Red Envelope’s Secrets to Bringing in the Green

Red Envelope will soon be in the black. Martin McClanan, CEO of the San Francisco-based gifts marketer, told a packed luncheon crowd Monday afternoon that Red Envelope is expected to report its first profit in the fourth quarter of this year. Multichannel execution has been key to the company, which was founded as Website 911 Gifts in 1997.

Red Envelope mailed its first catalog in February 2000, but McClanan says that 70% of sales are generated online. And Red Envelope’s aim is to migrate even more shoppers to the Web by continuing to improve the customer service experience online, he says. During the past year, Red Envelope reduced the number of pages required for its customers to complete the sale, added an address book, and improved the site’s speed and scalability. Customer satisfaction levels-and sales-improved significantly, McClanan says.

As for the partnerships now in vogue, Red Envelope is doing bigger, but fewer, online partnerships these days, McClanan says. The gifts marketer has partnered with J. Crew and Garnet Hill and has Internet alliances with Yahoo!, MSN, and Excite. The real challenge for the industry, McClanan says, is to narrow the focus and execute your message because there’s a real danger being all things to all people. “Standardizing your message across all channels will decrease response,” he says. Catalogers need to be asking the question, “What’s the performance metrics involved with this, and how does that relate to my customer?” he says.