October 23, 2008
Gap Tops $1 Billion in Online Sales
Gap Inc. has had it issues in recent years with its various divisions but one area that has performed remarkably well, even in the recent economic upheaval, has been the company’s ecommerce business.
According to a report on the Internet Retailer website, Gap’s four e-commerce sites: BananaRepublic.com, Gap.com, OldNavy.com and Piperlime.com, will generate roughly $1 billion in sales for 2008. That’s a 10.7 percent increase over 2007.
Gap Inc. is looking to grow its online business in 2009 with the addition of the Athleta women’s active apparel brand and a marketing push in Canada and the U.K.
It recently redesigned its websites to provide tabs for consumers to shop across Gap Inc. properties.
“We pushed the envelope,” Toby Lenk, president of Gap Inc. Direct, recently told investors. “Brands usually don’t like to live with other brands — it’s sort of unnatural.”
According to Mr. Lenk, many of the company’s customers shop across its various banners making it the right move for Gap Inc.
Discussion Questions: What do you think of Gap Inc.’s strategy of offering shoppers access to all its brands on each of its divisions’ individual websites? How will this approach affect sales at the individual banners operated by Gap Inc.?
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Ecommerce bidnesses are intimately aware of a basic truism: When you finally get a shopper to visit your site, offer them as many things to buy as you possibly can. Gap Inc. is illustrating this principle, as Amazon.com did before them. How can anyone argue with that? It’s a new retail reality, and customers get it.
It is all in the execution. If the sites stay true to their branded positioning with their product and profile, I see this strategy as being successful. If Gap sees it as a good to have a “Gap” brick and mortar store next to a “Banana Republic” brick and mortar store, why not have the same access online? Make it easy for me to buy a pair of slacks at Banana Republic and on the same online shopping trip go to Old Navy and buy some T-shirts for my grandchildren. Net, net, they will sell more to me and likewise, other shoppers.
But it is critical to emphasize again, this strategy must include an extraordinarily diligent effort to keep the various brands/banners distinctive. Each must represent a reason for being in the consumer’s mind.
Since Gap plans to offer shoppers access to all of its brands on each of its divisions’ individual websites, then why have those individual divisions’ web sites? Would it not be best for consumers and Gap to have just one web site, i.e. GAP?
Gap doesn’t employ a stealth strategy across its brands and rightly so. They do this based on customer insight, which is unfortunately something many businesses and retailers especially lack.
Having all brands accessible creates a network effect and improves the probability that a customer leaving that brand’s site ends up at a family brand site, rather than someone else’s.
People buy clothes for different reasons (occasions) from a variety of merchants, much as travelers select different hotels based on the specifics of a trip. The hotel companies have done well keeping their brand portfolio’s together under their loyalty programs and especially through their online (reservations) sites, as any Marriott or Starwood or Hilton loyalist knows well!
I never, ever shop at the Gap. I consistently shop on their online properties because of a few key factors: timely and alluring email marketing, one flat shipping fee across all brands, easy return at the store and pure convenience. 10 years ago this may not have been the case, as I had a lot more discretionary time. But I’m willing to bet that they have huge brand allegiance with folks like me because they simply “make it easy.”
One thing that Gap has done very well over the years as they’ve added brands is making sure each brand has its own identity and target clients.
Offering their own brands under one website will likely only have positive benefits, and allow mom to shop for herself and the kids at the same time.
I get impatient with the argument that a consumer will be negatively affected knowing that Banana Republic is owned by The Gap. Similar cases are made all the time by brands such as Kellogg that downplays its ownership of Kashi. What will consumers think if the well loved natural and organic brand is owned by a big multinational? Say it isn’t so!
Corporations are globalized and so are consumers. No 21st-century consumer is going to gasp in shock that some brand they love is part of a large multinational. The Gap gets it online, and therefore it credits its consumers with being smart and savvy as well.
They get it! It’s about consumer convenience. This is a smart move in many ways but specifically, customer convenience. Customers don’t care what the back end of your processes look like; they don’t care if they’re truly separate or what you have to do to accomplish this. All they care about is they want it when they want it.
