Thu, 6th November 2008

On the shop floor with......Firebox.com managing director Christian Robinson

Firebox.com this year celebrated its tenth birthday, which it shares with major internet luminaries such as Google and PayPal.

While the gadget seller cannot quite match this pair's stellar success it continues to punch well above its weight in what is a highly competitive market and it will this year hit £11.5 million in sales.

Christian Robinson, managing director of Firebox.com, has been at the helm of the business for quite a few of its 10 years and can be justifiably proud of his achievements (along with those of the company's co-founders) because the company has grown amid great change and upheaval in the online gadget market.

There has been the failure of The Gadget Shop, the change of ownership of Boys Stuff and IwantOneofThose.com, and the entry into the gadget and gifts arena of many established retailers.

Despite these changes Firebox.com has over the past 12-months enjoyed 15 per cent year-on-year growth with orders having increased from 340,000 in 2007 to a predicted 170,000 in the final quarter of 2008 alone.

Robinson is "cautiously optimistic" heading into the crucial Christmas period (that represents 50 per cent of total sales) and expects to see a radical shift in the mix of products sold: "Consumer electronics items are proving very popular. You'd think in a downturn that it would be cheaper products but it's more about people investing in goods to stay at home with."

This is a change from last year, which he says was "the year of the radio controlled helicopter when we did £1 million in sales". But since then the supermarkets started flogging them at very low margins and Firebox.com has moved onto the next trend.

At the moment an area of interest are ecological, cost-saving products with Robinson citing the example of the road-legal electric scooter, which is the first of its kind in the UK to sell for less than £1,000: "We can't get enough of them into the country as they instantly sell-out." Another interesting area is kids' products, which it has dubbed 'Firetots' within its online store.

The ability to spot the latest must-have products and to offer them ahead of the competition is one of the company's unique selling points, which has given it a loyal customer base.

Maybe part of the reason more expensive consumer electronics goods are proving popular this year is because its core customers have grown up with Firebox.com and might well have been buyers of its first big hit - the shot glass chess. They now have sufficient cash in their pockets to buy flashier, adult items.

The company's trend-spotting abilities were taken to a new level in 2004 when it took the "quantum leap" to directly import products from the Far East. Robinson says: "This gave us access to products without having to wait for a UK distributor to take them up. We were of a significant size to order from the Far East. This gives us extra margin and exclusivity but we have to do the certification, which is especially important for toy products."

Another key leap Firebox.com made was to re-launch its paper catalogue. In the early days it had used photocopied sheets that were editorial-led and mainly used as a customer retention tool. "Just in time for Christmas 2003 we put out a serious mail order catalogue and sent it as an insert in Maxim and Cosmopolitan. Since then the catalogue has continued to be an important part of the business," he explains.

Paper catalogues, and magazines even, have since been embraced by many online retailers including ASOS and are now used as serious drivers of incremental sales. Firebox.com publishes three or four catalogues per year (with its winter edition the largest) with 1.5 million distributed throughout the UK.

The company was also ahead of the curve with the use of customer reviews on its website, which it started way back in 2000. Initially these were text-only but with the advent of digital cameras, the uploading of photos and video clips has become commonplace.

"Today every retailer is sending out press releases saying they are doing reviews. Obviously, social networks is a buzzword and every retailer now wants to tap into this," suggests Robinson.

What Firebox.com is currently tapping into is the US market. Since 1998 it had been supplying products to US consumers (through orders to its UK website and shipping them out from its London warehouse).

From late 2006 it undertook a 12-month period of using a freight forwarder, who received regular containers of ordered goods from the UK and then split them up before entering them into the US postal system.

A US-specific website was also constructed with prices quoted in dollars and the content focused on that market. "Our American customers knew about Benny Hill but not about Reg Varney from On the Buses," he says, referring to the very English references that have given Firebox.com its quirky, individual feel.

It is only from November 2007 that Firebox.com has been operating a fully dedicated US division with its own warehouse in Philadelphia handling all the company's fulfilment needs. This has had the effect of pushing up the conversion rate, which not surprisingly were underperforming the levels enjoyed in the UK, which are annualised at around four per cent although they can hit double-digits on peak days.

What will also push the US rate up is PR activity, which constitutes one of the key drivers of the business, along with good old word-of-mouth. Robinson cites a recent New York Times article that mentioned a 'wine wedge' (to enable wine bottles to be held in a stack) and which resulted in 1,300 orders to Firebox.com the next day.

Although it is still early days and sales in the US amount to only a small percentage of total group turnover the country represents a key component of the financially-conservative organic growth strategy of Firebox.com.

Further territories could also be on the horizon, since "Europe is on the doorstep", especially as the company already supplies various European markets on a wholesale basis (which accounts for 10 per cent of group sales when also throwing in its corporate incentive products business). But there is no rush to pursue such a move especially as it is already dealing with Christmas orders.

glynnd@theretailbulletin.com