Online merchandise sales dropped by double-digit percentages in the fourth quarter and full year for XO Group Inc., as the wedding and baby supplies merchant faced technical challenges and increased competition from niche merchants.
For the year ended Dec. 31, 2012, XO Group, No. 393 in the Internet Retailer Top 500 Guide, reported:
- Web sales at the company’s e-commerce site, TheKnot.com, of $21.4 million, a 15.7% drop compared with $25.4 million in 2011.
- Total revenue of $129.1 million, a 3.9% increase over $124.3 million.
- Net income was $8.7 million, up 45.0% from $6.0 million in the prior year.
E-commerce sales represented 16.6% of total revenue in 2012, versus 20.4% in 2011.
The lack of a mobile-optimized web site hurt TheKnot.com in 2012. “As I stated last quarter, the rapid increase in mobile usage continues to present challenges for our e-commerce business,” XO Group’s president and CEO David Liu said on a conference call with investors last week. “E-mails have historically driven a large share of traffic to the e-commerce sites, but as e-mail is increasingly viewed on mobile devices, conversion rates have declined. This is primarily due to the fact that we have not yet launched our mobile optimized or m.e-commerce sites.”
XO Group also faced increased competition from niche online retailers, many with mobile apps, as well as “continuous changes in the search engine optimization landscape,” which both hurt sales, Liu added. Over the last year, Google Inc. has released several algorithm updates that have negatively impacted some retailers’ visibility in search engine results.
The merchant is currently beta testing a mobile-optimized site, which it expects to launch at the end of the second quarter. XO Group also plans to improve the margins on its e-commerce business by optimizing its shipping and inventory management systems, and expanding its affiliate marketing program, Liu said on the call.
For the fourth quarter, XO Group also reported:
- Online sales of $3.1 million, a 22.5% decline compared with $4.0 million in the quarter of 2011.
- Total sales of $32.2 million, up 4.2% from $30.9 million.
- Net income of $3.1 million, a 24.0% increase over $2.5 million.
E-commerce sales comprised 9.6% of total revenue during the quarter, versus 12.9% in 4Q of 2011.
The top 400 online retailers, travel companies and ticket sellers in the Internet Retailer Mobile 400 grew their mobile sales to $12.14 billion in 2012, a 101.3% jump from $6.03 billion in 2011.