I don’t think this will hurt store sales in the long run. This will help build brand loyalty and brand equity. They could actually use it to build store traffic with coupons for store only, after an online purchase, etc. The important thing is they have the outlet to capture not just sales but critical marketing and promotion data.
Offering all of its brand on each brand’s website will make each brand’s website more attractive to consumers and increase the Gap’s overall internet sales. By offering multiple brands at each website, customers will be encouraged to purchase multiple items and reduce their shipping costs and the shipping costs incurred by the Gap.
The one danger is that offering multiple brands might adversely affect the image of individual brands. For example, Banana Republic’s image of fashionable, high quality merchandise might be damaged by having Old Navy merchandise on its web site. However, I suspect that the Gap brands are strong enough to mitigate this potential degradation of brand image. In addition, many Gap customers probably patronize the different brand stores now.
This idea is a no-brainer, really…what took so long?
Gap merchandise is so incredibly mundane, it’s better that it’s online anyway as the stuff is very difficult to “show” in a compelling way in a retail theater. That’s not a slam on the market-ability or consumer need for that type of merchandise, it’s just that it doesn’t “attract and entice” well or create the type of visual interest it takes to get people excited about going to one of their stores (also mundane–another story). It’s mass, mass merchandise.
Gap could/should become one of the largest online retailers in the next 5 years. The stars are aligned for them and I think they realize that.
Totally agree with Susan–they get it. Consumers see the bricks and mortar store as the same brand as the online store. It’s seamless (or should be) to them.
Online sales will be the big winner this holiday season. Gift wrapped and with free shipping to the recipient–who could ask for more? Plus returns. It works. Why run all over town when you can shop on your lunch hour at work? And save! Gift cards are also available online too. Some of these promotions can work hand in glove with driving traffic in-store. And GAP brands are in a great position to capitalize on this, as consumers are already in the habit of visiting their site. Bravo Gap.
Clearly it is working. The best retailers need to have a great website with easy online shopping, excellent catalogs, well designed stores, and service-oriented staff. In short, retailers need to do it all well. We live in a world where consumers may live next door to each other but shop differently.
One hates to be negative, but when comp stats (SSS) are falling month-after-month, year-after-year, does it really mean anything that a (relatively) small segment of the biz is showing double-digit gains? Does GAP plan to become an internet-only retailer? If not, then I’m not impressed.
It’s a good move by GAP. The product suits it and offering as much as possible is the right way to go. More people will look to cut costs and GAP’s mass market, cheap goods should do well in the challenging economy.
Every e-commerce sites’ #1 problem: attracting more worthwhile traffic at a reasonable price. If you lick that problem, you usually make money. If you pay too much for your shoppers, your site isn’t sustainable. If the Gap cross-shopping helps reduce its per-customer marketing costs, all the Gap brands hit home runs.
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Ecommerce bidnesses are intimately aware of a basic truism: When you finally get a shopper to visit your site, offer them as many things to buy as you possibly can. Gap Inc. is illustrating this principle, as Amazon.com did before them. How can anyone argue with that? It’s a new retail reality, and customers get it.
It is all in the execution. If the sites stay true to their branded positioning with their product and profile, I see this strategy as being successful. If Gap sees it as a good to have a “Gap” brick and mortar store next to a “Banana Republic” brick and mortar store, why not have the same access online? Make it easy for me to buy a pair of slacks at Banana Republic and on the same online shopping trip go to Old Navy and buy some T-shirts for my grandchildren. Net, net, they will sell more to me and likewise, other shoppers.
But it is critical to emphasize again, this strategy must include an extraordinarily diligent effort to keep the various brands/banners distinctive. Each must represent a reason for being in the consumer’s mind.
Since Gap plans to offer shoppers access to all of its brands on each of its divisions’ individual websites, then why have those individual divisions’ web sites? Would it not be best for consumers and Gap to have just one web site, i.e. GAP?
Gap doesn’t employ a stealth strategy across its brands and rightly so. They do this based on customer insight, which is unfortunately something many businesses and retailers especially lack.
Having all brands accessible creates a network effect and improves the probability that a customer leaving that brand’s site ends up at a family brand site, rather than someone else’s.
People buy clothes for different reasons (occasions) from a variety of merchants, much as travelers select different hotels based on the specifics of a trip. The hotel companies have done well keeping their brand portfolio’s together under their loyalty programs and especially through their online (reservations) sites, as any Marriott or Starwood or Hilton loyalist knows well!
