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| What went wrong with Empori.com |
May 6, 2002 |
By Jason rodham
Few internet start-ups fell as hard or as convincingly as Empori.com, Oxford Property’s product distribution site.
The bold experiment in online retailing was supposed to revolutionize the way buyers completed online purchases.
Busy metropolitan customers could order a host of products from online stores—anything from books to running shoes to groceries and even liquor—and have them delivered to Empori sites. Purchases could then be picked up on the way home from work.
On the business side, Oxford Property tenants were expected to enhance their purchasing power through bulk buying, while also receiving direct delivery of office supplies and other essentials.
Initial results from the venture were encouraging, with Empori boasting 43,000 registered users, four depots in strategic locations throughout Toronto, planned expansion in other cities, and partnerships with 16 business-tobusiness ( B2B) and 31 business-toconsumer ( B2C) vendors.
But instead of carving out a lucrative niche, Empori fell flat on its face, leaving many questions about the cause of its decline. And foremost among these is whether the distributor’s model was flawed from the outset.
Surface value
As concerns such as security and privacy become less of an issue for customers, other retail issues loom larger, such as long wait times, high shipping costs, poor delivery schedules and complicated return procedures. Empori seemed to bridge many of these issues, meeting customer demands. Customers would not, for example, have to queue in stores or ensure someone was at home to receive packages.
“If you take a close look at what the Internet is about, it’s convenience and doing things when you want to do them,” said Mark Quigley, research director at The Yankee Group of Canada.
“If you’re someone who works in a building on Bay Street, you’ve got no time but you’ve probably got lots of money. I would think those kinds of people would lean heavily on solutions that make their lives easier.”
But the public never bought into the Empori model, and its short history reveals a great deal about the relationship between distribution and successful online retailing.
So what went wrong? As the dust settled it looked like the single biggest factor in Empori’s failure was its inability to secure a critical mass of distributors and retailers.
Empori got a lot of attention right out of the gate and showed success in its effort to get partners with logistical resources and strong brands to sign up to the idea. A few property owners invested money and were set to open depots on both sides of the Canada/U.S. border. But for the most part,property owners are a conservative bunch, and Oxford’s vision of using technology and the Internet to improve service to tenants never seemed to take hold.
Without the partners to help it develop into a local and national brand, Empori could never be anything more than a convenience for Bay Street workers with busy schedules.
As a duty to its shareholders, in 2001 Oxford was forced to stop the bleeding and shut down the operation after only one year.
Although Empori may have been doomed, Quigley believes the idea was sound and may come back, possibly in a different form. There’s no reason, he said, why retailers themselves can’t leverage their retail stores, distribution infrastructure and recognized brand names to fill a distribution gap. “It wouldn’t necessarily be the Empori model, but the idea that underpinned it.”
One that works
At least one conventional Canadian retailer seems to be following the same thinking. Grand & Toy (G&T) has hit it big with a tightly-focused B2B offering, generating $107 million in revenue from its Web site in the first three quarters of 2001.
The company’s online offering now represents a quarter of its total commercial business.
What differentiates G&T from online-only retailers is its vast distribution network and ownership of every element of the supply chain.
The company’s eight distribution centres, 22 commercial sales offices and 75 stores are tightly integrated.
This web of transportation and warehousing enables G&T to offer its customers consistent next-day delivery and realtime inventory reporting.
“A lot of these dot-coms saw the same opportunity: that office products would be a great sell,” said Rick McKay, G&T vice-president of marketing. “These guys came out hard, but they had no bricks and mortar, just a click. So people started migrating to a name they knew.”
Empori did approach G&T about becoming a partner, but McKay said his company was reluctant to give up any element of the customer relationship. He recognizes that G&T’s ability to deliver a high level of customer intimacy is one of the secrets of its success. Although they may do the bulk of their ordering online, clients still interact with the supplier on many different levels: through the stores, their personal sales rep or with the uniformed delivery staffer who comes to their desk.
Today, the average Grand & Toy business client spends about $150 on every order. “And it’s rhythmic,” McKay said.“Every week, or every two weeks, the company uses the same amount of office products.”
Another element of G&T’s strength comes from a diverse range of access points, including links from Bell Canada’s BellZinc and the TD MarketSite, two popular business sites.
McKay adds that G&T’s distribution network can be expanded to accommodate new product lines. Although it’s unlikely his company will be selling home and garden supplies any time soon, they certainly could. “It may not be as radical as barbecues, but I would say, ‘stay tuned.’ If it’s something that our customers need for business, then it is likely we will enter that marketplace.”
The sound of silence
Meanwhile, the bulk of Empori’s partners are not willing to talk about the death of the venture, and Oxford isn’t saying much either, although a spokesperson did claim the dot-com drop hurt the company badly.
The death of Empori is a comment on all Web-based businesses, said Yankee’s Quigley. “Part of the trouble now is that regardless of what kind of good idea is out there, regardless of what kind of business plan, investors want to see how much revenue you have now, how many customers you’ve got and what they’re spending. There is definitely less patience in the marketplace to keep these kinds of things financed.”
With a cold wind blowing through the e-business investment community, it may be some time before we see a distribution initiative as innovative as Empori. Given the success that companies like G&T have had, it’s far more likely that proprietary offerings—and not loose confederations of retailers working under the umbrella of a distributor—will be in the ascent.
W e b s i t e s
BellZinc http://www.bellzinc.ca
Grand & Toy http://www.grandandtoy.com
TD MarketSite http://www.tdmarketsite.com
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