E-commerce is no longer high and dry at West Marine Products, direct marketer and chain retailer of boating supplies and accessories.
In 2014, West Marine, No. 354 in the Internet Retailer 2015 Top 500 Guide posted only a modest gain in e-commerce by growing 4% to $52.0 million.
But so far in 2015 an investment in better e-commerce technology, more spending on marketing and more inventory are helping WestMarine.com grow web traffic and close more sales online, CEO Matt Hyde told Wall Street analysts Friday on West Marine’s second-quarter earnings call. “We benefited from the work that we accomplished in 2014 to transition our websites to a newer, more powerful platform,” Hyde told analysts. “This has allowed us to provide a much-improved experience for our customer and more easily make changes and updates to the systems.”
For the second quarter ended July 4, West Marine reported:
- Total sales increased 7.1% to $253.2 million from $236.5 million.
- E-commerce was 8.4% of total sales compared with 7.2% in the second quarter of 2014. Based on those metrics Internet Retailer estimates e-commerce totaled $21.3 million, up 25.3% from $17.0 million in the prior year.
- Comparable-store sales increased 7%.
- Net income was $20.9 million compared with $18.3 million in the prior year.
While West Marine did not break out marketing metrics, the growth in e-commerce can be attributed to a cutback in traditional printed direct marketing material and a bigger investment in digital marketing including paid search. Search engine marketing and Top 500 data provider ROI Revolution estimates West Marine spent $79,000 on monthly paid search in 2014, up 33.9% from $59,000 in 2013. “Our e-commerce business benefited from higher traffic online, our marketing programs have changed dramatically and we have been pleased with the results,” Hyde told analysts. “This year we’ve decreased our direct mail spend and transitioned it to 25% higher spend in digital media.”
In 2014 West Marine implemented an updated e-commerce platform from IBM and more robust e-commerce technology that among other functions allows the retailer to better integrate inventory and ship web orders from stores. So far West Marine is using 16 of its 270 stores in 38 states to ship merchandise, with plans to roll out to all stores over the next year. West Marine, which at the end of 2014 had an online inventory of more than 75,000 SKUs, has used available store inventory to add more than 5,000 items to its inventory.
“Over time, we expect to ship from stores to increase our turns, lower markdowns and expedite shipments to customers,” Hyde told analysts.
For the first two quarters:
- Total sales increased 8.7% to $380.2 million from $349.8 million.
- In the first quarter, e-commerce accounted for 9.3%, or $11.8 million, of all sales of $127.1 million compared with 8.2%, or $9.3 million, of all sales of $113.3 million in the first quarter of 2014. Based on the reported percentage of web sales in the first two quarters, Internet Retailer estimates e-commerce grew 25.9% in the first six months of 2015 to $33.1 million from $26.3 million a year ago.
- Net income was $10.7 million compared with $7.3 million in the first two quarters of 2014.
With e-commerce sales on a healthy upswing, West Marine is expanding online. In January the company launched a wholesale website, Portsupply.com. “Our investments are driving growth in retail, wholesale and online,” Hyde told analysts.