NEW YORK — How is it that SmartBargains.com has just secured $9 million in fresh funds, when so many e-tailers are struggling simply to survive?
This story first appeared in the August 26, 2002 issue of WWD. Subscribe Today.
Perhaps it has more than a little to do with the online off-pricer’s robust performance projections for the full year, in which it expects its volume to run up more than fourfold, surpassing $50 million, and its bottom line to be in the black for the fourth quarter. Further, the net profit trend is one that Carl S. Rosendorf, chief executive of the 22-month-old Web site, anticipates will continue throughout 2003.
Heavy customer traffic, amounting to about 4.5 million unique visitors a month, and a browsing-to-buying conversion rate that has soared 25 percent since June 20, when the e-tailer launched a redesign, are driving that growth — and caught the eye of the venture capitalists at Seattle-based Maveron. By comparison, Walmart.com topped Nielsen/Net Ratings’ July traffic report on apparel e-tailers, with roughly 5.2 million visitors, followed by SmartBargains; Target.com, with 4.3 million; and Sears.com, with 3.9 million.
“They approached us in late June, for the second time, and we closed the deal [led by Maveron] on July 26,” Rosendorf said of the funding SmartBargains is set to announce today. “Maveron understands e-commerce,” he added of the financiers whose founders include Starbucks founder Howard Schultz. “Their investments include eBay and drugstore.com.” Maveron, which has more than $400 million under its management, was joined in the round by initial investors Highland Capital Partners, Gordon Bros. and AOL Time Warner Ventures. The deal has raised SmartBargains’ total equity financing to $47 million.
SmartBargains’ new Web site has a cleaner, stripped-down design, making it easier to shop, one of the redesign’s chief aims. The home page hawks fewer items — seven on Friday — illustrated by bigger photographs, while a handful of additional goods are listed, straightforwardly, in a Spotlight Deals! section in the page’s upper-right quadrant. The off-pricer’s new features include a simplified shopping cart and four fashion boutiques on the launch pad, which are changed each Monday, Wednesday and Friday, along with the other goods there. On Friday, the boutiques were Prada, DKNY For Him & Her, Fendi and Harvé Bernard, which, Rosendorf said, is currently one of SmartBargains’ best-selling apparel brands.
Apparel is projected to produce approximately 25 percent, or $12.5 million, of Smart Bargain’s full-year sales, up from 20 percent of the e-tailer’s 2001 volume, which Rosendorf declined to disclose.
In a move to stoke its gains, SmartBargains has struck agreements, which, beginning Aug. 1, have enhanced prior marketing pacts with portal giants America Online and MSN. Now, Web-enabled links in AOL’s shopping area allow SmartBargains to provide users there with upsell and cross-sell links with its own e-commerce site. In addition, the off-pricer has secured a fixed placement on MSN’s home page, in the Today’s Sales and Deals section. An arrangement with Yahoo, bringing SmartBargains a link on that portal’s launch pad, is ongoing.