Daniel Pfeffer from Lighting by Gregory – Podcast Transcript

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Shaun : [0:07] Hi, I’m Shaun Ryan from SLI Systems. This is the eCommerce podcast. Today I am talking to Daniel Pfeffer from Lighting by Gregory. Welcome, Daniel.

Daniel : [0:15] Thank you. It’s good speaking with you, Shaun.

Shaun : [0:18] So, Daniel, just give me a little bit of background about yourself and how you came to be where you’re at today.

Daniel : [0:24] Sure. I live here in New York, married with two kids. I work for Lighting by Gregory as the Chief Executive Officer. I basically have a business background. I came from a family business that was sold, then went off to business school. After business school I got picked up by LinkShare Corporation here in Manhattan, an affiliate solution provider.

[0:50] While I was there, a pretty close friend of mine introduced me to the owner of Lighting by Gregory who asked me to come on and build out his website. That was four years ago. Since that point, we’ve gone forward and built the business out. We recently sold the business to a private equity firm, and I became Chief Executive Officer of the complete corporation.

Shaun : [1:11] Wow, that’s quite a rise over just four years, isn’t it?

Daniel : [1:15] Yes, it’s very exciting.

Shaun : [1:17] So, can you tell me a little bit about Lighting by Gregory? How long has it been around and what do you do?

Daniel : [1:22] Sure. Lighting by Gregory is one of the oldest lighting companies here in Manhattan. We’ve been in business for 25 years. We primarily service consumers, decorators, architects and designers in the tri-state area. We are the largest lighting showroom in Manhattan, and for many people who may not know this there is actually a lighting district in New York City. We’re one of the flagship stores down here on the Bowery.

[1:51] We sell over 300 different lines of manufacturers, specifically decorative lighting. On the web we offer over 150,000 products so we have both the retail presence and the .com presence, and we’re a multi channel retailer.

Shaun : [2:09] That’s a huge number of SKUs on your online store, and you have just the one store in Manhattan?

Daniel : [2:16] Correct. We have one store under thisbrella.

Shaun : [2:19] Cool. Now, how much do you sell online per month? Are you allowed to reveal that?

Daniel : [2:25] Well, being that our numbers are a bit guarded, we do do hundreds of transactions a day.

Shaun : [2:33] Cool That’s fine. I understand that you can’t always disclose numbers. Maybe, you can let us know how fast you’ve been growing recently in the four years you’ve been going.

Daniel : [2:46] Well, sure. This year we’ve been seeing growth rates of roughly 60 percent year over year. The first year was pretty large growth in the 1, 000 percent range, but we’ve basically been between 50 to 75 percent when we look on a monthly basis year over year.

Shaun : [3:03] That’s a fantastic rate of growth. It’s hard to keep up that 1, 000 percent growth rate.

Daniel : [3:07] It sure is as it becomes more competitive and things grow. It sure is, Shaun.

Shaun : [3:13] Even at 60 to 70 percent that must be fairly difficult to keep up that rate of growth.

Daniel : [3:17] It is, yes. And there are some concerns definitely coming into a slower economy. Of course, we’ve seen the traffic dwindle because of that.

Shaun : [3:26] Yeah, I think that’s been seen across the board. Have you seen that more your physical store or less at your online store, or has it been the same across the board?

Daniel : [3:39] The showroom business–it’s been in business for a long period of time so retail, as we know, grows at a much slower clip. This is really a niche kind of product so there’s a lot of repetitive sales in the showroom. That business moves along, but it is not really a high growth business. Primarily on the Web is where we’re really keep a good track of the traffic, and this is where we’ve seen it tail down probably in the last 60 days.

Shaun : [4:10] I think a lot of people are saying that at the moment. Can you tell me how do you attract customers to your site?

Daniel : [4:16] We attract them through a variety of different ways. We have an expansive PPC program. We have an expansive affiliate program. We have an expansive email marketing program and media, both online and offline. We have an in-house marketing team, and we also work with an outsourced agency handling our search engine optimization.

Shaun : [4:38] And you do the PPC in-house as well?

Daniel : [4:40] PPC is all done in-house.

Shaun : [4:42] Cool. So, how many people do you have on your marketing team running all of those programs?

Daniel : [4:47] Five people.

Shaun : [4:48] That’ll be five busy people, I imagine.

Daniel : [4:51] They are very busy. We also have a graphic designer who’s got a million projects on his desk every day.

Shaun : [4:58] Is there a marketing campaign that you are particularly proud of?

