Location Matters Little in World of Online Retail
The Web surfer in Boston who tripped across an Internet gift store called Unique Novelties 2000 in December probably didn’t know that he had reached a business based in the San Fernando Valley.
And even if he did, it certainly didn’t matter once a $7 poodle figurine captured his fancy. Instead of clicking on another page to find out more, the customer called the site’s customer service number three time zones away.
Although it was 3 a.m., Avi Drori, the Web master, order taker, and oh yes, owner of the 8-month-old Internet retailer, managed to mumble “Unique Novelties” into the receiver. He went on to answer every conceivable question about the poodle without betraying his irritation at being roused from a pleasant sleep.
“That sort of thing doesn’t happen often, but you need to be ready for it,” said Drori, who estimates that his Encino-based Web site gets 5,000 visitors a month at https://www.uniquenovelties2000.com.
Maybe 1% of those wind up placing orders.
“You can’t say ‘I’m in business from 9 to 5.’ You have to be on call 24 hours a day, like a doctor. He can’t tell the hospital, ‘I’m asleep now and I can’t come in.’ It’s the same with the Internet. If you want to succeed, you have to be there.”
Drori may have learned the hard way why many people describe the Internet as a place where stores never close, but he is not the only local entrepreneur willing to endure occasional inconveniences in return for reaching a global customer base.
Encouraged by the promise and high stock values of e-commerce giants such as Amazon.com, online retailers are popping up all over the World Wide Web, including dozens of enterprises based in the Valley.
And while no one would ever confuse this Valley with the one up north that silicon made, the landscape this new breed of “local” businesses covers is as varied as a drive down Ventura Boulevard.
It includes multimillion-dollar enterprises like Credit Union Shopper (https://www.cushopper.com), which sells credit union members high-ticket items such as computers and jewelry and links them with the loans they usually need to buy the merchandise, as well as with tiny, sole proprietorships like The Candle Witch (https://www.thecandlewitch.com), a site for custom-made candles that is so far more a source of pride than profits.
Of all the dot-com businesses that have sprung up in the Valley, the one closest to a name brand is Walt Disney Co.-owned Go.com (https://www.go.com), which sells merchandise from the Disney Store, as well as stuff sporting logos from the ESPN cable sports channel and NASCAR racing.
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This “branded” e-commerce segment of the larger Go.com network, which also features news and entertainment, is created and managed in a North Hollywood facility employing 75 to 100 people (other retail affiliates are handled in Go.com’s Sunnyvale offices), although the orders themselves are filled and processed in Kansas City and South Carolina.
Jeff Bender, a senior vice president and general manager of Go.com, says that a large Los Angeles presence has been a boon for the company in terms of being able to attract talented employees. Otherwise, its location is irrelevant, he says.
“Geographic locations in the online space are by and large transparent, so where you are, whether it’s Osh Kosh or North Hollywood, I don’t think the consumer knows or cares as long as you are providing a great experience,” Bender said.
Another big local player on the “e-tail” scene is the ARTISTdirect Superstore (https://www.artistdirect.com), where music fans can buy the latest CDs and music memorabilia, either from the store’s own 200,000-title catalog or by logging onto dozens of official “artist specific” sites that are maintained on behalf of performers.
The store, which uses third-party vendors to fill orders, is part of the online ARTISTdirect network, an Encino-based dot-com company that also operates a music search engine, an online music community featuring message boards and chats, and a site from which computer users can download new music.
The 4-year-old company, which was founded by former agents and Lollapolooza tour creators Marc Gieger and Don Muller, is in the process of going public. Company officials would not disclose any revenue figures but said their payroll has swelled from 99 to 179 employees in the last six months.
Like Go.com and ARTISTdirect, portable computer vendor Mobile Planet (https://www.mobileplanet.com) is not purely an e-tail endeavor.
The Chatsworth company, which markets its products to large corporations such as Coca-Cola and Ford and employs 50 people, was founded in 1993 as a mail-order business.
But since Mobile Planet launched its Web site three years ago, online purchases have come to comprise two-thirds of its millions in sales, says co-founder Casey Powers.
