NEW YORK — Piperlime.com is facing the tough economy head on.
Since launching in 2006, the footwear e-tailer owned by Gap Inc. has successfully navigated the various changes taking place almost daily in online retail. In three short years, the site has become Gap’s fastest-growing brand, said Toby Lenk, president of Gap Inc. Direct. The site will continue to work with celebrity stylist Rachel Zoe as the resident fashion expert, and it recently added a handbag category and new features — such as allowing customers to review products — in an effort to enhance the online shopping experience.
“This is the first time we’ve allowed customers to provide feedback on many brands,” said Jennifer Gosselin, VP and GM of Piperlime.com. “What’s interesting is that unlike other sites, our version of customer reviews allows customers to create a profile as well, so it gives us more of a perspective [on who they are].”
But as the country faces a global recession, challenges lie ahead. Both online and brick-and-mortar retailers are taking hits, and the fates of even large corporations remain uncertain. Like many, Gap’s sales have suffered. The company reported $1.93 billion in sales for the five-week period ended Jan. 3, a decrease of 12 percent from the same period the year before (sales for Piperlime are not reported separately).
Still, Lenk said Piperlime is well positioned, thanks to on-trend product, competitive prices and devotion to customer service. With an eye on emerging brands and trends and a desire to be selective, Lenk is optimistic about the site’s prospects.
“Our growth has not been from basics, it’s been from fun fashion product,” he said. “And that will continue to propel us forward in this climate.”
FN: How has the online playing field changed since the Gap apparel sites relaunched in 2005 and Piperlime.com launched in 2006?
TL: On the macro level, social media — such as Facebook — has continued to gain a lot of momentum and continues to grow. But social media continues to search for an identity in terms of a business model. It’s probably bigger in terms of reach than people thought, but smaller in terms of advertising impact. Where it will be down the road is anyone’s guess. We notice that Piperlime.com gets a lot of commentary on social feedback sites [including Facebook, Yelp and Bizrate.com], and it all happens organically. We don’t control it. It serves us well, and it’s free. Word-of-mouth is now like word-of-Web.
FN: How has the economy affected online retail?
TL: It’s been pretty well documented in the press that the online market overall has slowed down considerably with the macro environment. The online market is still growing more healthily than the store market, but both stores and online have been meaningfully impacted by the macro environment.
FN: Have Gap’s sites had to be more promotional due to the recession?
TL: Overall, yes. The consumers are judging their spending, and online doesn’t get a hall pass — [the recession] affects all [retail] channels.
JG: While we definitely felt a hit in October, we feel very fortunate that we have not had to be as promotional as some of our competitors. We actually ended the year having hit all our internal financial goals.
TL: When the storm broke in September and October and store confidence died, we certainly were curious as to how our shoe and handbag business would hold up. But Piperlime.com is doing quite well, and we’re reasonably optimistic about its prospects in 2009.
FN: What footwear styles are particularly strong right now?
JG: From the beginning, we saw strength in boots, and we thought that it might wane a little bit, but it was a very strong season. The other strong trend is furry boots.
FN: Would you ever consider selling Gap, Old Navy or Banana Republic branded footwear on Piperlime.com?
JG: We’ve thought about it. But it’s so easy to navigate the sister brand sites. Their shoe and handbag lines tend to relate back to the apparel more closely, so it feels like a more natural adjacency.
TL: We call the framework [and tabs to sister sites] at the top of the page “universality.” You can shop for a Banana Republic dress and then shop for some shoes on Piperlime.com and pop them into the same cart, and that’s a huge plus for consumers. So it’s not really necessary to put a Banana Republic shoe on Piperlime.com because it’s really only a couple of clicks away.
FN: Are there any footwear brands you’d like to add to your assortment?
JG: None specifically. We feel very good about our assortment now, but we continually look for emerging brands and designers in order to be able to deliver fashion guidance and stay a step ahead of the trends.
FN: How has the partnership with Rachel Zoe helped you connect with your customers?
