Playboy Outsourcing Direct Business

Playboy Enterprises last month finalized a deal for eFashionSolutions to manage the company’s catalog and e-commerce operations of its retail brands–ShopTheBunny.com and PlayboyStore.com.

EfashionSolutions is a full-service e-commerce provider for brands such as Rocawear, Ben Sherman, DKNY, and Baby Phat. It will handle all aspects of the direct business for Playboy, including design, photography, inventory management, merchandising, marketing, payment, fulfillment and shipping, and customer service.

Playboy officials said in February they were planning to outsource the company’s e-commerce/catalog operations to a firm with experience in merchandising lifestyle brands. The company said that such a deal will improve profitability “in what historically has been a very low-margin business and allow our licensing business to generate much higher sales through the e-commerce distribution platform than they previously have been able to achieve.”

The arrangement with eFashionSolutions “will lead to a sizeable increase in the profitability of our e-commerce revenues in 2008 and beyond,” says Bob Meyers, Playboy’s president of media. “In addition, because the consumer products offered through our e-commerce portal are manufactured under licensing agreements with Playboy’s Licensing Group, that business also stands to benefit from increased sales volume.”

Danielle Savin, vice president of e-commerce for eFasfionSolutions, says circulation for the Playboy catalog will not change this year. “Instead, we are planning to mail 6.3 million catalogs and increase our marketing dollars to other online acquisition programs that prove to have a better ROAS,” she says.

“Acquiring new customers through the mail is becoming more and more expensive with rising postal and paper costs,” Savin noted. That said, “direct mail is still invaluable for retention and loyalty.”

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