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The Quiet Giant

Scott Savitz, CEO of ShoeBuy, America’s second-largest footwear e-tailer, discusses why the site’s sales continue to boom— recession be damned.

 

“We are a quiet company and we become more in vogue whenever the economy is doing badly... During good times, people think we’re boring and anal. ”

“We are a quiet company and we become more in vogue whenever the economy is doing badly… During good times, people think we’re boring and anal. ”

Before I ask anything else, what’s on your feet?

I get asked that question a lot. Bally’s Caddo slip-ons that I bought off our site, of course, last month. I love them to death. They are a great pair of comfortable dress shoes but you can wear them with jeans.

Did you make the purchase at 2 a.m. like a lot of other online shoe shoppers?

Yes. I was actually checking out something on our new designer micro site, and I ended up buying three pairs.

Was the delivery OK?

It went great, and I kept all three pairs.

That purchasing experience is a reinvention of shoe retailing as the world had known it for generations.

Yes, this is certainly a different way to shop for and buy shoes. But I wasn’t as prescient as some people might think, as the idea really started from a friend who couldn’t find a good site to buy shoes for himself or his family. It became one of those crazy things where I looked into it and thought if we could partner with a bunch of great brands, have a really terrific selection and offer it in a convenient manner, we could have a terrific business. By solving a problem for him, it solved a problem for many more people. And it obviously gave the brands a friendly way to put their products in front of millions of shoppers. The process certainly has created a lot of the success at ShoeBuy.

Back then, did you ever envision your site becoming what is now: with more than 1,000 brands, 800,000-plus products and more than $3.5 billion in inventory?

You build these types of businesses because you think it could be something big or a lot of fun—otherwise, you probably wouldn’t get excited about it and give it a try. Interestingly enough, the business that exists today is exactly the one that we envisioned. We have this mantra of putting the customer front and center in everything we do, so we decided to just continue to listen to the customer and keep trying to create a better shopping experience. That hasn’t changed in the 10 years since we launched ShoeBuy. We keep adding brands—last September we launched a designer store featuring 200 labels—we added an iPhone shopping app, and soon we will launch a mobile shopping site that will work across a variety of smart phones.

We are extremely analytical in looking at how our customers tell us they want to shop. That has influenced things like our advanced search function, which allows browsers to narrow their selection by size, width, color, price, heel height, country of origin—you name it. Additionally, in the fourth quarter, we launched a sister site called Product Express, which highlights more than 10,000 products all with free overnight shipping. We also rolled out new product categories our customers said they were interested in like sunglasses, watches and flowers, and we are aggressively adding activewear and outerwear. It may sound crazy, but we do hundreds of thousands of end-of-transaction surveys, questionnaires and site feedback, which are all ways to hear what the customer is saying. We even bucket calls that come into customer service to hear what they may be having trouble with. By listening, you are letting the customer dictate what is important. These concerns are an evolution, and you change based on what your customer tells you.


Sounds like you would have made for a good detective or reporter.

I’m still trying to figure out how to sell shoes (laughs). But we are as metrics-obsessed as anyone. We just feel like our customers are a lot smarter than us. It’s not like I’m a rocket scientist. What we’ve done is simply let our customers make us much smarter. We retrieve data, execute on it and see if it translates well to the customer. If we are wrong then we pull back quickly. And we are wrong more often than we’re right. We are just very quick to identify the mistake.


In your case, the customer truly is always right?

The customer is king, without a doubt. I still hear today how some retailers think they know more than the customer: ‘We know what the customer should be buying, our customers look to us to tell them what they want.’ I would disagree and recommend always listening to your customers. You should be getting smarter from them so you can become much more relevant, so your customer says, ‘Oh my god, they knew exactly what I wanted.’ Like with Product Express—we used to hear customers say, ‘I love ShoeBuy. The only time I don’t use it is when I need the product now.’ We launched the site, shot them an e-mail about it and then we got the ‘Oh my god’ reaction. Well, we did it because you told us to!


Still, some of the current stats—for example, surpassing 8 million site visitors in December alone—must go way beyond what you first envisioned.