Daniel : [5:05] I’m just trying to think. We’ve done a lot of different marketing campaigns. One in particular was one with one of our large manufacturers where we were offering the ability to bundle together a variety of different packages. When you were looking at one product you were able to see a lot of different related products. That was very helpful for us in terms of consumers coming across. They were able to buy a fan and then purchase another fan with that. It’s one of the best programs that we’ve had.

[5:42] We had to run it for a short period of time. It was kind of an open window, but it worked very successfully for us.

Shaun : [5:48] Right. That’s upselling, and you end up selling more to every customer than you otherwise would have.

Daniel : [5:53] Correct. That really worked well from a navigational sense.
Shaun: [5:57] Cool. You obviously follow what’s happening online and your competitors and other eCommerce sites. Is there any eCommerce site that you particularly admire and try to replicate?

Daniel : [6:12] As a direct competitor we definitely see what’s going out in the space, and we recognize many of our competitors out there. There was one particular site which we were looking at, Action Envelope, which was done by a design firm here in Manhattan. It just has an incredible usability, and it’s an award-winning site. One of my friends developed the site, and it just has an incredible, incredible appearance and functionality to it.

Shaun : [6:41] What do they do that’s different? How do they make…

Daniel : [6:44] You can really customize a product. Whatever envelope you want, any package, it asks if you want to design one, develop one or whatever it may be. It’s all about user experience, and that’s where we kind of see our site going as well.

[7:02] We really want to concentrate on the user experience, whether it be the navigation, the ability to sift through a hundred plus thousand products. We just want to give that user the ability to really find what they are looking for and then customize it when they actually get it. We have a lot of Ashby template work done on our site. We sell a lot of fans, and fans have a tremendous amount of facets that you can choose when you are putting them together.

Shaun : [7:23] Yes. I’ve seen a little bit of that looking at the search on your site. Can you tell me a little bit about the eCommerce site itself? What technology are you using to run the store?

Daniel : [7:39] The business itself sits on a Miva Merchant 5.5 eCommerce package, and then we have a customized fulfillment CRM package that we work on here internally to ram that out. Then, of course, we use SLI search as well which is a very integral part of the way in which we sell our products.

Shaun : [8:05] Excellent. The Miva Merchant, is that software you’re using or is that a service?

Daniel : [8:12] It is actually a software that we use basically.

Shaun : [8:15] OK.

Daniel : [8:16] We customize and build it and we have in-house developers. It’s kind of like an open-source e-commerce package. It is an out-of-box package.

Shaun : [8:26] Yeah. So what are your big headaches at the moment? What are you working on?

Daniel : [8:33] Our biggest headache of course is managing the catalog. When you sell home decor products, there are constantly new products coming on and constantly new products going off.

[8:42] And specific to the economy and the increase in the price of all raw materials, we are constantly changing the prices a lot more than we ever did. So we continue to grow the catalog out aggressively and take on new lines aggressively.

[8:55] So the whole idea of managing that catalogue and then allowing the user to find everything within our catalog easily is our biggest headache I think.

Shaun : [9:06] Yeah, I hear that is a common headache, particularly amongst retailers that have large catalogs. If you have 150,000 SKUs it must be difficult. How do you get up-to-date data for all those, in terms of images, descriptions?

Daniel : [9:23] We work very closely with our manufacturers. Being that this is an old line business, we do a lot of this in-house.

Shaun : [9:29] Yeah.

Daniel : [9:29] And we have to build out a lot of the data in-house. So we have a pretty extensive team in-house that manages the relationships with the manufacturers with whom we deal.

[9:38] Then we really custom-build the catalog for each one of the manufacturers. So it’s almost like we build a whole new website for each manufacturer that we put up.

Shaun : [9:45] Yeah. So you ask the manufacturer to give you their data in a certain format so that you can then integrate it into your site?

Daniel : [9:53] Correct. We get the manufacturers’ data in a certain format. But we still really need to do a tremendous amount of work on it.

Shaun : [10:03] Yeah. Yeah. No, I understand. So how many people do you have on your technical team?

Daniel : [10:08] At any given time, it’s seven to ten, whether they are in-house or outsourced.

Shaun : [10:14] So what are you looking to change in the coming year?

Daniel : [10:18] I think our big focus this year — recently last year we did an aesthetic site design change. Our focus was to add product to the site.

[10:32] But really our main focus for ’08 and finishing that and going into ’09 is really to create incredible site usability, user experience that’s second to none within the space. So we are going to do another redesign of the site and spend a lot of time creating wireframes.

[10:53] We use Omniture Analytics as well to get a really good sense of the traffic coming across the site and what it is that they are actually doing and looking and why they are exiting and redesigning the site based on those reasons.

