A Chat With October’s Profile, Peter Cobb, co-founder/senior vice president, eBags

Catalog Success: Where’s your company headquartered?
Peter Cobb: Denver, Colorado. Greenwood Village, technically.

CS: What are your catalog/company customer demographics?
PC: We sell 520 brands of products, everything from luggage to backpacks to handbags to laptop cases. Five hundred and twenty brands, 36,000 bags. So, there’s such a wide variety. And in a day we’ll have 100,000 visitors to our site. I’m saying all this because it’s hard to pinpoint. It’s about 70 percent women; moderate to upper income — household income around $82,000; average age, and I hate using averages because we have retirees buying luggage for retirement and kids buying backpacks for school, but that 30 to 45 age range is kind of the key sweet spot. But we know we do really well with 18- to 30-year-olds, with Dakine and Billabong and North Face and JanSport and Nike and ladies handbags and all that. Educated, professional … it’s about selection, 36,000 bags, and of course convenience.
In our category there’s no Bags R Us — it’s a very fragmented market. If you’re looking for luggage, you may go to a luggage specialty store. If you’re looking for a backpack, you may go to a Big 5 or Oshman’s or Sports Authority. If you’re looking for a handbag, you may go to Nordstrom or Neiman Marcus. So you’re kind of all over the place, but at eBags it’s one-stop shopping.

CS: What’s the primary merchandise offered in the catalog?
PC: I’d say that we have four major categories: handbags, luggage, backpacks and laptop cases. Those account for pretty close to 80 percent of our sales. Handbags are a great example, and this gets to the point why I think eBags is successful. We have over 200 brands of purses and handbags; over 12,000 individual SKUs. So if a woman says, “I just want to shop for myself,” maybe browse at lunch while she’s having a brown-bag lunch at her desk, she can click on eBags and scroll away and shop for over 12,000 handbags.
But I want to say, it’s really important to us that it doesn’t stop there, because it’s not just like flipping through pages in a catalog. We try and really advance the experience. An example of that is we have an area called “On the Streets,” where we find emerging handbag designers that can’t make it into a big-box department store — Neiman Marcus or a Bloomingdale’s — but you may find them in SoHo in New York City or the Highlands area here in Denver or Jackson and Fillmore in San Francisco. We find them and have them come onto eBags. We do a video of them; just tell us a little bit about how you got your start and your inspiration, and why your handbag designs are different from everybody else. They send us copies of where they’ve appeared in Vogue or Cosmo or Lucky magazine and we put those in their own personal boutique.
So all of a sudden, this small little designer who can’t really make it in, and thinks she’s the next Kate Spade but no one will give her a chance, we have over 80 of them on our site. That’s what the Internet’s about: discovery. That’s an example of why someone would shop at eBags — the woman in Des Moines or San Antonio or Boise, Idaho can see the same things that are currently in SoHo in New York City.

CS: How many total SKUs does the company offer?
PC: Thirty six thousand.

CS: What’s the average SKU count in a catalog?
PC: Two hundred and fifty.

CS: How many times a year is the catalog mailed?
PC: Four times a year. We’ll do around 4 million in circulation. I’ll say too that that world is changing, where there’s more segmentation and there’s more targeting. So I think it’s four [million] today, I think it will be changing in the future, especially as we have the ability now to send out handbag-specific catalogs to those women that have bought multiple handbags.

CS: What are your annual sales?
PC: We’re private, so we don’t release that. But I will say, for instance, this last quarter our sales were up 26 percent. This last month orders were up for eBags.com 27.5 percent in the month of July. We really feel like things are going well. We’re always paranoid about looking over our shoulder, but we feel like we’ve kind of carved out a category leadership within the bag space, and our proud of what we’ve built here at eBags.

CS: What’s the sales breakdown via the different channels, catalog and Web? And do you operate any retail stores?
PC: No retail stores. This is one of the issues that I think we all face with the catalog business. And that’s that it’s really challenging … you don’t know whether the sales are coming from catalog anymore because we no longer ask people to put in key codes. It’s challenging: Are they buying because they got the catalog or these happen to be the people that we e-mail as well?
So our catalogs, we really look at it as a 360-degree holistic program of let’s figure out our best customers, do some segmentation. For instance, we just sent out 750,000 back-to-school catalogs, and those are for people in households that have purchased backpacks within the last several years. I have three kids, so I know every back-to-school period it’s … kids just get new shoes, new clothes and their backpack. And that’s really what we’re targeting.
But to your question, we’re primarily online and the catalog is a small portion of that. We just hired a catalog manager, a direct mail and marketing manager in the last two months. Her job will be to continue more of that offline direct marketing.

