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way
of our bargain countdown deal section and through the twice weekly Outrageous Offer program that we
started in the latter part of 2008. |
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Let me provide you just a few key highlights from a detail standpoint that I believe are important
indicators for the improvements of the eCOST business. First, let’s talk about unique visitor
traffic. This is a statistic similar to shopper count in traditional retail. Unique visitor traffic
was up 16% during the first quarter of 2009 compared to last year, clearly getting more shoppers to
our site and then converting them into buyers is one of the most critical factors to driving higher
revenue volumes. |
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Secondly, because of the attractiveness of our product deals, many of which we make available only
to our Platinum Club members, club memberships have grown tremendously over the past year. This
quarter club memberships were up over 350% versus Q1 2008. What’s important about this data is that
our historical information shows us that club members buy two to three times more frequently than a
non-club member. As such, we’re excited about the customer life value, that’s the repeat purchasing
patterns, and potential of this large group of new club members; and the more club members we have,
the higher return purchase volumes we can expect. |
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Third, new customer growth was also strong again in the first quarter of 2009. We added a little
more than 32,000 new customers in the first quarter of 2009 and that compared to about 23,000 new
customers during the same period a year ago. That’s an increase of about 40% year-on-year. And
maybe what’s most exciting financially is that with these outstanding characteristics that I’ve
just covered, we continue to find ways to optimize our marketing spend. |
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Ad spend over the past year has continued to decline yet new customer levels are growing. We
attribute this trend to improved measuring and evaluation techniques that have allowed us to
quickly identify the most effective programs and sources that drive new customers to our site. As a
result, we’ve been able to eliminate the less effective programs quickly and invest heavier into
the more effective programs. This is resulting in less total ad spend and higher new customer
activity, kind of a magic paradigm there. The estimated cost to acquire a new customer for the
first quarter of 2009 was $5.84. That excludes any catalog cost. That compares to $7.10 excluding
catalog cost for the first quarter of 2008. |
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We believe that we are perfecting a suite of viral marketing methods that bring customers to our
site by word of mouth or personal recommendation. The buzz created by our Outrageous Offers we
believe draws new customers and does so in a manner that’s very cost effective when compared to
other marketing programs like affiliate advertising or shopping comparison engines or search engine
marketing. |
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As I mentioned a minute ago, we made the decision in early 2008 to heighten our focus on the B2C
segment really for all the reasons that I just described, and clearly we believe this strategy is
showing solid success. This is supported by the data which I’ve already discussed. Our B2C segment
represents now approximately 55% of eCOST.com’s total revenue; that was during the first quarter of
2009. As a comparison, the business-to-consumer segment represented less than 40% of the overall
revenue mix in 2006. Generally, the B2C segment provides adjusted gross margin contribution that is
more than 500 basis points higher than the business-to-business segment. We’ve certainly not
abandoned the business-to-business segment but, with our strong focus on continuing to improve the
financial characteristics of the eCOST.com business, it
behooves us to continue to focus most of our resources on the B2C segment given its substantially
stronger financial characteristics. |
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B2B revenue during the quarter was down more than $7 million versus last year as we reduced focus,
sales resources and adapted our margin objectives to help ensure that the B2B business that we do
have meets the overall financial objectives of our Company. However, it’s important to note that
during Q1 2009, we did begin to experience some firming up of the B2B revenue from a |