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FAO’s roller-coaster week
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December 3, 1999: 3:24 p.m. ET
Redesign brings strong surge in sales, but online survey remains unconvinced
By Staff Writer Tom Johnson
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NEW YORK (CNNfn) - After two weeks of downright holiday bliss, the FAO.com team’s joyful demeanor came unwrapped Thursday quicker than a present on Christmas morning.
In the last 20 days alone, the New York-based Internet arm of legendary toy retailer FAO Schwarz had launched a complete redesign of its Web site, introduced a new Spanish site and generated holiday sales returns beyond even the company’s wildest dreams.
But on Thursday, the group’s upbeat disposition was dampened significantly when Gomez Advisors, the Boston-based e-commerce research firm that advises consumers on the best places to shop online, unveiled its updated scorecard for Internet toy stores.
Surprisingly, despite all the site improvements and an overall score that doubled its fall 1999 tally, FAO Schwarz maintained its distinction of ranking dead last among 17 sites that were surveyed by Gomez’ experts.
"I really can’t believe this,” said a disheartened Jennifer Townsend, FAO Schwarz’ director of new media and chief architect of the company’s redesigned Web site. "I can’t say that I am at all happy.”
"Happy” might have been an understatement in the days leading up to the survey.
After having more than its share of problems launching the redesigned Web site in mid-November, FAO’s online store had performed like a well-oiled machine through the busy Thanksgiving holiday weekend, avoiding some of the technical problems that have plagued its bigger-name competitors.
A stark contrast to a site analysts had called "drab” before the redesign, FAO.com customers were now being immediately greeted with an array of colors and graphics, more flexible search engines, a gift finder, and the ability to create a wish list, all without having to even scroll down.
Adding to the experience was the new option of viewing an animated introduction meant to address one of the company’s biggest challenges online -- recreating the unique sense of wonderment experienced by shoppers at FAO’s Manhattan store.
Though deemed too slow in its first few days, the graphic, featuring a small boy rushing past the life-size toy soldier that greets shoppers at FAO’s Manhattan store, Townsend and her content manager, Tami Zonenshine, removed enough technical bottlenecks to have the display running smoothly in time for the bulk of the holiday season.
Recreating the real-world FAO Schwarz shopping experience online was a major challenge faced by the Web site
The response from consumers was almost immediate. When the November sales and traffic figures rolled in Wednesday, Townsend smiled like a proud mother.
"I’m just flabbergasted by the sales,” she said scanning the numbers. "As of Nov. 30, we saw a 300 increase in sales. Page views doubled during November. Every day it’s going up. We’re way ahead of our own projections.”
Because it is privately held, FAO Schwarz does not release exact sales figures for either its online or bricks-and-mortar stores. But, Townsend put the numbers in perspective by calculating that November’s sales were 159.2 percent above her own projections heading into the holiday season.
Yet, despite the improvements, which Liz Leonard, Gomez Advisors’ senior online retail analyst, readily acknowledged, FAO.com still found itself on the bottom looking up in Gomez’ latest survey at such startups as Ace Toys and Netoy.com, not to mention industry giants like eToys (ETYS) and Amazon.com (AMZN).
"FAO made improvements that were both superficial -- in both the friendliness of the site and the colors they chose -- and they added a higher level of functionality,” Leonard said. "But I still believe that they are not fully understanding the customers needs for security and privacy.”
Leonard said her survey found nothing specifically unsafe about using FAO’s site. Rather, she said, the concerns came more from how the site presented itself, which could raise some warning bells among consumers.
For instance, while FAO.com provides a link to its privacy and security statement on its home page, Leonard said it is not as prominently displayed as other sites like KBkids.com.
Second, Leonard said the company’s wish list function, now prominently displayed on the company’s home page, will still raise some privacy concerns with consumers because it opens another browser and take shoppers to ivebeengood.com, FAO’s online partner.
That, Townsend said, is hardly uncommon in the rapidly expanding world of online retailing.
"That I don’t understand because some of the most upscale merchants on the Web right now are using partner sites,” she said. "I’m beginning to not take her analysis so seriously.”
Costs drive score down
A closer look at Gomez’ scorecard clearly indicates that, more than anything else, FAO.com was hurt by the one thing out of its control -- cost.
An upscale retailer in its own right, FAO Schwarz is not only known for its hard-to-find toys, it is also quite famous for its not-so-low prices.
To help manage her own budget, Townsend established a $20 to $25 threshold for toys that appear on the site, thus making it profitable to sell and ship the items. But, in a store where a $125 Dream Kitchen play set sits alongside a $750 LGB Christmas Classic Train Set, that hardly eliminated many items.
If the truth be told, FAO Schwarz boasts hundreds of items under $40. But Gomez’s ratings, designed to judge all aspects of a consumer’s online shopping experience, severely penalized FAO.com for the average cost of its gifts, a figure inflated by its higher-priced, exclusive items.
Its rankings in other areas were much better, including a seventh place finish in the "On-site Resources” category, where it outperformed such industry giants as Toys R Us (TOY) and Wal-Mart (WMT).
Other analysts said the FAO site, while still lagging some peers, was clearly on the right track.
"They are doing a lot more things right,” said Seema Williams, a consumer e-commerce retail analyst with Forrester Research. "The challenge is to stay ahead in their product set. eToys and Amazon.com are convinced they can dominate every product set.”
But Townsend is not so sure. After proclaiming herself "unconvinced” by Gomez’ analysis, she found herself reciting the reasons she redesigned the site in the first place.
"Believe me, I take [the rankings] very personally because this is my work,” she said. "But at the same time, I don’t feel they have been able to offer me a whole lot. So I’m kind of taking this with a grain of salt.
"I’m not going to apologize for the fact that we haven’t thrown a lot of money at this site. But I don’t necessarily want to be an eToys or an Amazon.com I want to be a specialty store that offers unique products.
Still, she could resist one last dig at her notoriously cash guzzling competitors.
"At least we run a profitable site,” she said. "I don’t think they took that into account in their survey.” 
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FAO Schwarz
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