Garden.com: Growing By Its Own Rules

A move from pure play to cataloger—that’s the trend in the online retail industry.

After years online, pure-play retailers are discovering that catalogs are cost-efficient customer-acquisition and branding tools. But despite moving into the mail order world, pure plays do not consider themselves catalogers.

Lisa Sharples, co-founder of Garden.com and the force behind that company’s recent print catalog drops, is straightforward about its catalog’s purpose—driving customers to the Garden.com Web site. Unlike many entrepreneurs who launch catalogs as extensions of their avocations, she didn’t start Garden.com out of enthusiasm for gardening. Sharples and her partners wanted to start an online business in a growth market.

“We weren’t gardeners trying to turn our passion into a business. We were MBAs trying to find a business,” says Sharples.

The three co-founders, Sharples, her husband Cliff and Jamie O’Neill, are all graduates of Kellogg Graduate School at Northwestern University. In their hunt to become online entrepreneurs, Sharples says a move to Texas got her imagining a company that could recommend plants that grow best in your area and then ship them to you.

They started holding gardening focus groups and found that the serious gardeners usually shopped from 30 different catalogs, each with a different niche—bulbs, seeds, plants, tools, etc.

The industry’s segmentation has much to do with shipping and growing issues. Catalogers realized that buyers shop for one particular type of plant at a time rather than buying a variety in one shot. Typically, several growers source a gardening catalog, but can hardly keep pace to offer the kind of variety buyers desire.

The three partners examined the strength of the growing gardening business and its supply-chain weakness, and saw an opportunity to combine two successful retail models: category killers and online shopping. A category killer is a retailer that supplies every facet of a consumer’s needs in a particular industry segment—Home Depot is a prime example. While difficult to operate, they mean big dollars because they attract a great deal of customers.

“You’d think gardeners won’t use computers, but they really are academic. It is a very academic pursuit and they are always looking for new ways to do things. And the Internet provides a unique way to do things,” says Sharples.

Garden.com has more than 1 million users.

According to Garden.com Public Relations Director Eileen Isola, when Garden.com got started five years ago, the garden industry was a $47-billion market. Now, it racks up $82 billion a year in revenue. Despite the growth, no one except Garden.com has attempted to be a national, full-service garden retailer.

“What I think is so interesting, you don’t see any category-killer catalogs in the U.S.,” which Sharples attributes to the complex business model needed to operate gardening retail. “The only way to create a one-stop shop is to do it in the virtual sense.”

The Catalog’s Contribution

After five years on the Internet, Garden.com has tried its share of marketing tools and campaigns to grab the attention of off-line garden shoppers. In December 1999, it launched its first mail order catalog. The 1.5 million-circulation catalog was an experiment—one that worked.

In February 2000, Garden.com purchased Earthmade, a gardening tool and furniture catalog, and has since produced two more catalogs. Garden.com’s catalog is simply part of an equation that drives online sales.

“We were a small company going for the lowest fruit—people online that gardened,” says Sharples about acquiring customers five years ago. “With the evolution of our brand, our model is about just sucking people online.

“As an Internet retailer, one of the difficulties is finding customers. You acquire a customer for x number of dollars, but once you do, there’s the retention part of the model … In an online space you can send an e-mail, which is low cost,” compared to off-line, but it still can be a waste of money, says Sharples. “The real trick is getting qualified people to visit the site.”

The catalog’s job is to acquire qualified customers by using customer modeling, databases, co-ops and lists—all to reach targeted customers. A persistent problem for online retailers is that banners and affiliate marketing attract customers to sites but offer a low conversion rate.

“Was it the best thing we have done? No,” says Sharples about the catalog. “But it definitely was not the worst.”

Reluctant to provide specific conversion numbers, Sharples merely quips that if the catalog experiment hadn’t worked, her company wouldn’t have purchased Earthmade and produced two more catalogs.

But Garden.com doesn’t keep its catalog customers for long. Once a catalog customer purchases from Garden.com online, they are dropped off the catalog mailing list and targeted by e-mail.

