Analyze Case Study - "The Cliptomania Web Store"

• Show the strategic issues faced by the company in launching and developing their e-business venture.
• Provide your recommendations and analysis.

The Cliptomania Web Store

Cliptomania, LLC, a limited liability company, sells clipon earrings on the Internet. Cliptomania is owned and operated by the Santo family-father Jim, daughter Christy and mother Candy. Its business is conducted from the lower level of the Santo home in Indiana, but it sells non pierced earrings all through the United States, Ireland, Canada, Australia, and New Zealand.

Most people who wear earrings have pierced ears, so stores provide a limited assortment of non pierced earrings. Those who want clip-ons have a very difficult time finding appealing choices. Cliptomania sells nothing but non pierced earrings, and it provides its customers a choice of hundreds of different styles of clip-ons.

though the percentage of people who want clip-ons is small, the total number of potential customers required to Cliptomania on the Web is huge. The Santos have found an underserved market niche. According to Candy: A lot of our buyers are first-time buyers on the Internet, and some of them are older women. But you would be surprised how many teens and young twenties buy because for one reason or another they have had trouble with pierced ears. There are young mothers whose babies ripped the earrings out of their ears and their ears cannot be pierced again. And there are people like me who have problems with scarring forming keloids and don't want any needless scars. There are people for whom piercing their ears is against their religious beliefs.

Some women are so thrilled to find us-they may tell me that they have this problem or that problem and ask which of the earrings will work best for them. Due to there are various different types of clip mechanisms, I can often help them out. Our customers are pretty evenly distributed by age from pre-teens to the elderly. We had not anticipated it, but we approximation that we get some 5 percent of our sales from the cross-dresser and transgender population.

The Santos want Cliptomania to become the first name someone thinks of when looking for non pierced earrings. They concentrate on providing a quality product at a competitive price with outstanding customer service.

They have worked diligently to give quality, honesty, and friendliness through the Cliptomania Web site. For instance, Cliptomania has a very liberal return or exchange policy that allows customers to return or exchange any item within 30 days for any reason without question. Less than one percent of their customers return any items.

First established as a Yahoo! store in November of 1999, Cliptomania has had spectacular growth in sales during a very difficult period for retailing. Although it sells only clip-on earrings, by June 2003 Cliptomania was the fifth largest jewelry store on Yahoo! in terms of gross sales. Yahoo! store customers are encouraged to rate their satisfaction (or lack thereof) with their experience with the store. If they choose to rate the store, in two weeks (by which time they should have received their purchases) they
are sent an e-mail pointing to an online rating form to complete.

History

In the mid-1990s, Jim and Candy Santo were living in New Jersey near New York City. Candy was the development director for a large nonprofit organization that provided a broad continuum of care for the homeless, and before that she had been executive director of a crisis line. Jim had a long-time career in insurance sales that he still continues.

According to Jim:
In 1998 I went out to buy earrings for an anniversary present for Candy, and I could not find a good selection of nice clip-on earrings anywhere. I looked everywhere I could think of in the New York metropolitan area. I could find plenty of earrings for pierced ears, but it was clear that all the stores had decided that they could not sell enough clip-ons to justify carrying an adequate stock in their stores.

I knew that there must be millions of people in the world who wanted clip-ons and could not find what they wanted, so this appeared to be a great opportunity to sell them on the Internet. This intrigued me, but I knew little about the Internet or jewelry so I started staying up at night and working weekends doing research on jewelry and how to sell via the Internet.

After 13 months of research I concluded that the Internet was the ideal medium for this type of business. Earrings had a high markup, you could get started with little capital, and the Internet was the way to access the widely distributed market for clip-on earrings.

The Santos decided to try to sell clip-ons on the Web, and Candy came up with the name Cliptomania for their new Web store. They decided that if the URL Cliptomania.com was available and the name Cliptomania had not been registered as a corporate name, they would go forward with the endeavor.

They employed a patent and trademark attorney who checked and found that the corporate name appeared to be available. And they were able to purchase the URL Cliptomania.com from Network Solutions, so they decided to go ahead.

On Thanksgiving day, 1999, traditionally the beginning of the Christmas holiday sales season in the United States, they went live with the Cliptomania store on the Web, operating out of one small room of their home in New Jersey. Their total capital investment was $10,000, which came from their savings. Although Jim had hopes that Cliptomania would grow, they expected it to be a sideline activity that they would take care of in their spare time while continuing their regular jobs.

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