BW e.biz--09/20/00--An Old Mail-Order Monarch Conquers the Net

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BW E.BIZ: FROM LE MONDE INTERACTIF

September 20, 2000

An Old Mail-Order Monarch Conquers the Net

Retail giant La Redoute finds growth in cyberspace, in part by luring new customers. Suddenly, it's one of France's top e-commerce sites

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La Redoute

Tradition is taken seriously in France. But when an 80-year-old mail-order company like France's mighty La Redoute decides to focus its strategy on the Web, it means that priorities may be changing for good. La Redoute, Europe's No. 1 consumer-goods distributor, is shedding its traditional, stuffy image and focusing on opportunities that come with the Internet Age. Over the past two years, the company has invested roughly $13 million for the development of its nine Web sites in Europe and the U.S. The payoff? Opportunity and growth. Plus, "via the Internet, the cost per transaction is divided by 10," says Jean-Marie Boucher, e-commerce director at Roubaix-based La Redoute in northern France.

But that's not all. The Net is also a great way to attract new customers, since traditional mail delivery from a catalog is something today's Net-savvy generation finds outdated. Already 20% of La Redoute Online clients have never even bought anything using an old-style catalog. La Redoute expects 10% of its sales to come from the Web by 2002, of which more than two-thirds will be from new customers. "Our 20% market share for online textile sales is easily more than double of what it is for traditional distribution," says CEO Paul Delaoutre.

GLOBAL REACH. Indeed, the Web has given La Redoute the chance to extend its offerings in ways that were unimaginable before. As opposed to publishing catalogs with a limited number of goods, LaRedoute.fr can now offer hundreds of new products every month, from cell phones to couches to sweaters, and up to five new products every day. Customers can view the site's top 10 list, personalize the site according to their own tastes, and take advantage of price adjustments on electronics, as well as track their orders in real time. That's quite an improvement considering that market share for the mail-order business shrank from 4.12% in 1996 to 4.01% in 1999 with a growth rate that has plateaued to between 1% and 3%.

In terms of sales, La Redoute Online has become the No. 1 mail-order Web site in France and the No. 3 French e-commerce site according to Benchmark Group, a Paris-based company that publishes studies on Internet-related subjects. With 200,000 orders in 2000, La Redoute Online expects sales to reach $26 million this year. Although that number is only a fraction of the $1.4 billion in group sales, Delaoutre and Boucher expect online sales to triple by next year. Analysts couldn't agree more. "Operating margins for Redoute Online could eventually rise above 20%, compared with 5% for La Redoute today," says Aline Nguyen, an analyst at Paris based BNP-Paribas.

La Redoute is confident about the direction it has chosen. In the first semester of 2001, the company will finally launch its international site, laredoute.com, which it has been preparing for the past two years. With all the logistics and programs in place, goods from the company's center in Roubaix will be able to reach all corners of the globe. In the Internet Age, it looks as if even the oldest of dogs can manage to learn new tricks.

By Gaëlle Macke