Wednesday, September 06, 2006

This Weekend Only! And Next Weekend! And Next!...


$1 Shipping*
Ending Tomorrow!


That email, from an online retailer, appeared in my inbox last Wednesday. And while the prospect of getting something as big and bulky as a bed, for example, delivered to my house for a mere $1-with-an-asterisk might sound appealing, I paid no attention to it.

Aside from the fact that I don’t have any particularly pressing needs in bedding, lighting, jewelry, furniture or electronics—the categories highlighted in the email—the reason I paid no attention to it is that I’d seen the same kind of email, from the same web site, before.

In fact, it was just weeks earlier that I got a similar email promising $1-with-an-asterisk shipping from that web site, as a quick search of my never-discard-anything Google inbox disclosed. August 21st to be precise:

$1 shipping*
This weekend only!

And that was a month after the previous “This weekend only!” $1-with-an-asterisk shipping offer hit my inbox, on July 19th.

In fact, I’ve gotten these “Last Day” for “$1 Shipping” emails almost every month this year:

June 21st: “$1 Shipping - Last Day.”

April 21st: “$1 Shipping – This Weekend Only.”

March 19th: “$1 Shipping – Ends Today!”

February 27th: “$1 Shipping – Extended – Today Only”

January 23rd: “$1 Shipping – Extended – Today Only”


Consumers are not this dumb—as Sam Walton, the founder of Wal-Mart, knew when he dropped the this-weekend-only! kind of promotions that drove mass merchandise retailing during the 60's and 70's and switched to everyday-low-pricing.

And consumers have become even less dumb thanks to the Internet, which provides pricing transparency never before easily available to the average shopper.

So why on earth a web site would blast-mail “$1 Shipping, Today Only!” offers month after month is anybody's guess.

While I have no specific insight into whether this particular web site’s repeated ‘one-time only’ offers are turning off, rather than turning on, buyers, the company has reported a marked slowdown in sales growth—from the 100% early last year to sub-10% currently—which management attributes to deliberately easing up on the marketing gas.

Meanwhile, the CEO has told Wall Street’s Finest that he has taken over the email marketing program, with no apparent impact on the repeated “Today Only!” $1 Shipping offers. These are his words from a recent conference call:

I've taken over the internal marketing personalization, email -- well we call it internal marketing as opposed to online marketing and offline marketing. So the website and everything related to customer analytics.

Sounds clear enough, until he goes into details later on:

And then the Teradata data warehouse, we have super sized it with a new system. I think I'll leave it to Teradata - they're going to announce some time soon what they've done here. But they have super sized the system and that's important for a bunch of reasons like we're now personalizing e-mails, but we had trouble personalizing more than about 500,000 e-mails -- we send nearly 10 million.

We have 22 million addresses, but we sent 10 million about three times a week. And we could personalize about 500,000. We're actually through some brands in IT group, I think, figured out a way to get about 2 million. But with the super size system we'll be able to handle a lot more and we're very glad we upgraded.

What all this means I have no idea, nor did any of Wall Street’s Finest follow up on what it actually meant, so I suppose it’s no surprise that this weekend another email arrived, with an even better deal than the recurring one-time only $1 Shipping offers:

FREE SHIPPING*
This Weekend Only!

But I’m not biting. Something tells me this isn’t the last “FREE SHIPPING”-with-an-asterisk “This Weekend Only!” email I’m going to see from this web site.

Oh, I almost forgot. The web site is Overstock.com.



Jeff Matthews
I Am Not Making This Up


© 2006 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

7 comments:

pondering said...

We have 22 million addresses, but we sent 10 million about three times a week. That is spamming at its finest. Now wouldn't Overstock due better spamming for Enzyite?

DaleW said...

Great analogy between Overstock and 60s and 70s discount retail. Overstock's rickety website, cheap promotion, poor merchandising, willy-nilly expansion, and evidently very shaky back-end feel very much like Kmart, Two Guys, Ames, etc. circa 1975.

And what the heck is PB talking about on that transcript? He needs help.

Lee_D said...

It's not just Nigerian Finance Ministers and Romanian viagra hawkers that spam. An apalling number of companies that sell actual products lean heavily on bulk emails that use alarmist buzzwords, condescending attitudes and never-to-be-repeated offers. I can't say how many spam I get where the GREAT DEAL that will NEVER be repeated is prefaced by the greeting "Dear Friend,"

Yet, somebody must be buying this crap, because if it didn't work, these hard sell email techniques wouldn't propagate. Granted, I would expect the closing ratio to be less than a hundredth of a percent, but a) with 500,000+ email addresses, it's still going to pay off and b)if you take a cynical view of human gullability, the closing ratio might be substantially higher. What a horrible thought.

bpl1000 said...

...well, OSTK isn't the only one. Other web-businesses do the same- in various other forms. Repeatedly.

However, the last time I ordered from OSTK, which was a long while ago, they had $1 shipping. Did they ever not have $1 shipping?

In my junk mail from various web-retailers, I am continually bombarded with discount-type-marketing. Which makes me wonder, if the economy is doing so great, do they have to be this aggressive? I'm sure there are multiple facets to this question.

Its_strange said...

I believe Patrick said this holiday will show postive earnings or atleast it will show OSTK has turned the corner...We will see .

They using the bulk email machine to alert the world about naked shorting ?

lenofushardsox said...

Why does something that you don't care about, don't own, have no intention of owning, bother you so much? Why does it take so much of your time? Why do you care? Move on.

Unpronounceable Cymbal said...

Ms. Pondering, based on the experience of my wife, I believe each of those email recipients opted in at some point. And I assume that each has the opportunity to opt out.

That's the opposite of spam.