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“At first, the Web site was a convenience for customers, but they were still placing most orders through our catalog,” Powers said. “Now, you are talking about a huge part of the business.”
Another Valley Internet retailer is Credit Union Shopper. The site sells a variety of consumer goods to credit union members, with a twist: It also provides the financing to buy them.
Chief Executive Adam Walker explains that credit union members who might otherwise have to finance their purchases with high-interest credit cards use the site to secure personal loans that carry interest rates averaging 10% through the 650 institutions that are part of the site’s network.
About 90% of all purchases made through CU Shopper sales are financed, Walker said.
With millions of dollars in sales, “we have a lot more revenue than a lot of the public dot-coms these days,” he said.
CUShopper was launched in 1998. Last year, the company grew from 13 to 100 employees. In March, its headquarters will be relocated to Glendale to accommodate a staffing level now approaching 130.
That figure does not even include people to package and ship orders, tasks handled directly by distributors.
Another Valley company that was created to sell goods primarily through the Internet is Real Size (https://www.realsize.com), which markets clothing for plus-size women.
Encino resident Nancy Kaye, a former psychology student and full-time mother, started the business in 1997 at the suggestion of her husband, who manufactures garments for the apparel line designed by actress Delta Burke, former co-star of TV’s “Golden Girls.”
At first, Real Size sold only merchandise from Burke’s collection, but it has since branched out to include clothes from other designers, and sales increased 450% from January 1999 to the same period a year later.
According to Kaye, a national advertising campaign launched in September resulted in a tenfold increase in visitors to the Web site; the company had more than $50,000 in sales last October and another $200,000 in sales before the end of the year.
Kaye’s story is one of the increasingly rare examples of the way the Internet can serve as an equalizing force in business, allowing small entrepreneurs to compete with giant concerns.
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Last year, readers of IVillage, an online women’s community, voted Real Size as the best online source for swimsuits. It would have probably surprised many of her customers to know that the company’s president runs the computer server out of her home so she can be there when her three children get home from school.
Although Real Size has about five Southern California employees, who, like Kaye, work out of their homes overseeing the Web site, orders are processed and filled at a 10-person facility in Florida.
Kaye says that the Internet allows Real Size not only to take more orders than a conventional brick-and-mortar store, but that her interactions with customers are more pleasant too.
“I find it easier to communicate with the customer. When somebody is angry, it’s much easier to put it in writing and it seems calmer and more positive,” Kaye said.
Like Nancy Kaye, Teri Davis Tolladay, aka The Candle Witch, works out of her home in Sherman Oaks. Tolladay started making high-end, hand-dipped candles three years ago, selling them through retail stores, and then launched a Web site last May.
A few months later, the business got a boost when Yahoo accepted her page on its search engine, something that doubled weekly visits to the site, where customers can choose the colors and scents for pillars that cost $30 each. With about 300 visitors a week, online purchases now account for half of her sales, and Tolladay says she would eventually like to make it 100%.
Tolladay’s husband, Eric, is a graphic designer who put together his wife’s Web site.
“One of the reasons we focus on the Web,” he said, “is, even with L.A. being as big as it is, we weren’t sure with the kind of candle we were making there was enough of a clientele that would support a traditional bricks and mortar business.”
Teri Tolladay says that for reasons she has been unable to figure out, most of her candle customers live on the East Coast and in the South.
Brian Bord, a West Hills real estate agent who also owns The Very Best of British (https://www.ukproducts.com) as a side business, is also sold on the Internet as a way of conducting sales.
“The nicest thing about this business is you wake up in the morning, turn on your computer and you’ve got orders sitting there,” says Bord, who estimates he fills an average of 50 to 100 orders a month.
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Like Tolladay, he says his customers appear to be equally unconcerned with where he is when they log onto his site to buy Princess Diana commemorative stamps, silver-plated classic car models and Cadbury chocolates. Last week, he received a large order for Princess Di coins from Japan and in the past he has gotten orders from customers in England.
“It sounded crazy. We were sending goods back to England that came from England. I’m sure the people didn’t realize they were placing an order with a company in the Valley,” Bord said.