CS: How many employees do you have?
PC: One hundred and thirty. One hundred and twenty here in Denver, we have 10 in Cambridge in the United Kingdom that work for our European operations, and then one in Tokyo, Japan, where we have a site. We also run the sites globally for Tumi.

CS: When was the company established? When did you begin mailing catalogs?
PC: We formed the company May of 1998, launched the site March of 1999, started doing catalogs around 2002.

CS: What were the deciding factors for eBags to begin mailing catalogs?
PC: Every distribution channel, retail channel, has its obstacles. And one of them with a Web site is it’s really kind of faced with something that’s similar to a brick-and-mortar store, in that you have a certain limited window space. Coupled with that is the fact that now more than 50 percent of our traffic goes right into a specific category. Let’s just say if they come in from a keyword, a Google keyword. They keyword wallets or mens’ wallets or kids’ backpacks or Nike duffel. The way the Internet works now, it takes them right to Nike duffel.
When you’ve got 520 brands, 36,000 products, there’s people coming to our site that may not even know that we have Tumi luggage or Michael Kors handbags or other products. So we felt like the catalog was a great way to show people the breadth of our assortment. That’s really why we started it — to show them, and also to display the fact that we’re getting probably 20 to 40 [new] brands every quarter. It’s a nice way to show new brands that are coming onto the Web site.

CS: Was this your first venture into the catalog business?
PC: I’d done direct mail in the past; I ran the marketing for Samsonite. We’d done some direct mail, but this was really more from a consumer catalog, this was the first time.

CS: What initial challenges did eBags struggle with breaking into the catalog industry?
PC: I think the challenges for all of us now are how do you … the Internet, regardless of what people say and think, is still a direct marketing channel. And everything on the Internet, online sales, you can attribute to a certain source. With a catalog, it’s difficult to do that. With offline advertising, it’s difficult to do that. If you place a print ad in People magazine or Lucky magazine, you don’t really know the people that are driven to your site because of that ad you ran. And the catalog I think has some of those same aspects. So that’s one part of it — figuring out the sales attribution.
The second part of it is the Internet’s dynamic. We have products that come on the site that come off the site daily. With a catalog, you’re locked in on a 90-day or 120-day period, because of the nature of a printed piece. Not only putting it together, but also it sits on a coffee table and somebody may pick it up a month later, two months later and go in and purchase. So, not only from product availability, but also pricing. And there’s promotional pricing that goes on — there may be free shipping. So there are some issues sometimes with different consumer offers floating around, one via Internet, one via catalog.
And then I think rising costs makes it more and more challenging. It puts a lot more demands on those of us putting together catalogs. You just have to be smarter — things like list rentals, paper and postage costs.

CS: Has anything been done in particular at eBags to offset the rising costs associated with mailing catalogs?
PC: Well, our last couple of catalogs we’ve actually teamed with Shoes.com, where the first half of the book is eBags.com products and the last half of the book are kind of complimentary Shoes.com products. The nice thing about that is sometimes you have the same brands: North Face has bags, they also have shoes; Nike, has bags, they also have shoes; Columbia has bags and shoes; Michael Kors, Stuart Weitzman, Kate Spade, Cole Haan, etc. So it’s somewhat compatible from that end of it.
And in this regard we can share in the cost of the marketing vehicle and also share our lists. Shoes.com is now able to send a catalog to our best 300,000 to 400,000 customers, and we have access, at no charge, to Shoes.com customers. To the Shoes.com customers, Shoes.com has the first eight pages or 12 pages or 16 pages, whatever the book size is. We reverse it to Shoes.com; they have the cover, they have the first 16 pages, we have the last 16 pages. That’s a way where you’re basically splitting the cost and getting it down to something that’s kind of maybe more easy to hit your return on investment hurdles.

CS: Did this relationship with Shoes.com begin this year with your back-to-school catalog?
PC: We actually did it last year, in 2007.

