8 Steps to Shoebuy.com's Success

Despite leaving the company five weeks ago, Shoebuy.com founder and former President and CEO Scott Savitz led a session at this week's eTail conference in Boston where he detailed the steps the online footwear retailer took to grow into one of the most successful online brands, averaging more than 8 million visitors to the site monthly and realizing gross margins in excess of 43 percent for those visitors. Here are eight of those steps:

1. Always remember why you created the business in the first place. Savitz founded Shoebuy.com in 1999 (the site launched in January 2000) after discovering that the marketplace for buying shoes online was strangely thin. Footwear at the time was a $40 billion market in the U.S., yet only $5 million of that was being sold online. Savitz saw an opportunity and acted upon it.

2. Be totally disciplined to your value proposition. For Shoebuy.com, that value proposition includes a bigger product selection, an unwavering commitment to customer service, free shipping and product returns, hundreds of thousands of product reviews, multiple payment options and an average product ship time of 1.4 days, among other things, Savitz said.

3. Put the customer first in everything that you do. Some ways that Shoebuy.com goes about doing this is by listing its phone number on each of its web pages; customer surveys; site feedback; engaging customers and prospects via its company blog and Facebook and Twitter pages; customer-driven merchandising; A/B and multivariate testing; and a 100 percent price guarantee.

Customer service has never been outsourced at Shoebuy.com. It's the one part of the business that's not scalable, Savitz said. If Shoebuy.com gets a customer service email, it will respond to that customer within a half-hour and the customer service phone calls are answered within 75 seconds.

4. Don't ever stop innovating and building value. Innovation for Shoebuy.com comes in all facets of the business, from how it offers product to how customers can transact on the site (e.g., PayPal, Bill Me Later, Google Checkout) to creating a culture of entrepreneurship. Citing a culture of entrepreneurship, Savitz noted that interns are treated the same as senior management and, in fact, many senior leaders at the company were former Shoebuy interns. Don't be afraid to call your brand manufacturers and even your competitors to gain insight about your business or the e-commerce industry as a whole, Savitz added.

5. Every dollar should be spent as though it's your last. Maximize opportunity and minimize risk, Savitz said. The goal should be to build partnerships with your vendors and lifelong relationships with your customers. Base your decisions on your own good assumptions, not the assumptions of others.

And lead by example, Savitz added. He made it a point not to fly first class or hire a car service when traveling for Shoebuy.com because he didn't want to set the example that it's alright for him to do this but not others.

6. Focus on being scalable and adaptable using metrics as a guiding light. Whether it's your technology, product offering, advertising, infrastructure and leadership, business model, etc., it must be scalable and adaptable to the marketplace, Savitz said.

7. Go for better than good; be in it to win it. All members of the Shoebuy.com team are held to a certain standard. Savitz believes that if you show loyalty to the people you work with they'll return that loyalty to you. Even in the worst of the recession a few years back when employee satisfaction levels were at their lowest, Shoebuy employees remained satisfied and invested in the company.

8. Help others — individually and as an organization. Although Shoebuy.com was growing and profitable, and its employees had job security, Savitz realized that many others weren't as fortunate. The retailer donated its time and money to volunteer work and organizations such as Make-A-Wish and Big Brothers Big Sisters. Employees’ charitable donations were matched dollar for dollar by Shoebuy.com. Those that donated were entered into raffles to win prizes such as paid time off and gift certificates, among other things. Senior management has also donated its time to industry boards and trade shows.

Here are some other highlights/tips from Savitz's presentation:

• 95 percent of Shoebuy.com's products are drop-shipped;
• Shoebuy.com levies chargebacks on suppliers for late or wrong shipments not as a source of revenue but to help prevent them in the future;
• Shoebuy.com has offered free shipping since it launched in 2000;
• even with free shipping, the company averages a 25 percent profit margin per customer;
• a retailer's mobile site experience must be equal to or better than its e-commerce site before the technology should be rolled out to consumers, Savitz advised; and
• after cost of goods, shipping is Shoebuy.com's biggest line-item expense.