Shaun : [11:04] So as well as looking at analytics, are you also doing surveys of your users to find out what they want?

Daniel : [11:11] We do. We do have surveys at checkout. We have surveys for orders coming in over the phone. Because we are a multichannel retailer, we have surveys in our showroom to understand their experience on the Web and how it relates to the showroom because many times we find that people come into the store with information right off the Web.

Shaun : [11:37] Yeah.

Daniel : [11:37] So we would like to understand how that works and what we can do to make it easier. It would be of course better if they purchased online rather than coming into the store because it would be an easier purchase. But doing it the same way, doing it together is perfect for us.

Shaun : [11:51] Yeah. Do you have trouble tracking that behavior?

Daniel : [11:56] It is definitely a challenge because there are many customers coming across. There are definitely great analytics tools out there. But it is just hard to gather it all together and make heads or tails of it. But we do the best we can to thumb through it.

Shaun : [12:10] Yeah. It is particularly hard if they come to you through a PPC campaign to find it all online and then go into the store and buy it.

Daniel : [12:18] Correct. That makes it very difficult because it becomes disjointed. And it is the kind of product of course that many times people want to see and touch it before they actually buy. So because it is decorative in nature and we have a very high average order value, it has to be really thought about before they actually make the purchase. It’s not as much of an impulse buy.

Shaun : [12:39] Yeah. Now just out of interest, the interactive features that you’re looking to add, are you going to be using AJAX technology for some of that?

Daniel : [12:49] We are, yes.

Shaun : [12:50] Right. That is a definite trend we are seeing. It seems to make a huge difference to the richness of the site and the feeling of the site.

Daniel : [13:01] Yes, absolutely. We are testing a lot of different pages right now to see what is going to give us the best conversion rates.

Shaun : [13:09] Oh, that is going to be interesting. Now, you mentioned you are using SLI for your site search. How have you found that experience?

Daniel : [13:16] It has really been an absolute pleasure working with SLI. We have changed our site search and changed our pages so many times and have been on the phone with our rep, David Getlinger and your folks out in California.

[13:30] Every single thing that we have asked them for, the response has been spectacular. And as we have been working closer and closer with SLI, we see our conversions continue to increase.

[13:42] We ask for a lot of feedback, specifically for our site search because when you are searching for these kinds of products online, the way in which the sites navigate is very important.

[13:54] What we had originally done was had our own site search built for us. It just needed to be shelved quickly. When we went out to look at some of your competitors, we just found SLI great. They were very responsive and they seemed to understand our business and really were able to act in a way that completely customized the package every single time we needed to make a change.

[14:18] If we had a design change and we needed the way that the search results should, we would be able to work with SLI and get it done quickly. It wasn’t a long lead time. That’s why I really enjoy working with them.

Shaun : [14:30] That is great to hear. I hope we can keep up that level of service for you.

Daniel : [14:35] Absolutely.

Shaun : [14:37] Now, have you listened to any of these e-commerce broadcasts?

Daniel : [14:42] Have I heard any before?

Shaun : [14:44] Yes.

Daniel : [14:44] I have heard a couple but I have not heard the SLI ones.

Shaun : [14:47] You haven’t heard them. So just out of interest, what sorts of things would you like to hear if you are hearing another online retailer talking about their experiences?

Daniel : [14:59] I think it’s always interesting to hear about people’s current headaches and what they are facing. I read a lot of the trades and it just seems as though as you go through in building out businesses and as they become larger and larger online, everybody seems to feel the same pain at the same time basically.

[15:18] They get to a certain level and they say, "Oh, I need to upgrade my site search. Or I need to upgrade my e-commerce package. Or I need to get better customer service."

[15:27] But because it is such a small space, everybody really needs to learn from each other and needs to get feedback on which vendors to work with because if you choose the wrong one it could really be a detrimental choice to your business. It could, in many cases be fatal.

[15:45] So it is really good to hear nice feedback about companies when you are making these big expensive choices and looking to partner with a vendor.

Shaun : [15:52] Yeah. That is important. I think the best practices in e-commerce are still changing and developing. There are some things set in stone. But it keeps on changing as new technologies come along and people work out what works the best.

Daniel : [16:05] Yes, absolutely. So that’s important to know what did work for them and how to keep achieving those numbers.

Shaun : [16:12] Cool. Well, that brings us to an end. So thank you very much for your time Daniel.

Daniel : It’s my pleasure speaking with you Shaun.

Shaun : [16:18] That was Daniel Pfeffer from "Lighting By Gregory". I’m Shaun Ryan from SLI Systems. This is the e-commerce podcast. Catch us next time. Thank you.