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Sears.com: Fastest Growing Internet Retailer

Based on the lack of chatter about it out there, it would seem that the stunning changes at the website for Sears Holdings (SHLD) have gone unnoticed.

Sears is looking to make their site, Sears.com a “go to” site for all consumers needs and its 20% plus growth implies they just may be succeeding.

Notables:
* December 2007 when Sears.com partnered with Alliance Entertainment Corporation (AEC) to offer movies and music to its online shoppers. Sears.com now houses more than 250,000 titles
* February 2008, a co-branded site hosted by Digital River. Customers can purchase and immediately download to their PC or laptop software programs ranging from finance,
games, security and system utilities.
* April 2008, Sears.com expanded its For the Home Online Store by partnering with ArtSelect.com. Sears’ customers now have a complete art gallery and custom frame shop at their fingertips. After finding a favorite art piece, visitors can create a custom finished product by choosing the mat and frame. The design can be viewed against a wall color, saved in a gallery, or shared with friends. Featuring more than 300,000 image options for art prints and canvas reproductions, as well as mirrors and tapestries, the
frame shop fits any style of home decor.
* April 2008, Sears.com partnered with Baker & Taylor to offer an online book assortment consisting of more than 600,000 products. Customers can order books in advance of release date.

So, how is the site doing? At an estimated $2.6 billion in sales, Sears ranks as the largest mass merchant retailer online after Amazon.com (AMZN) and is the seventh-largest online store in the U.S., according to revenue estimates from online consultants and Internet Retailer’s annual Top 500 guide.

Shoppers that visited Sears.com and Kmart.com at least once in February rose 20%, to 14.7 million vs last year. That makes Sears’ Web business the 2nd fastest growing site among mass merchants vs 2007, after Costco (COST) at 23%, according to Nielsen Online.

Sears.com alone drew 12.3 million visitors in February, up 28% from 2007. That makes it fastest growing Web site among retailers besting Amazon’s 17% increase.

When traffic from Kmart and Lands’ End is added, Sears Holdings is drawing about 18 million people to its Web sites each month. Only Amazon at 47.7 million, Target (TGT) at 22.6 million and Wal-Mart Stores (WMT) at 21.3 million draw more people, according to Nielsen.

All of the above information is from before the new initiatives have been implemented.

Back in January, Jim Barr, previously for seven years the general manager of Microsoft’s (MSFT) MSN Shopping on MSN.com, was named SVP in charge of Sears’ online business. Then the company said, “Jim will be responsible for leading a new organization focused on innovative business architecture design, merchandising planning/operational development and technology solutions integration,” the company says.

Paul Miller, who joined Sears as senior vice president of direct commerce in November 2006 from Williams-Sonoma Inc., will report to Barr, the company says.

Clearly Barr is making fast and dramatic changes to the site and based on results to date, so far so good..

Disclosure (“none” means no position):Long SHLD, WMT, None

Todd Sullivan's- ValuePlays

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5 replies on “Sears.com: Fastest Growing Internet Retailer”

Notes from Sears Holdings’ Shareholder meeting. Post on cnbc.com, 05/16/2008.

Interesting point:

Lampert sees a fundamental shift in how consumers are shopping. Social networking sites and online services like Netflix Inc are changing the traditional brick and mortar retail game. Stores like Sears are going through a “digestion period” and trying to replace that lost traffic.

I believe you are taking considerable creative license calling Sears the fastest growing retailer, Todd. Target has 3 times the traffic, growing at a comparable rate. Lowe’s is growing almost 4 times faster and has more visitors / month. Finally, the revenue number you quoted from Internet Retailer is off by a factor of 2; the ecommerce business is less than $2B even with Landsend.com included. IR assumes a wholly inaccurate conversion rate and average rate.

Here’s the article you failed to reference:
http://www.chicagotribune.com/business/chi-fri-sears-online-strategymay16,0,7059917.story

And their unique visitor traffic for April tells a very different story than February (less clearance and promotional activity which, by the way, will adversely affect margin for Q1).
http://www.chicagotribune.com/business/chi080516searsonline_gfx,0,417586.graphic

Finally, the assortment expansion strategy will have limited effect on the total business – afterall, selling $15 dvds, when you’re not priced competitively, won’t offset $Bs in lost store comparable sales. That said, it is the right strategy assuming they continue to expand into higher ticket categories where they have strength – appliances, tools, outdoor living, etc. Time will tell if its too late.

Finally, the company is reaping the benefits of a strategy Paul Miller put in motion last Fall. Unfortunately, he left Sears Holdings in February, after Barr came on board. All credit lies with Miller for his vision to re-invent Sears online.

Anon,

I did not call them the “fastest growing retailer”. I said they were online for the visits which is the number I quoted.

also, i also illustrated how target and walmart were larger

“mass merchants” is a key. lowe’s is not that and is in a category of two. i would expect their traffic to be far higher this time of year just as I would expect SHLD to be higher at the holiday’s.

I would question your land’s end #’s since SHLD does not break them out and the IR article assumed a conversion rate less than 1/2 of JCP’s 10% which is the high # for the industry.

I also never made any claims to its success on the business as a whole. It will keep Sears in people’s mind which is a good thing..

First, the title of your post is, “fastest growing Internet retailer”. That is flatly false. Admit it. I call it pulling a Limbaugh.

Second, yes, Target and Wal-Mart are larger as are JCP, HD, LOW, and smaller specialty players BB and CC (who is on its deathbed). Even Kohl’s, who had no ecommerce business 3 years ago, is getting 10% less traffic. If I were Eddie, I’d be more than concerned. You really have to look at visitors as well as visits.

Finally, Sears killed the catalog back in 1992. It only brought it back last year. JCP never killed its catalog which serves as a core driver for their Internet operations. Virtually all ecommerce businesses with strong catalogs (LandsEnd, Williams-Sonoma, JCP, etc.) have strong, double-digit conversion rates. However, mass merchants such as Walmart, Target, Sears, Macys, HD, LOW – none with a viable catalog business – have conversion rates in the low single digits. As the GM of a top 10 ecommerce competitor, I have distinct industry insight and I can state resolutely that IR’s assumptions are off base. Just like financial analysis, you shouldn’t believe everything you read. Do your own research and draw your own conclusions.

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