Child-Products Merchandiser Takes 1st Steps Into E-Commerce
Boasting overnight delivery, free gift wrapping and online customer service, the Right Start Inc. children’s merchandiser has launched a multimillion-dollar ad campaign to drum up cyber-business for the holiday season.
The Westlake Village company, which markets upscale products for children up to age 6, has allocated $6.5 million for advertising through the end of 1999 to attract shoppers to its new Web site and e-commerce capabilities.
“We’ve got an aggressive print advertising campaign in all children’s and parenting publications, and our radio and TV ads just started,” said Jerry Welch, president and chief executive of the Right Start. “They will all be targeted to moms--96% of our customers are women.”
Advertisements will run on family-oriented cable networks, including Lifetime, Nickelodeon, the Discovery Channel and the Disney Channel. Network television spots will air during “Oprah,” “Martha Stewart Living” and other shows that attract a large female audience.
Since it was founded in 1985, the Right Start has sold nursery products, clothing and other items through mail-order catalogs. In 1991 the company opened its first of what is now 47 retail stores to complement the catalog sales. The Internet site, Rightstart.com, was introduced in late June.
Though the Internet is the company’s newest approach to reaching customers, officials expect online sales to be a prime source of income almost immediately.
That would provide a big lift to a company that reported a net loss of $2.7 million on revenues of $10.6 million for the second quarter of 1999, ended July 31. That compared with a net loss of $1 million on sales of $8.8 million for the same period in 1998.
“When we end this year we expect the Internet being 25% of our business, stores about 67% of our business and catalog sales 8%,” Welch said. “Looking a year or two from now, I think we’re going to see that the Internet is going to be about 50% of our business, stores will be about 45%, and catalogs 5%.”
Online revenue topped $1 million in mid-September, less than 90 days after the site debuted.
Rightstart.com is a subsidiary of the Right Start Inc. The parent company owns the majority of the online operation with funding and minority ownership by Palomar Ventures of Los Angeles and Sierra Ventures of Menlo Park. The two venture capitalists combined to contribute about $15 million in funding for a one-third ownership of the subsidiary.
Guidance Solutions, an online business development company based in Marina Del Rey, is providing the technical expertise for the Internet side of the business.
“We looked at the Internet very closely two to 2 1/2 years ago, but we didn’t think our competition was very formidable--it allowed us to lay in the weeds and wait,” said Welch, who took over the company’s top spot in 1996. “After the first of this year, we started moving aggressively, raising money for Rightstart.com.”
Welch said the company’s success on the Internet will depend largely on its ability to bring its costumer service skills to the virtual world.
“We’ve brought a strong sales and marketing philosophy to the Internet,” Welch said.
“Our customers are women and they are not the type to sit down and surf the Internet all day--they are sophisticated shoppers and they expect good customer service,” he said. “Round 1 of the Internet was technology-related, getting the Web sites up and getting the technology going. Now everybody can have a Web site. Round 2 is about sales, marketing and customer service. We think that’s our stock and trade.”
The Right Start is taking advantage of the Web site to expand its product lines. Earlier this month the company opened a Kids’ Development Store section offering developmental toys, music, software and other products geared to children ages 3 to 6. At the start of 2000, Welch said, products aimed at children ages 6 to 12 will be added.
“For years, we’ve sold products just for kids up to age 3, so when customers’ children got past age 3 we didn’t have anything for them,” Welch said. “But it’s the power of the Internet. We have almost 2,000 products on the Web site.”
The Right Start stores carry about 1,200 items and the catalogs offer 250 products, he said.
Along with building their Internet presence, officials of the Right Start also expect to expand the number of retail stores in the chain, Welch said. There are plans to add eight stores by the end of the year, he said, and 30 more in 2000.
Beginning with eight store closures in 1998, the Right Start shifted its retail strategy away from stores inside malls to those in neighborhood, street-side locations.
“We really started getting into the retail business in a big way in 1995, and between 1995 and 1998 we were working on getting the store model right,” said Welch, of the chain that is concentrated on the West and East coasts and in Detroit and Chicago. “We realized mall stores weren’t working.”
By year’s end, Welch said the company should have 27 mall locations and 28 neighborhood-based stores.
