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Home-Grown Firm Climbs Corporate Ladder: Page 2

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Posted February 11, 2004 By James Maguire     Feedback
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Custom Gifts, Custom Software
GiftTree has three gift designers who work with companies to develop custom gifts featuring the company logo. The site's photographer takes photos of the gifts in development, posting them on a password-protected page for client approval.

This custom service wasn't available in the site's early days. Before GiftTree hired its first employee, Bowen and his wife outsourced everything, routing all orders to other suppliers. Now, GiftTree combines a complex array of in-house resources and outsourced vendors.

To handle it, the company had to bulk up its software infrastructure, which is built on an Oracle database. "In 2000 and 2001 we probably spent a half million dollars developing our software platform," revealed Bowen. The site now boasts four in-house programmers.

This software handles order routing for the company's catalog of more than 500 gifts. About 125 are stored in its warehouse; about 100 perishables like fresh fruit and chocolates are drop-shipped from outsourcers. For the remaining gifts, depending on a number of factors -- such as customer budget and schedule -- company branded packing material is sent to external suppliers who assemble product and ship it directly, or the gift is assembled in house.

Getting the Word Out
Of the various methods GiftTree uses to increase sales -- sponsorships on major portals, search engines, an affiliate program, and coupons -- Bowen finds existing customers to be the best resource. To mine customer data, the site's software looks for certain buyer characteristics: shopping behavior, frequency and amount of purchase. After identifying prospects the site may call the customer, or, appropriately, send them a gift.

The site's customers include individual buyers as well as corporate customers. Although Bowen says the individual market is not too profitable, it still represents a window to corporate sales. "You never know when someone's going to take us to work with them."

GiftTree has a group of phone salespeople who aggressively sell to the corporate market. Phone sales work better than Web advertising to reach the corporate audience because "we don't have a brand," Bowen said, explaining that since GiftTree is not a high profile company, these buyers need a more direct sales pitch.

The site also has begun printing a paper catalog. "Printed catalogs and direct sales are a lot more predictable," Bowen explained. "The same amount of effort produces a greater amount of return."

Staying Afloat
Like any business owner, Bowen has things that keep him up into the wee hours of the night. In particular, the vulnerability of having most of GiftTree's transactions flow through the Internet. To address this, the company set up redundant power supplies and pipes to the Internet.

Another concern is relying on delivery services for customer satisfaction. Fearing that either UPS or FedEx could disable his business by striking, Bowen set up a system that works with both, at considerable expense.

Finding funds for continued growth is yet another concern. Although the business is profitable, much of the profit is funneled back into building the gifts services concept, Bowen said. And accepting venture funding is something he's loathe to do. He has seen friends lose control of their businesses due to what he calls "venture vultures."

"We always find a way around [venture funding]. But it concerns me down the road, that eventually it's going to put a damper on how much we can grow in a year," Bowen said. "I'll probably decide to slow down instead of get a boss."

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