Yes. You get crazily immersed in this business—addicted, actually—and in the beginning you are in hyper-build mode and don’t take a second to look back on it. But we absolutely take a second now and say, ‘I can’t even believe it.’ We were the second-largest seller of shoes online in the U.S. and the seventh most-visited apparel site in the country last year. But did I think we would see 8 million visitors in a month? No. It just goes to show that if you are resonating well—whether it’s 10 customers or 1,000 customers telling you you’ve added an awful lot to their shopping experience—then that number can end up becoming 10 million. So now we are attacking the business from the perspective that there is no limit to how big it can become. We just need to keep focusing on each individual customer one by one, which fuels that viral growth.


Twenty years ago there was no Internet to speak of, and even fewer than 10 years ago many experts weren’t convinced people would buy shoes online. What do you say to those skeptics now?

That’s a good question. A lot of times those doubters have come up to me first admitting their mistake. I remember one in particular who said, ‘How wrong was I?!’ The reality is that’s one of the aspects that attracted me to the business in the first place. These businesses can sometimes become successful because you are going against the curve. If everyone thought it seemed so intuitive, then everybody would already be doing it. The marketplace is typically pretty efficient. I even have relatives who have confessed they thought I was out of my mind. They admitted it took a number of years for them to shop the site, but now they never buy their shoes any other way.


Why do you think that online buying conversion is so strong?

Customers like to have choices and they like to shop in a lot of different ways. It might be just researching an item online and then buying it in a store. Or they are window shopping, deciding they must have that item now and ordering it from home. The fact of the matter is we should never underestimate what can make people’s lives easier and better. We listened to the customer and created a better experience for them. It was hard to know at first, because the Internet was so new and few expected that it would become so prolific and that people would be willing to shop differently when they were so used to shopping 9 to 7 in stores. Would they shop at 2 a.m., for example? What many people in this business weren’t listening to was that getting to the store was becoming increasingly difficult for a lot of consumers.


Or when they did go to the store, the retailer didn’t have the shoe they wanted in their size.

Exactly. Or, they simply might love to shop for shoes. If a person is like Carrie Bradshaw in “Sex and the City,” they like shopping for shoes while lying in bed at night.


Were you a shoe-aholic before all this?

I was not a shoe guy by any means. I was in banking. But, in hindsight, it wasn’t a big leap. I first worked in the mortgage business and soon after was the leading seller of mortgages by an individual in Massachusetts. Basically, I took something that everyone was doing and found an easier way to do it by offering a no-cost, no-points program before anyone else. I took out ads and the sales just went crazy. Then I realized I was working nonstop and got recruited into banking, where I quickly realized I was again working nonstop—just for someone else. While I wasn’t looking to do anything new, this idea got into my head about finding an easier way to sell shoes online. That was the brainchild of ShoeBuy.


I recently spoke with a retailer who said online megasites like yours are wiping out brick-and-mortar independents—that customers go in for a fitting and then leave to buy it cheaper online. What is your response to that?

I 100-percent believe that anything that gets people excited about buying shoes bodes amazingly well for both brick-and-mortar and Internet retailers. When we started ShoeBuy, it was a very mature $40 billion U.S. footwear market and people said it kind of ‘is what it is.’ Now it’s closer to a $45 to $50 billion market, and that growth is despite these hard times. I believe the Internet has excited the customer and it is ultimately turning the dial for all players.

When ShoeBuy gets 8 million visitors clicking on products [it sees approximately 3,000 queries per minute throughout the day], some are doing research and then going to a store to buy that product. The fact is people do like to shop—and in a lot of different ways. And they like to have choices and want to do what is best for them. So the key is to continue to differentiate and innovate and raise the bar on the consumer experience. In contrast, a lot of retailers spend so much time trying to get people into the store and less time focused on those people who are already there. What we are finding is that customers have a lot of choices, purse strings are tighter, and they are going to reserve their money for those brands and retailers they know and trust. Our last holiday season was our tenth consecutive of double-digit sales growth, and I think a big part of that comes from our repeat business, which has gone from 17.9 percent of our revenue nine years ago to 65 percent today. If you are differentiating and innovating, customers will reward you. But if you are cutting customer services or are ignoring them in an effort to reach new customers, then I think you are going to have a much more difficult time.


