $10 million. However, eBags believes they contribute directly to sales, which doubled in one recent year and continue to grow. "It is important for us to have unlimited customer reviews, so we do it ourselves," says Cobb. "An outside vendor might limit you to 100 customer reviews. When you go outside, you tend to be forced to cut corners on innovation-you have to dilute the customer experience to be like everyone else." 14
For more information about this company, go to http://www.ebags.com.
eBags was one of the first online stores to allow customer reviews on its Web site, and now sells its in-house technology to non-competing retailers. What other steps do you think an e-business like eBags might take to keep growing in the future?
More than 500 luggage stores in the United States closed in the travel slump that began September 11, 2001. eBags, the online luggage and handbag retailer, was just a few years old at the time, and a few thousand dollars away from turning its first profit. However, like many other firms, it immediately set up a way for customers to donate money in the wake of the terrorist attacks, collecting almost a quarter of a million dollars.
"We were about four days into it," remembers co-founder Jon Nordmark," when we realized 'Oh my God, we're not getting any orders."'As fellow co-founder and senior vice president Peter Cobb describes the situation, the fall off in travel hurt luggage sales, and troubled economic times compounded the firm's bad news. "We were really just in a foxhole waiting for nuclear winter to end," he says.
The company moved fast, however, expanding its product offerings to include "day" bags such as briefcases, backpacks, purses, and laptop carriers. Another strength was its policy of drop shipping, ordering from suppliers only when customers order from eBags and letting suppliers ship products directly to customers. As a result, eBags avoids the usual retail problem of needing to have a lot of stock on hand to meet demand. "This drop ship model is the reason we're alive," Cobb says. "We don't have to spend tens of millions [of dollars] buying products and putting them in a warehouse."Thanks to quick action and good business planning, the company managed to turn a profit that year and never looked back.
Today, eBags is a $100 million company with about 100 employees and has sold over 7 million bags since its founding. As the biggest online retailer of luggage and bags of all kinds and a leader in the use of Internet technology, it offers 40,000 different products from 520 brands. Inspired by its fund-raising success after 9/11, the company also continues its commitment to the community, giving more than $500,000 to breast cancer research and donating thousands of bags and packs to foster children around the United States.
As eBags has grown, it's become more sophisticated in its use of technology. For example, the company segments its database of 1 million customers and can target individuals in different groups with personalized messages based on their previous purchases and other details. It also offers its products through eBay and other online channels.
Hallmarks of eBags' award-winning Web site are multiple photographs of each product, full-color images in every available color instead of mere swatches, and videos starring employees who seek out and interview up-and-coming New York and Los Angeles designers to showcase their products on the site. Google Maps help shoppers locate other new designers around the country. Specialized search tools locate specific products, like airline-approved carry-on luggage. Unlimited customer reviews-as many as 4,000 for one popular product and more than 1.5 million overall-encourage customers to rate products and read others' comments. Visitors can even post their own videos. "What we're really saying is, 'It's your whiteboard,"' says Cobb.
The company developed most of these interactive software-applications in-house. They're costly to maintain, requiring a staff of 40 people and an annual budget of about $10 million. However, eBags believes they contribute directly to sales, which doubled in one recent year and continue to grow. "It is important for us to have unlimited customer reviews, so we do it ourselves," says Cobb. "An outside vendor might limit you to 100 customer reviews. When you go outside, you tend to be forced to cut corners on innovation-you have to dilute the customer experience to be like everyone else." 14
For more information about this company, go to http://www.ebags.com.
eBags was one of the first online stores to allow customer reviews on its Web site, and now sells its in-house technology to non-competing retailers. What other steps do you think an e-business like eBags might take to keep growing in the future?
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Business 11th Edition by William Pride,Robert Hughes ,Jack Kapoor
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