Selling Memories and More Online
June 1, 2005
Selling Memories and More Online
By Carla Zanetos Scully
Internet retailing generates new revenue streams for candy makers and satisfies consumers who seek unique gifts and hard-to-find sweets.
Ever wonder if Sugar Daddy suckers, candy cigarettes or Wax Lips are still around?
There’s virtually no limit to the types of confections you can find surfing the web. Many candy companies are finding that e-commerce is an effective avenue of doing business, while several online retailers have built viable businesses selling hard-to-find candy brands.
One in particular has found a niche with retro candy. GroovyCandies.com started with one box of nostalgic candy in 1999 and has grown to a $2.3 million company, according to partner Scott Hughes, who says the company sells more than 3,300 non-seasonal and seasonal items from 150-plus manufacturers. “I’m selling stuff that people can’t get in their area,” says Hughes.
Depending on where you live, Mallo Cups are hard to find, Hughes says, yet there’s still a passion for them. Some of the more popular items at GroovyCandies.com are candy cigarettes, Atomic FireBalls, candy necklaces and Bottle Caps.
“We’re selling a box of memories when we sell one of these things,” he points out. “It was a simpler time, and everyone ate candy.”
Hughes says GroovyCandies.com has two markets: those looking for the hard-to-find items and those who want the convenience of shopping online. It may be cheaper to buy 300 York Peppermint Patties at Sam’s Club, he says. “But if you want the convenience of just having it mailed and you don’t care so much about the money,” his website is where to go.
CandyDirect.com claims to be the oldest Internet candy distributor still in business, according to its president, Steve Traino. The eight-year-old company, which sells all different types of candy—from boxed chocolates to novelty and retro items, has grown about 30 percent a year since its inception in 1997, with growth as high as 100 percent some years.
Customers can find all of the major candy brands at the website, including gift items in the form of candy bouquets and cornucopias.
Customers also can browse and purchase their favorite sweets at his 8,000-square-foot warehouse, located in Chula Vista, Calif. And the great part about e-commerce is it doesn’t seem to be taking business away from his brick and mortar store.
“I wouldn’t separate the two any more,” he says. “It’s just another avenue of doing business.”
E-commerce is the wave of the future, Traino contends, noting those who don’t participate are foolish.
“Although there’s always going to be room for impulse buying,” he continues, “there are people looking for specific types of candy.”
It’s about the clicks
So what makes for a successful online retailing operation? One expert in the field of fulfillment in backend systems says the website needs to be displayed in an environment that is appealing to the customer and must also be easy to navigate. “It’s all about the number of clicks so you don’t lose interest,” says Douglas Bushong, president of the Jay Group.
The Jay Group has a proprietary ordering system that generates order tickets in real time and processes orders so they can arrive quickly. With this ordering system, once the credit card is processed and inventory is reserved, a ticket is printed in real time allowing the product to be picked, packed and shipped out, in most cases, the same day.
“Those participating in e-commerce want same-day shipping,” Bushong notes. “With this integration, you’re able to achieve those goals.”
The company also provides software that controls product rotation, helping to ensure product freshness with a first-in, first-out system. And, in the event of a recall, this software has a lock-tracking system. Other software supplies packaging requirements based on the climate of the destination.
The more you can personalize, the better, adds Bushong. For instance, he recommends that websites offer gift cards, with the ability for customers to address the card, as well as offering gift-wrapping and customized gifts.
“Internet sales are up 47 percent since 2003,” he says, “where phone orders are down 48 percent. It’s most cost-effective to use e-commerce.” The greatest benefit of e-commerce, Bushong notes, is “to reach customers where the product is not available.”
Searching for success
And, once you have an effective website, you need to build a successful online marketing campaign through search marketing, according to Diane Rinaldo, retail category director for Yahoo! Search Marketing, formerly known as Overture.
Yahoo! Search Marketing sponsors searches for companies who bid on key words that can be readily found through search engines like Yahoo! It also provides advice on what text to write under the title and how to write it in the most effective manner to generate not just the most clicks, but the most effective clicks.
“There’s a tremendous amount of users who find what they are looking for through a search,” says Rinaldo. By using the right key words, she says, businesses can bring new customers to their online store. “It’s a very effective way to drive sales to the site.”
For instance, the word “candy” had 151,000 searches in the month of January alone, while the word “chocolate” had 220,000 hits. After Charlie and the Chocolate Factory, “chocolate gifts” had the next highest hits.
Similar words also will appear on the search engine. For example, when you key in “candy,” you’ll also get candy stand, candy store and chocolate candy. The same is true with the word “gifts.”