From a shoe perspective, are you still in the early stages of growth?

Yes. As long as we continue to find new ways to excite the customer, there are still plenty of great years ahead. I think the Internet and the technology surrounding it is still fairly new and we will continue to figure out ways to make the shopping experience more exciting.


Who is the typical ShoeBuy customer?

We are about a 60-40 split between women and men. Clearly, men like to shop for shoes, too.


So there’s a bit of Carrie Bradshaw even in male consumers?

We make it extremely convenient for the male buyer who wants to come in quickly, find what he’s looking for, and have a very seamless shopping experience. But there are definitely men out there who like to shop and explore. We also see a lot more family buying, which is part of this evolution. In the last few years, we have families literally standing over each other on the computer and shopping together. That is probably a function of engaging the child more in the purchasing process, which increases the probability that they will actually wear the shoes. It’s a function of consumers being smarter about what they are spending. But it’s also the fact that there are more computers with high-speed access in the home. We used to see more shopping at work, and now that’s evened out. We are also seeing an increase in the amount of older people purchasing. The habit is continuing to become more common across a range of demographics.


What might ShoeBuy look like in five years?

I believe we will be the same company—just a lot bigger. It continues to feed on itself, and that gets you more excited and invigorated to stick with the original plan. That’s why we added more than 100 brands during the past holidays and we continue to raise the bar on the consumer experience—like rolling out 30,000 videos regarding certain products, introducing enhanced images, and adding alternative payment methods and personalized product recommendations.

It all centers back to our customer-centric focus of a tremendous selection in an extremely convenient manner. The bonus of this approach: By not being distracted, we have been able to reinvest in the programs that created that success. And as people were laying off employees, we were hiring, and when others were reducing inventory, we were adding.


Is ShoeBuy recession-proof?

We are a quiet company and we become more in vogue whenever the economy is doing badly. We get a lot of attention then because we continue to do well. During good times, people think we’re boring and anal. We aren’t running Super Bowl ads or doing other crazy stuff. We are just hyper-focused on investing back into our consumer experience. The result is a business that has done extremely well whether the economy is good or bad.


Have you come up with the golden mousetrap or is it just plain common sense?

To me, it’s common sense. Lots of people want to launch a business and do everything right away, but if you look at a lot of great businesses, they weren’t built in two seconds. If you can be patient and focus on the customer and build the business the right way, you end up being able to do a lot of those other things anyway. You get to those 8 million visitors and you’re able to launch other categories and sites. We saw a lot of crazy inflated growth during the dot-com era and we saw crazy things three years ago and we will surely see them again, but we just continue to keep our heads down and stay focused. Sometimes we get criticized for not moving faster, but we want to grow in the right way so we don’t stumble or sacrifice the consumer along the way. We are not in a tremendous rush.


Are there advantages to not being the media darling of online shoe retail?

We’ve always been a quiet company. We like who we are and don’t see a disadvantage to it at all. If we can be a company that prides itself on continuing to have success for our employees, brands and customers in good times or bad, then we are comfortable in our skin. But there are always going to be different people with different approaches. Like I mentioned, we don’t think anything that creates excitement around the category is a bad thing.


Is there room for everyone?

This category is not under- or overcrowded right now. If you are able to differentiate, innovate and provide great service, you will find a place. And you really want someone like Zappos, for example, to be hyper-focused on providing a good consumer experience because at this stage a lot of people are still making their first online footwear purchase, and you don’t want them to have any apprehension or a bad experience because then no one is going to get a second chance. You want people to tell their friends, ‘If you haven’t tried this out, then you really should.’ That’s what puts wind in the sails of everyone who is selling shoes online.


If this idea hadn’t panned out, what do you think you’d be doing now?

I get asked that question constantly—even my wife asks me that—and I haven’t thought of a good answer yet. But I don’t think about it too much. We sold ShoeBuy to InterActive Corporation four years ago and that caused people to ask the question more frequently, because a CEO as crazy-fanatical and committed as I am is rare once you sell. But I told my team then: As long as we are having fun and doing good things, we are not really going to think about ‘what next.’ If we come in one day and decide it’s not fun anymore, or we stop coming up with new ideas, then I’ll pay more attention to that question.

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