“We send e-mail promotions showing specials focusing on your preference in gardening before they’re up online,” says Sharples. “They are more frequent than catalogs. They are very aggressive.”

How the Catalog Fits

“There are two buckets that we think about when it comes to marketing: off-line and online,” says Sharples about how the catalog fits. “Off-line is traditional direct mail, print, advertising and TV. Online, there’s buying banners on Yahoo!, distribution deals with iVillage or Excite and creating business relationships with other online vendors.”

The first “bucket” is primarily about branding and the second drives sales. Each is spent in an 80/20 fashion toward the primary and secondary goal of the bucket.

Garden.com is continually experimenting with new marketing and branding ideas. It retains consistency by generating most campaigns in-house. There is a marketing team and a director of brand who oversee the campaigns of each marketing medium, as well as the tracking. On occasion, outside consultants are hired to assist with marketing. For Garden.com’s spring 2000 branding campaign, Austin, TX-based ad agency McGarrah/Jessee helped. Garden.com often outsources media buying for the Internet, television and radio. Befree.com operates its online affiliate marketing, which includes 20,000 relationships.

The catalog is just one component of the marketing strategy, but seems to work well for Garden.com.

“It is more cost effective than other things we were doing on the customer-acquisition side so we [now] are shifting dollars from other buckets that were not as cost effective to the catalog,” says Sharples.

While Sharples acknowledges that each medium performs some customer acquisition, traffic driving and branding for the company, each is measured on its primary goal. The catalog, for example, will not be measured on revenue or branding, but on customer acquisition. This mentality shapes each campaign.

Garden.com started a magazine shortly after it launched. Produced by gardening expert and former editor of Better Homes & Garden, the Des Moines, IA-based magazine, Garden Escape, builds brand. It contains articles that develop Garden.com not only as an authority for first-time gardeners but as the primary source for finding products listed in the magazine articles. Sharples says one of the loudest complaints from first-time gardeners is that other consumer magazines show beautiful plants that either can’t be found or aren’t suited for the reader’s particular area. Either predicament frustrates the consumer. Garden Escape plays out Garden.com’s mission to corner the market of one-stop garden stores that deliver to backyards.

Making it Come Together

The business model for offering 20,000 garden products and delivering them to the garden gate means Garden.com can’t afford to operate as a cataloger. So what looks like a catalog really just perpetuates Garden.com’s online business model.

Garden.com caters to the busy baby boomer. Its entire business model works on the convenience of the Internet. Category-killer gardening sales is too complex to be done off-line. It requires a fast, efficient operating system to facilitate communication, make split-second changes to the merchandise display and ship perishables.

Garden.com stands at the heart of the complex online operating model. The company’s only job is to make sure all the parts have what is needed to work right. Garden.com does none of the plant growing, order taking, picking, packing, shipping or returns. It is merely the face man.

Garden.com works with more than 83 vendors to provide its myriad products. The growers are not only responsible for providing all the live plants, tools and furniture, they also handle fulfillment from pick to ship.

Using Trellis, Garden.com’s proprietary network of servers and intranets, vendors download pick-and-pack slips and a mailing label at their location seconds after an order is placed. The system even sends an e-mail to the customer once the vendor completes the fulfillment.

A catalog could not possibly keep pace with the intense inventory fluctuations or constant communication needed to pick and ship thousands of SKUs of perishables. However, a Web site can be updated instantly and already operates on an electronic level.

Internet Shapes the Catalog

Garden.com’s business model and its dependence on the Internet are what shape the catalog. Knowing that the catalog shouldn’t resemble a Web site or a traditional catalog, the company struck out on its own to create a remarkable catalog that picks up a little of each genre.

From merchandise to copy to photography to design to call-to-action, the Garden.com catalog is an entity unto itself. And while Sharples says that creating a catalog isn’t that different from running a retail Web site, she admits that her first stab at the catalog was from “gut instinct.” Sharples fortunately has several people on staff with cataloging backgrounds, including experience with multi-channel retailer J.C. Penney.

Merchandising the catalog is a struggle for Garden.com.