JG: Rachel has been with us from the start, and we’re very pleased with the partnership. As her reach has broadened, most recently with the success of her reality show, “The Rachel Zoe Project,” we’ve seen her impact with our site and within our customer base increase as well. She gives fashion advice — for instance, how to wear the gladiator sandal trend — and that’s been a great success.
FN: Who is the Piperlime.com core customer?
JG: We have two primary targets: single professional women in their late 20s and early 30s; and what we call into-fashion moms in their late 30s, who are very fashion involved and have a high household income. They definitely shop for their husbands and kids, but we do also attract male customers. The one common thing is that our customers are all fashion involved. That was the biggest thing we learned immediately after the launch. Our customers skewed much more toward fashion than we expected. We’ve continued to build along that line, and our customers are responding to our fashion point of view, the trends we put forward and our fashion guidance.
FN: How has the handbag business been performing?
JG: We launched handbags in spring ’08 and were actually surprised by how strong of a launch we had. It’s no secret in the market that handbags were hit pretty hard because shoes are a little more of a justifiable purchase. There is more of a need with shoes, while handbags can be stretched a season or two. It was hit harder than our shoe business, but it still remained strong. We feel good about where we’re taking it, and we have some new brands joining for spring, [including See by Chloé, Jane Marvel and Industry].
FN: What are your advertising and marketing initiatives for the upcoming year?
JG: We had our first advertising campaign last fall in the September issue of Vogue, and we will extend that this spring in In Style, Elle, Lucky, Vogue, Glamour and Harper’s Bazaar.
FN: Who do you consider your main competitors?
TL: When we looked at the other sites out there that sell shoes and handbags, they are either good at fashion branding or great at fulfillment of customer service, but we didn’t see any competitors that were great at both. So to some extent, we feel that we’re unique. We watch our competition, but we’re more focused on improving what we are doing. We don’t carry every shoe; we’re not a warehouse. We’re merchants; we’re fashion editors. And unlike our competitors, Piperlime.com gets traffic from Gap.com, Bananarepublic.com and Oldnavy.com, so we craft Piperlime to leverage the strength, technology and traffic from these huge online existing brands that already have a great fashion position.
JG: We are focused on going out with a strong trend point of view in a fairly limited number of categories, so that combination distinguishes us from our online-only, shoe-focused competitors, as well as from our department store competition. It’s a sweet spot in between.
FN: How big of a concern is security for online retailers today?
TL: We don’t usually hear that [as a concern] from our customers these days. We follow all the best practices in terms of securing customer data. All big retailers have to follow a set of Payment Card Industry guidelines from the credit card companies that ensure the best practices to protect credit card information and consumer data. We invest in that very heavily and take that very seriously.
FN: Do you plan to alter your buying strategies for the year ahead? For instance, will you take as many risks or bank on basic styles?
JG: We’re going to stay with what our customers are telling us they’re looking for. We get feedback every day from customers, and we see what’s selling, so we’ll continue to feed off that. In times of a downturn, it’s actually better to offer something special that will be an emotional pull. You definitely have to watch price points and see what she’s willing to buy, but we’re starting to see her gravitate toward trendforward product. The basics are the part of the wardrobe that she can stretch out another year, and it’s not going to meet the emotional need of wanting a little something as a pick-me-up.
FN: Mobile sites are becoming increasingly popular for online retail. Do you plan to implement one?
TL: Mobile Web is being powered by the next generation of smart phones — where you can actually browse a Website and have a good experience. If you had asked me about a mobile site when we launched Piperlime.com, I would have said, ‘Talk to me in five to 10 years.’ Now I would say that in the next three years, mobile is going to be important for Web players and brands. We don’t have a mobile site, but if it becomes important, we may want to do something to optimize [that opportunity].
FN: Following the early success of handbags, will you add additional categories?
TL: Right now we are completely focused on shoes and handbags. So we’re not looking to add more categories at this time, but we’ll never say never.