Sweet gifts from Hershey
“Gifts online is a huge business,” says Rinaldo. The Hershey Foods Corp. understands this philosophy, having both a corporate site at Hersheys.com and a gift-buying site at Hersheygifts.com. When Hersheygifts.com launched in 1999, the idea was to sell products that can’t otherwise be purchased through the mass merchandising channels.
Customers wanting to send a unique Mother’s Day gift or birthday card can send a two-pound Hershey’s milk chocolate card personalized with chocolate lettering for $18.95. Or, they can send a mix of Hershey’s and Reese’s miniatures surrounding a 1.45-ounce Hershey’s Kiss in a gold tin wrapped in a Thank You ribbon, with a personal message added to the plume of the kiss, all for $24.95.
“You can’t go and purchase it somewhere else,” says Judy Hogarth, senior public relations representative for Hershey Foods. “It’s unique. And it makes a great presentation.”
Although the company wouldn’t discuss sales or growth of its online business, Hogarth says its online sales don’t compete with its other retail markets because these specialized gift baskets, towers and containers just aren’t available anywhere except on its website and through Internet retailers like FTD.Com, or in its catalog.
Online sales aren’t eating up the offline sales, at least in the candy industry, says Rinaldo. “It seems to be complementary for clients straddling both worlds.”
Offline benefits for Russell Stover
Websites, in many cases, will drive sales offline, which is the hope of companies like Russell Stover Candies.
When Russell Stover launched RussellStover.com five years ago, its intention was to be used as an electronic signboard that provided information and directed traffic to one of its retailing partners. As the world’s leading manufacturer of hand-dipped chocolates and largest producer of boxed chocolates in the United States, mail ordering has been a way of doing business for many years, says Dave Copas, senior vice president of logistics and information systems.
It wasn’t until 2003 that Russell Stover enabled its web as an e-commerce system in order to sell over the Internet, he remembers. “Business has grown four-fold [compared to] what it was doing manually,” he says, projecting that it can double or triple in another year or so with a potential of $5 to $10 million in sales. “It’s been pretty successful, much more successful than we thought it would be.”
It’s doing so well, in fact, that the company is redesigning the website to include Weight Watchers by Whitman’s, one of its recent additions, noting the current demand for sugar-free products.
Russell Stover has two other distinct online buyers. “We’re getting a strong profile from people who are re-ordering by the case of something (that’s stocked at Wal-Mart or Kroger) but that they can’t find locally,” says Copas. The Kansas City, Mo., manufacturer would rather direct customers to one of the 90,000 retail stores it services, if possible, but will accommodate those who can’t find a particular product or retail outlet.
The online site also services those who need mass quantity unavailable at a retail location, though he pointed out the pricing isn’t different.
Internet sales aren’t taking business away from conventional retailing, Copas adds. If it did, the company probably wouldn’t be reinvesting in its website. As he points out, “You don’t eat your young.” n
Sweet Market Opportunity
Although statistics for online candy retailing are hard to find, the food category in general accounted for $5.1 billion of the total $144.6 billion U.S. e-commerce market last year, according to a study by Forrester Research Inc. The researcher estimates the online food market will reach more than $19 billion in sales by 2010, comprising 3 percent of the projected $331 billion e-commerce market. It also projects the 10 million online shoppers will increase to more than 44 million by 2009.
Internet Presence Sparks Growth for Godiva
Godiva Chocolatier began participating in e-commerce about 10 years ago, according to Kim Land, vice president of Godiva Direct, which encompasses the company’s catalog and e-commerce sales, which represent 12 percent of Godiva North American sales. Godiva launched the website to participate in e-commerce, provide consumers with brand knowledge and support its offline boutiques, but found there was a calling for party favors and gift baskets.
Most Godiva.com visitors are looking for multi-recipient gifts or convenience if they aren’t close to a boutique, says Land. It was Godiva’s objective to make the functionality of the website easy and quick for the customer, she says, so they’ll continue using it.
About a year ago, Godiva started a gift selector service online, she continues, where customers key in their budget and number of recipients, which prompts three gift ideas. Addresses also can be downloaded on the site so you don’t have to type in each one. “We wanted to make navigation very easy for you to choose a gift from Godiva,” says Land.
The second objective was to provide a chocolate guide online so customers can understand every piece made. And, the third objective, she says, is providing information about what’s going on in the offline boutiques.
The website “has had a positive impact,” Land says, noting that many customers first learn of new product lines such as the “G” collection online. “We drove a lot of traffic to boutique stores because of that,” she adds, noting that the website and partnership with Amazon.com supplements the overall business.
“We’ve seen double-digit growth in the last 10 years,” Land says, noting Godiva Direct is up 18 percent from last year. “It’s been a very fast piece of growth in our business.”