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Martha Stewart Alters Strategy

Aug 1, 2008

Martha Stewart Living Omnimedia Inc. has announced plans to get back into online selling. It acknowledges that while a previous website was popular with consumers, it lost money. The new strategy is designed to correct that problem and profit the company founded by the homemaking guru in the business of selling directly to online consumers, and this time to make money.

The new online strategy, which will launch in 2009, is, "going to be a very different ecommerce concept than we had before," said Susan Lyne, president and CEO, during a Goldman Sachs investors conference. "On the old site, we did the manufacturing, we held the inventory, the products were great and we lost an enormous amount of money. It's not what we're good at."

The new concept is for MarthaStewart.com to attract consumers and inspire them to buy, while relying on a service provider to handle the actual transaction. "By 2009, we hope to be able to sell, or to make consumers believe they will be buying on our site," Lyne said. "We will be working with a middleman partner on that." She did not provide further details.

MarthaStewart.com now offers products for sale, but consumers are redirected to the sites of retailer partners such as Macys.com and Kmart.com to make the purchase, Lyne said. Much of the company's ecommerce, however, was largely phased out two years ago, as it refocused on developing content rich websites that would generate revenue from advertising.

Martha Stewart Living reported that the company's ecommerce sales were $11.2 million in 2005, down from $14.4 million the year before. In 2007, the company generated six percent of its revenue, or $19.2 million, from the Internet, mostly from advertising on the Martha Stewart sites that feature recipes, gift suggestions, wedding related content and homemaking tips.

While the Internet segment lost $4.4 million in 2007, Lyne said the company has been making significant investments, including acquisitions in online properties like WeddingWire.com, a site targeting engaged couples. The company registered a 31 percent increase in online advertising in the first quarter of this year, as traffic to its websites increased, Lyne reported.

Topic: Wholesale News

Related Articles: Martha Stewart  online shopping 

Article ID: 706

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