CS: What about the catalog/multichannel industry appeals most to you?
PC: I love the fact that you can … this skips back again to the fact that at eBags.com we have 36,000 products, 520 brands. I think in the bag world, people know a few of the brands, but cannot imagine how you can even have 520 brands. What I enjoy is the fact that people will get a catalog and page through, or visit on the Internet, and over-and-over be surprised and delighted with “Isn’t that cute” and “That’s cool, I’ve never heard of this brand.” And in this world of ours, if you go to a brick-and-mortar store, for instance that sells luggage, it’s a sea of black. The ability of the Internet and the catalog allows you to display different colors, different prints, Disney character products, on and on and on. And all of sudden it turns a product which maybe some people would consider utilitarian into something that’s more of a style or fashion purchase.
It’s always been like that for handbags — well, I won’t say always, but the last 10 years. Definitely the inventory of products that women have has grown incrementally, but now that’s moved out into the luggage world, into backpacks, into duffels, where people maybe don’t buy additional pieces because they’re worn out, they buy it because they’re either bored or it’s out of fashion. That’s something that’s been very rewarding for us. When we started the company in 1998, we believed in this phenomenon. You know, you saw it happening in things like tennis shoes. When I was a kid, I had one pair of tennis shoes. Then Nike came out and said, “No, you got to have cross-training shoes and you have to have basketball shoes and you have to have running shoes, and all of a sudden I had eight pairs of tennis shoes in my closet. That’s really happening across the board and we really love playing a part of that in the bag world. There’s women that have 20, 30, 40 different handbags because they want to match it with certain outfits or wear it for a certain season.

CS: What sets eBags apart from its competition?
PC: One of our values is to be pioneering and resourceful. We have five values actually, but pioneering and resourceful … when I spoke to the fact that we have 80 emerging designers in our area called “On the Street,” that’s something that’s new and fresh and different, and something that isn’t duplicated on other sites. And it’s a reason for being for eBags. Now we’re able to put those in — we send out a million e-mails a week, that’s our database — and there’s women that want to see who’s this new, fresh designer. So rather than just pummeling them with 10 percent off and free shipping offers, we’re able to feature new designers. Check out the new video on a new designer.
The other part that we’re really proud of is from day one we wanted the customer to play a role in making recommendations on our site. We have over 1.5 million customer reviews on our site. We were one of the first to incorporate that, and we have products … like the JanSport SuperBreak for instance, has over 4,000 customer testimonials on that one product. Sadly, I think in brick-and-mortar retail these days there aren’t knowledgeable sales associates across the board. And in a way, we have 1.5 million sales associates — customers who have actually purchased, used and been willing to provide feedback on the product: how it was used, where they took the product.
And then the other part of that is we’ve expanded that and we have 100 videos on our site. Those range from product demonstrations to videos about the brand to the founder of JanSport talking about how he started the company 40 years ago. We’re really the first Web site to incorporate kind of a video management system. It’s kind of YouTube meets e-commerce, where you can go to our video tab and you can click on, “I want to see highest rated videos,” “I want to see favorite videos,” “I want to see most viewed videos,” “I want to make a comment,” “I want to share,” “I want to embed it into my MySpace or Facebook or Digg or Delicious.”
You don’t see other sites kind of going to that extent. We’re proud of that, because we want to make it entertaining; it isn’t just a catalog online where you’re flipping through pages. It’s gotta be more interactive than that. We really believe that. And that gets to being able to leave a comment on a video, or being able to leave a comment on a product. And to have 1.5 million of those on our site says that people trust and feel like, “Hey, it was useful for me and valuable for me in making my purchase decision, now I’m going to … I want to leave my own personal post-it note next to the product that I bought, because it helped when I made my purchase.”

CS: Over the course of your career, is there one mistake you made that has stood out? And if so, how did you recover from that mistake?
PC: Well, in 2004 we bought a footwear site and said, “Boy, we’re doing this in bags, let’s duplicate it in the shoe world.” And we bought Shoedini.com and ran that for three years, and just realized that, you know, our passion, our core competency is bags, and there’s nothing wrong with that. It’s a $40 billion retail category, globally. When you start diluting your efforts you sometimes open up that door for losing your leadership position. That was a mistake that I think we made — getting into the footwear business. There’s guys out there, from Zappos or Shoes.com, OnlineShoes.com, that have that market. They do a nice job at that and they’ve got an eight year head start. And you know what, they’re the experts in that category, let them carve it. That was kind of something that we learned early on.

