Enters the Catalog Fray or Does It?

Dot-com pure-play is extending its presence beyond the Web. The New York-based marketer of discount designer apparel, accessories, and home fashions enclosed a 16-page catalog in the May issues of Vogue and Harper’s Bazaar magazines. And in late April, the $17.5 million company mailed a smaller version of the catalog to 375,000 customers and prospects. The book, which was trimmed down from 8″ × 10-3/4″ to 6-7/16″ × 9-7/16″ for the mailing, offers a teaser selection of women’s apparel, handbags, and jewelry.

Observers applaud Bluefly’s move into a new channel. Owner Ken Seiff “is very industrious, and will continue to shift between the business models that work at the time,” says Mike Petsky, CEO for New York-based investment and research firm Winterberry Group. “So to go from a pure-play to a cataloger makes perfect sense.”

Except that Bluefly isn’t really a cataloger. The “catalog” doesn’t have an order form or a toll-free ordering number. It doesn’t even list prices.

Indeed, Bluefly considers the book a customer acquisition and retention tool, says vice president of marketing Alanna Richter. “We only direct people to our site to make a purchase; we don’t promote phone sales,” although the company has a toll-free number for customer service. “We want customers to go to our site, because in the catalog we can show only about 70 items.” The Website carries more than 10,000 SKUs.

Driving down acquisition costs

Bluefly hopes the catalog inserts and mailings will reduce its customer acquisition cost, which is already down 48% from 1999, to $49.53 last year, Richter says. As of the end of 2000, Bluefly’s house file had 185,240 buyers. It also had 863,263 registered users — consumers who registered on the site but didn’t necessarily place orders.

In March, Bluefly received $10 million in venture capital from Soros Private Equity Partners, which has invested $40 million in the three-year-old company to date. But while Bluefly has weathered the dot-com crash, it has yet to reach profitability.

“We’re focused on getting to profitability, and are using every touch point we have to get there,” says Richter. She adds that the company had its first positive cashflow month last December.

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