Cover Story: Spinning Success Stories on the Web
By Marilyn Pritchard, Contributing Editor

Top Online Retailers Tell How They Meet the Challenges of Cyberspace

During the peak Halloween shopping season in 2008, online searches for Halloween costumes accounted for .36 percent of cyberspace traffic. Though this figure may seem a mere sliver of the Internet pie, it represents an enormous amount of business, according to Matt Tatham, director of media relations at Hitwise, an online competitive intelligence service with a U.S. division based in New York City. And, says Tatham, the online Halloween business is growing. "Traffic to Halloween websites has been trending up the past three year," he observes.

The phenomenon has created a number of cyber success stories, including long-time Halloween retailers who have been notably successful in their online divisions as well as Halloween companies that were founded as online retailers. Selling Halloween magazine spoke to leading online costumers about how they have achieved success on the web and how they are continuing to cope with its challenges.

COSTUME CRAZE, LLC
Costume Craze, LLC, based in Lindon, Utah, was launched by siblings Matthew and Kate Maloney in 2001 as Matthew's Robes, an online company that sold monks' robes. When the Maloneys realized the extent of the online market for costumes, they quickly expanded their product line and used a searchengine optimization tool Matthew had developed, Static Advantage, to optimize their online presence.

Static Advantage, explains Jeff Wiseman, Costume Craze's vice president for business development, improves the company's search-engine optimization by automatically converting dynamic web pages to static ones, exposing them to Google and other search engines which, for the most part, don't search dynamic pages. This allows more keywords to be found, significantly increasing the ranking of all the website's pages. In addition, Static Advantage allows the webmaster to automatically upload database changes to the static pages. As a result, the website becomes significantly faster, more reliable and less expensive to host and maintain, according to Wiseman.

Costume Craze also relies on technology for order fulfillment. The company just moved into a new warehouse three times the size of the one it occupied a year ago. Says Wiseman: "Our biggest challenges have been space and the ability to process orders. Now we rely on technology. We recently purchased a new warehouse management system. We handle thousands of orders a day. It's a good thing but a real challenge."

Wiseman believes that Costume Craze's investment in technology has been a key factor in its success. "When you don't have money early on, and you need software that costs hundreds of thousands of dollars, it's hard to justify. But every dollar we've spent on technology has come back to us many fold. We made it a priority."

ANNIE'S COSTUMES
Shari McConahay, vice president of Annie's Costumes in Dania Beach, Fla., also understands the importance of
search-engine optimization. When her company, which operates a number of Halloween websites, first began selling online in 1996, she started reading right away on how to get the word out about her original website. "I learned how to do SEO [search-engine optimization]," she says. "I keep up with that, so when people are searching for our product, we show up. People think you can just build a website and they [customers] will come. They won't come if they don’t know you're there. I go to conferences every year. I belong to a local interactive marketing group."

Annie's Costumes began as a mom-and-pop costume shop in 1989. In 2003, McConahay and her father, Harold Maxwell, decided to close the store and concentrate on the online business. It was not an easy decision, she admits.

"We had the retail store for 15 years. It was like our baby, but it was just something we had to do. There are so many challenges facing mom-and-pop independents in this day and age. It was becoming hard to manage the store and the customer service. We are so customer-service intensive, we wanted every customer to get attention." Besides that, she adds, the Internet business was growing more profitable, and the store was becoming less profitable.

How can a mom-and-pop retailer compete with major companies on the Internet? "We're trying to find our niche in the whole market," McConahay notes. She keeps up with the latest in search-engine optimization as well as e-commerce rules and regulations. "You have to know the rules, the anti-spam laws. Shoppers need to know we're an ethical operation. We have to show them we've been here a long time and that we're not going to sell their e-mail," she says.

BUYCOSTUMES.COM
BuyCostumes.com has been selling online since 1999. The New Berlin, Wis.-based e-tailer does not have a traditional retail store but offers a broad selection of products backed up by fast shipping and customer service. "Our biggest feature is customer service," says Karen Van Ert, director of marketing for BuySeasons, BuyCostumes.com’s parent company. "Everything is handled here. Communication is as close as it can be. Our distribution center is here as well. Nothing is outsourced. Turnaround is extremely fast."

Another aspect of customer service is making the customer feel that his or her opinion matters to the company. Says Van Ert, "We have online reviews. We even try to incentivize customers to write reviews by entering them to win a gift certificate if they write a review. We run a different contest every month. If they add a photo to their reviews, they are eligible for higher rewards. We even have video capability if they want to upload a video
with their review. We want to get as much input as possible. It helps our customers to hear if a costume runs larger or smaller."

While many Halloween e-tailers have added blogs or tips on dressing up or decorating for Halloween, BuyCos
tumes.com encourages discussion among users, allowing them to initiate posts or join groups with similar interests.
In a section of its website called "Community," visitors can seek out expert advice, discuss subjects ranging
from haunted houses to pet costumes, or join a group of pirate enthusiasts.

HALLOWEEN EXPRESS
For Halloween Express, which began selling online in 2005 in addition to operating more than 200 seasonal retail
outlets, price and depth of inventory are major selling points. Brad Butler, co-owner and chief operating officer
for the Florence, Ky.-based company, attributes the firm's online success to its ability to leverage the size and scope of the retail operation to its advantage. "The synergy between our retail stores and online presence gives us an edge most of our competitors don't have," he states. "For example, when we make merchandise buys, we do so for both the website and retail stores - thus giving us a volume pricing advantage that benefits the stores and the website."

Butler also cites customer service as an important factor in Halloween Express's web success. "We are constantly working to improve the customer's experience with us," he says. "We maintain a professionally trained customer service team year round to retain continuity from season to season. We offer same-day shipping and we are one of the few online costume companies who accept returns year-round."

COSTUME SUPERCENTER, LLC
Steven Mandell, CEO of Costume SuperCenter LLC, Edison, N.J., agrees that customer service is one of the cornerstones of successful e-commerce. "We've been successful because we understand the needs of the customer," Mandell notes. "We're giving them the right merchandise at the right price with good customer service."

In addition to same-day shipping on orders that come in by 3 p.m., Costume SuperCenter also claims to have the
most liberal returns policy in the business. "Costumes are returnable at any time," he reports. "We also have a size
exchange program. If you send it back for a different size, we'll pay the freight for both directions."

Mandell, who founded Party City and retired when that company went public, started Costume SuperCenter
three years ago. "When I got tired of golfing, I wanted to get back into something I knew," he says. "I decided
to focus on Halloween."

He admits that keeping up with technology is the most challenging aspect of any e-commerce business, but doesn't overlook the importance of the human side of the equation. "We want to continue to grow the business while developing the infrastructure - the processes and distribution channels - to service our customers' needs," Mandell says, adding, "Whenever you start a business, you do what you need to do to find the right team. It's all about the people. People are the most important ingredient in any business." //