CS: When did eBags divest itself of Shoedini.com?
PC: October of 2007 we sold our site, which at the time we renamed to 6pm.com, to Zappos and said, “You’re the leaders in the shoe world. We’ve got a site we’re very proud of, it has a lot of the features that I talked about on eBags.com, but we’re getting out.” And we had a quarter million shoes, 250 brands; we were really happy where it was, but just the resources, the time, the money, the mental energy that it takes … if you’re not one or two in a category, you shouldn’t be in it. That’s kind of the old Jack Welsh philosophy, and I subscribe to that, because to try and chase the business and try and compete with Google keywords and so forth, it’s just too competitive.

CS: Is there anything done at eBags to keep a light and fun environment for employees?
PC: It’s definitely a casual, work hard, play hard atmosphere. There’s things like a softball team and a soccer team, and we try and do beer Fridays, company picnics. Once in a while we’ll have dog Fridays, where dogs can come in; you just sign up and bring your dog in.
Yesterday was a great example, where we had somebody that just joined the company as a handbag merchandiser, and a message went around, “Come meet the new handbag merchandiser at this Irish pub across the street.” That type of thing. And the nice thing was that there were people from operations there, people from Web design there, merchandising, marketing. It’s really fascinating. When you go from zero to 130 people, it’s pretty easy to lose that small company, intimate feel. So you really do need to pay attention to the culture of the company, and communication is a big part of that.

CS: Have you had any mentors or been a mentor to anyone during your career in the catalog/multichannel industry?
PC: I really haven’t, and I try to because I have more experience than I care to share. It’s adding up fast. The great thing at eBags is that I think we give young people an opportunity. There’s a group of us that mentor some of the newer, younger people, where this is maybe their first or second or third job and they’re still in their 20s. It’s such a fascinating area that’s moving quickly.
One of the things that we always tell new people coming in is a.) don’t be afraid to fail; if you’re not failing some of the time, then you’re not pushing hard enough and b.) no one has ever done what we’re doing before; there is no playbook to follow. There’s no textbook you can get from a business school that says, “Here’s how you build the world’s best bag Web site.”
It’s a lot of hard work and intuition and testing and curiosity, picking up nuggets from other areas, seeing something that you like. I mentioned it on YouTube, seeing the way that this whole video management system works on YouTube and saying, “Well, why can’t we do that on eBags?” No one’s ever done it before, you can’t even buy it off the shelf. Let’s build something. Those are the types of things that we try and instill in the eBaggers.

CS: What are one or two factors that you think are critical to future success at eBags?
PC: We have to focus on the customer shopping experience, making it easier, more interesting and compelling — a reason to shop at eBags. I think an interesting thing has happened in the last several years: Back in 2000 and 2001, there really was a nuclear winter of people just trying to survive. Everybody built a foxhole and you just got down and tried to make your cash last as long as you could. People weren’t experimenting. You had to survive and drive traffic, but it was really cost containment.
Now everybody’s peeped out of the foxhole and realized, “OK, now this is a time to grow and expand and offer different things.” In our world, we’re competing against small mom-and-pop’s, but also some of the big boys, the Amazon’s and eBay and Overstock and Macy’s and the department stores. Some of these guys sell bags and they’ve got deep pockets. So for us at eBags, we’ve got to be super nimble. We’ve got to really get our ear to the ground as to what the customer wants, and deliver it before one of the big guys do. We have something on our site, for example, a laptop case finder, where you key in the laptop that you own and hit go and it searches and brings forward all of the laptop cases that fit that laptop. You’re not going to see Kohl’s or Wal-Mart or Penney’s building out features like that, probably, because they’re just not thinking about bags 24 hours a day like we are. Those are the types of things that set us apart.
Another perfect example is, starting last week, the TSA at airport security is allowing certain bags that are checkpoint-friendly, where you don’t have to take your laptop out of a bag for screening. I actually had this case where I took it out, like an idiot got to my plane and realized that I never picked up my laptop, and had to run off the plane, go get my laptop and I missed my flight. Fortunately I was going Denver to L.A., so an hour later there was another one. But I was like, “Oh my God, what if I was going to Europe or something.” Now they have bags, it just started last week, where you can keep your laptop in because it’s a special pocket that has no other pens or anything — it’s just there for the laptop and it’s TSA approved. And eBags was the first company to offer that online. It’s called CODi.
eBags is the one that’s offering this product first, has a video on how it works and why it’s important, what TSA is looking for, and then did a press release to tell the world that TSA has just approved these bags (it was August 16) and go to eBags.com to buy it there. Our feeling is you’re just not going to have some of these big guys. They’re going to wake up and realize, “Oh gosh, we need to have this TSA checkpoint-friendly bag also.” But we’ll have already been out there, people will have told their friends. We want to be as viral as we can. We have to be scrappy. And we’ve got to be the first because we will not be the biggest, at least in that kind of overall, I’m talking vs. Penney’s and Sears and Wal-Mart and some of these big guys. But we’ve got to be the best in our category.