I never, ever shop at the Gap. I consistently shop on their online properties because of a few key factors: timely and alluring email marketing, one flat shipping fee across all brands, easy return at the store and pure convenience. 10 years ago this may not have been the case, as I had a lot more discretionary time. But I’m willing to bet that they have huge brand allegiance with folks like me because they simply “make it easy.”
One thing that Gap has done very well over the years as they’ve added brands is making sure each brand has its own identity and target clients.
Offering their own brands under one website will likely only have positive benefits, and allow mom to shop for herself and the kids at the same time.
I get impatient with the argument that a consumer will be negatively affected knowing that Banana Republic is owned by The Gap. Similar cases are made all the time by brands such as Kellogg that downplays its ownership of Kashi. What will consumers think if the well loved natural and organic brand is owned by a big multinational? Say it isn’t so!
Corporations are globalized and so are consumers. No 21st-century consumer is going to gasp in shock that some brand they love is part of a large multinational. The Gap gets it online, and therefore it credits its consumers with being smart and savvy as well.
They get it! It’s about consumer convenience. This is a smart move in many ways but specifically, customer convenience. Customers don’t care what the back end of your processes look like; they don’t care if they’re truly separate or what you have to do to accomplish this. All they care about is they want it when they want it.
I don’t think this will hurt store sales in the long run. This will help build brand loyalty and brand equity. They could actually use it to build store traffic with coupons for store only, after an online purchase, etc. The important thing is they have the outlet to capture not just sales but critical marketing and promotion data.
Offering all of its brand on each brand’s website will make each brand’s website more attractive to consumers and increase the Gap’s overall internet sales. By offering multiple brands at each website, customers will be encouraged to purchase multiple items and reduce their shipping costs and the shipping costs incurred by the Gap.
The one danger is that offering multiple brands might adversely affect the image of individual brands. For example, Banana Republic’s image of fashionable, high quality merchandise might be damaged by having Old Navy merchandise on its web site. However, I suspect that the Gap brands are strong enough to mitigate this potential degradation of brand image. In addition, many Gap customers probably patronize the different brand stores now.
This idea is a no-brainer, really…what took so long?
Gap merchandise is so incredibly mundane, it’s better that it’s online anyway as the stuff is very difficult to “show” in a compelling way in a retail theater. That’s not a slam on the market-ability or consumer need for that type of merchandise, it’s just that it doesn’t “attract and entice” well or create the type of visual interest it takes to get people excited about going to one of their stores (also mundane–another story). It’s mass, mass merchandise.
Gap could/should become one of the largest online retailers in the next 5 years. The stars are aligned for them and I think they realize that.
Totally agree with Susan–they get it. Consumers see the bricks and mortar store as the same brand as the online store. It’s seamless (or should be) to them.
Online sales will be the big winner this holiday season. Gift wrapped and with free shipping to the recipient–who could ask for more? Plus returns. It works. Why run all over town when you can shop on your lunch hour at work? And save! Gift cards are also available online too. Some of these promotions can work hand in glove with driving traffic in-store. And GAP brands are in a great position to capitalize on this, as consumers are already in the habit of visiting their site. Bravo Gap.
Clearly it is working. The best retailers need to have a great website with easy online shopping, excellent catalogs, well designed stores, and service-oriented staff. In short, retailers need to do it all well. We live in a world where consumers may live next door to each other but shop differently.
One hates to be negative, but when comp stats (SSS) are falling month-after-month, year-after-year, does it really mean anything that a (relatively) small segment of the biz is showing double-digit gains? Does GAP plan to become an internet-only retailer? If not, then I’m not impressed.
It’s a good move by GAP. The product suits it and offering as much as possible is the right way to go. More people will look to cut costs and GAP’s mass market, cheap goods should do well in the challenging economy.
Every e-commerce sites’ #1 problem: attracting more worthwhile traffic at a reasonable price. If you lick that problem, you usually make money. If you pay too much for your shoppers, your site isn’t sustainable. If the Gap cross-shopping helps reduce its per-customer marketing costs, all the Gap brands hit home runs.