At first glance, Guild.com is a pretty standard e-commerce business. The Madison, Wisconsin-based site is a fine arts and home decor retailer, selling original works by about 650 artists across the country. The site's shoppers browse among its collection of oil paintings, decorative glass sculpture and handcrafted furniture.
But while an online arts site is not unique, at least one factor sets Guild.com apart: The site's average purchase price, according to Guild.com founder Toni Sikes, is in the $500 range.
The $500 figure cannot be independently confirmed because Guild.com is privately held. But a perusal of the site's prices, like an oil painting for $750 or a Japanese paper chandelier for $800, makes it clear Guild.com reaches an affluent audience.
Jonathan Gaw, e-commerce analyst with research firm IDC, notes factors working against Guild.com. "There is a sense of insecurity about high-end online purchases," he says. Furthermore, prices of high-end items must be lowered to sell online. "People think 'If I can get everything else online at a discount, why shouldn't I get a discount on fine art online?'" Gaw says.
Yet, maintains Sikes, "Our average order value has been amazingly consistent."
A Brief Partnership
Guild.com's software infrastructure plays a key role in its success as an e-tailer. But to build its advanced e-commerce platform the business had to take some twists and turns.
Sikes founded Guild.com in 1985 as a catalog-based business aimed at interior designers and architects. She launched the site in 1998 with help from outside investors just in time for the Internet boom. Under the wing of venture firm Benchmark Capitol, Guild.com raised $40 million.
Guild.com's cash reserve made it an attractive acquisition target for luxury gift site Ashford.com, which acquired Guild.com in January of 2001. The boom was collapsing, however, and the merger was short-lived. Just eight months later, Sikes again raised venture capitol to buy the company back.
"It was a wild and crazy couple of years, but it didn't take us very long to realize the expectations we had about e-commerce were not going to be met," she says. From a high of 98 employees, Guild.com now has 31.
Guild.com's Ashford partnership, though brief, gave it essential technical expertise. "The Ashford founders were technology guys, and they developed some pretty spectacular stuff," she says. "I don't want to say we 'stole,' but we 'appropriated' a lot of the ideas from a company that was much more technology driven than we were."
"We spent a lot of VC funding on developing a back-end infrastructure that allows us to run a pretty complicated little business all through the Internet," she says. Originally built with Microsoft software, Guild.com is now powered by a proprietary software engine built on an Oracle foundation.
When a Guild.com shopper places an order, it's routed into the site's customer relationship management (CRM) tool, Sikes explains. The credit card is charged and a purchase order is automatically generated to the artist. (Artists keep their own work until sale and pay a 50 percent commission to Guild.com.) The order is then routed to the site's extranet.
The Guild.com extranet allows artists to log on and complete the sale with a single click. This generates a packing slip, notifies UPS for pick up and creates a tracking code for the customer. "All this happens within our system so we're billed for it and can track it all the way through the process," Sikes says.
"We can handle huge volumes of orders with 650 artists pretty seamlessly with very little human intervention," she says.
Two Million Glossies
Catalogs continue to be a major sales driver for the business. Guild.com sends out 2 million catalogs per year, spread over five mailings, at a unit cost of 70 cents per catalog.
Sikes calls catalogs "probably the single most effective thing we do" to reach Guild.com's affluent customer base.
To improve catalog sales, Guild.com once again turns to technology. It uses database company Abacus to fine-tune its mailing list. Guild.com compares its typical customer profile with Abacus's database, which includes mailing lists from the likes of William Sonoma and the Museum of Modern Art. Using a set of about 125 attributes, Abacus searches the database for the most likely customers for Guild.com.
This fine-tuning of its mailing list enabled Guild.com to decrease catalog circulation, which Sikes credits for much of the twenty percent cost cutting Guild.com did in the last year.
CRM Tools and Paid Search
Having high quality photos on the site is a key sales driver, so Guild.com takes special care with this. Guild.com requires artists to provide excellent photos of their work. Additionally, the site has a full-time photo artist devoted to making the photos look compelling, from meticulous scanning to color correction.
Another tool the site uses to drive sales is CRM experimentation. Guild.com works with a Web analytics company called FireClick that provides in-depth data on how shoppers use the site, including complete lists of how each user navigates through the site.
Guild.com uses this data, for example, to change how the main page for its Paintings section is presented. Depending on what category of painting is most clicked upon, the site will rearrange the page's top four supporting graphics to further promote this.
"Right now, Abstract is far and away the most clicked on, Figures is second and Landscapes is third," Sikes says.
The site is also planning on experimenting with changing the category "Paintings Under $750" to "Paintings Under $500" and measuring change in click-through rate. One key CRM finding that Sikes has discovered: Anywhere you put "Best Selling," will be the most frequently clicked thing.
Guild.com also buys keywords in search engines, but only as the holidays approach, as these fourth-quarter buys pay off, Sikes says. Rather than focus on paid keyword buys, the site is working to improve its unpaid listings. "We've spent a huge amount of time these last four or five months working hard to make our site more searchable," she says, noting that the site focuses on Google results. Guild.com currently gets about 150,000 unique visitors a month, Sikes says.
As for Guild.com's overall revenue, Sikes declined to comment, though she claims the business is on track for a 35 percent revenue increase over 2002. "We are good and solid," she says.
Paradoxically, Sikes sees a value in Guild.com's tighter budget a contrast to when the business was awash in venture capital. "To a certain extent, the money was a set back to this brand new baby industry. None of us had any idea what we were doing. While it was fun to have a lot of money, to an extent having enough money to try everything hurt us."
"When you're broke, you have to focus on the things that work and make them work better so you can survive. When you've got plenty of money, you can say 'Oh let's try this, let's try that,' and we really didn't do anything very well."
"Now we're kind of like teenagers. We're still young and we don't have all the answers yet, but we're getting smarter every day."
Adapted from ECommerce-Guide.com.