“The most challenging [aspect] for us as a company in doing a catalog has been the demand planning. Online you can switch out products that are gone, in the catalog world you can’t,” says Sharples.

To compensate, Garden.com uses inventory prediction models, but still has to plan intensively in advance.

“But because we are really creating a national resource of one-stop shopping when we promote something, it is in stock,” she says, emphasizing that nothing ruins the customer experience more than out-of-stock products. “It forces us to think about what we will promote much further in advance. For the catalog we have to have a lot of one thing. With the online store, you can have more moderate amounts and keep switching them out. You are dealing with live goods that need to grow one year in advance, so [with the catalog] we have to say ‘grow 25,000 of this one.’”

The company completed its first catalog in three months. Because Garden.com has access to more than 2,000 stored photos, it can produce a catalog in much less time than traditional catalogers. All photographs for the Web site, the magazine and catalog are done with the other media in mind. Photographs are digital, allowing them to be altered fairly easily.

Garden.com does the catalog entirely in-house using its own copywriters, photographers and designers. The creative staff is shared for all marketing projects. When the catalog model started to take off, Garden.com simply reallocated duties to more effective marketing campaigns instead of hiring more staff.

“I think the biggest reason we do it in-house is we are trying to reinvent the garden industry and we want creative control to make sure brand is consistent and ensure that customer service is top notch,” says Sharples.

Garden.com’s catalog layout is highly unconventional. The company spends quite a bit of space selling itself rather than products. The spring edition takes the phrase “Top Millennium Picks” from the Web site and strips it across the cover to resemble the site. Garden.com devoted the first two inside pages to driving readers to the Web site.

“The garden of your dreams! You can have it all delivered right to your garden gate. Only Garden.com can make it happen. Just hop on the Internet to shop our full selection of gardening products. We offer more than 20,000 plants, seeds, tools, accessories, furnishings, garden decor, and more. Come garden with us!”

Down the right hand page is an explanation about plant arrival by mail, which is followed by nine Web addresses that drive traffic to specific types of plants or accessories. Mind you, not a single thing has been offered to the consumer yet.

Throughout, the catalog introduces each product type with a full-page photo of a flower on which no sell-copy is placed. Overall, there are about six products per two-page spread—very low compared to other catalogs.

“[We try to pull them online so they] wouldn’t be looking at 25 perennials but at 75,” says Sharples about the continual drive to the site. “A lot of traditional catalogers don’t understand why we take the first two pages not to maximize sales on the catalog, but trying to maximize the number of customers —we are trying to sell them on why [to go to the site].”

There is no formula for creating a catalog to drive traffic.

“We took what we had learned from direct mail and magazines, to be honest. The Christmas catalog was an experiment. We just tried it. We used a lot of gut instinct. They’ll tell you a lot of things won’t work, but there are some that worked really well. A lot of us came from channel marketing. We used it to do these things,” says Sharples.

The Christmas catalog offered 20 kids’ products, but sidebars promoted more than 100 gifts for kids online. Sharples says traditional catalogers aren’t sourcing 80 additional products that aren’t in their catalog and that required a new way of designing and copywriting for the catalog.

Garden.com has fairly sophisticated tracking methods to determine how catalog-driven shoppers place orders. Unlike traditional catalog shoppers who simply input an order code to specific products, Garden.com purchasers go to specific plant sections and shop around. They tend to place their original catalog orders but also pick up a couple other varieties that aren’t offered in the catalog. This is a good indication that the catalog is doing its job. Sales were up 236 percent for the first quarter of 2000.

Garden.com doesn’t have a plan for the longevity of its catalog. But Sharples said it will never replace the Web site as a revenue generator or become one itself.

“The Web site is the bricks and mortar of the company. It has content, community and commerce, there is a lot more on the Web site than purchasing. Are all of those things likened to sales?—yes. But the catalog is a catalog. It doesn’t have a lot of articles, no community, no interactivity; it is just a catalog. With the Web site they realize how much cooler it is and how much better the quality is online—[hopefully] pulling them off-line to online.”