CS: What are your hobbies away from work?
PC: I love to bicycle; if I have an hour, that’s what I’ll do. Working out, bicycling and playing golf. And I have three kids, so every nonworking hour, as I just e-mailed my wife, “What do you want to do tomorrow?” I’m going to get up and bike for an hour, and after that I’ll do whatever you want me to do with the kids. Working out, I love wine, and really, I love the Internet. Nothing is better to me than sitting in my favorite chair with my wireless and cruising Wikipedia. There’s a joke in my family that I can’t even sit and watch a movie without in the middle of the movie it’ll be about a certain topic and I’ll just have my laptop there and I’ll Wikipedia, you know, Thomas Jefferson. And they’re like, “Dad, what are you doing? Are you using Wikipedia again?”
I just love how the Internet brings this knowledge to immediate gratification, whether it’s information and knowledge or weather or restaurants or products, in our case, bags. I have three kids and two of them have iPhones before I even do. We’re training a whole segment of the population, meaning kids, that they can get it and they can get it now. And we as Internet retailers and catalogers need to understand … we better wake up and realize that expectations are increasing amongst the consumers out there.
I was shopping for something, and you know how they sometimes have catalogs and they say “expect four to six weeks delivery,” which used to be when I was a kid. Well, that’s just unheard of now. That’s now grounds for, “I’m not going to purchase.” I’m not going to wait four to six weeks, even if they ship it really in a week, but they give themselves that space for legal reasons. We ship within, really kind of a day. It’s gotta be out the door and on its way to the customer.

CS: Have you given any thought to what you would have done for a career if you hadn’t gotten involved in the catalog/multichannel business?
PC: At the time, I was very happy as a classic brand manager in consumer product goods. Everything from the golf world to sports products to Samsonite, and that was really the path that I was on. I had had 20 years of … I went to Kellogg Northwestern, and was trained in kind of classic brand marketing. There’s plenty of jobs there and it’s really kind of a nice path to be head of marketing at various consumer products goods companies.
But I had a life-threatening illness, cancer, rhabdomyosarcoma, in 1997. That’s when for me — I was 37 and a 25 percent chance of living three years — I really said if I make it beyond this, I’m going to take more chances and I’m going to do something different and I’m going to kind of make a lasting mark because I realized you only have one go at this. Slugging it out in a 10,000-person company where you’re kind of one of many was a comfortable life, but I realized I wanted to do something that was different, something that was more challenging and rewarding.
As I was starting this out my wife said, “What if this fails?” I all of sudden was able to say, “If it fails, it fails, and I get a job back in consumer product marketing. So we probably lost six months in our house.” By the way, it was like, “What do you mean our house!” I was like, “Well, I didn’t tell you the office lease is tied to my house. But we can get another house. It may take a little while, but …” Those are the types of things I think everybody’s got to look at their own personal situation, and some people are a little more risk averse and some people are kind of taking some calculated risks. I think now I enjoy those situations where your back’s against the wall and you really have to think creatively. I kind of think that’s what gets me going everyday.

CS: I saw your bio on eBag’s site, that was quite a remarkable story of your battle with cancer.
PC: Well, what I didn’t write in there either, my wife at the time, we started this in 1999, she had had breast cancer and got it back and passed away in 2001. So for about a two-year period there, from ’99 to 2001, I was kind of juggling a start-up and a wife who had terminal breast cancer. My wife and I had a son, so it’s those things … I think it puts things in perspective and it challenges you as a human being to kind of make a mark and do the right thing. I’m a big believer in integrity. Sometimes you just have to do what’s right, not only for your company, but for your family.