More RedEnvelopes in the mail

Don’t call upscale gifts purveyor RedEnvelope an online merchant. “We view ourselves as a multichannel marketer,” says CEO Martin McClanan. And the San Francisco-based company is backing up the statement with cold, hard cash. In August it received $33 million in a third round of venture financing, and it is using the funds primarily to turbocharge its catalog mailing program.

RedEnvelope is planning to mail 3 million-5 million copies of a holiday catalog in drops between October and December – not bad, considering that last holiday it didn’t mail a catalog at all. More than half of the books will go to prospects rom rented lists and exchanges, although McClanan won’t disclose which lists he rented. But he does praise the print book, not just as a sales vehicle, but as a traffic driver for the Website: “The catalog is a fabulous way to introduce people to our brand.”

The company had launched its print catalog in time for Valentine’s Day 2000, mailing about 600,000 copies to names it amassed from its Website. The initial 16-page catalog featured just 15 items. By contrast, the holiday book is 40-plus pages with approximately 90 products. About half of the items, such as the Spa in a Box ($195) and the Napa Valley Getaway gift basket ($159), are proprietary, McClanan says.

Service investments RedEnvelope is investing in customer service too. Having already expanded its warehouse capacity to 12 times what it was last year, the company added a real-time inventory function to allow online customers to check the status of their orders. Shoppers can also chat online with RedEnvelope’s customer service representatives. And a new multiple ship-to feature allows a customer to send the same gift to multiple recipients or several gifts to several recipients all in one checkout process.

To help RedEnvelope fine-tune its marketing efforts and convert gift recipients into customers, it implemented an online tracking software program from Broadvision. “The system allows for more flexibility, and it runs well with our UNIX-based environment,” McClanan says. “It tells us the origin of the customers: Were they America Online customers, or did they came in from Yahoo? Or did they come onto our RedEnvelope site directly?” The software also enables RedEnvelope to see which visitors are buying vs. browsing, and which pages are generating the most traffic and the most sales.

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