RedEnvelope Puts Emphasis on Gift-Giving

It started as a site for procrastinators looking for presents in a jiff. Two years later, it repackaged itself as the elegant-but-creative, any-occasion, gift-only company RedEnvelope.

In a retail climate where online stores are popping up faster than Starbucks coffee shops, Web sites need to work hard to set themselves apart from the pack. RedEnvelope has tried to keep its image simple, marketing itself as a site solely for gifts -- but one with a potpourri of products-with-a-flair, for any occasion imaginable.

RedEnvelope President and CEO Alison May said department store and other retail chain Web sites do many of their sales in the "self-purchase" category. Not so with

"That’s the primary differentiator," she said. "When people think of gifts, they will think of RedEnvelope."

The retailer, which does 50 percent of business online and 50 percent through the catalog, isn’t after just any old consumer, though. Instead, it targets a classy set of gift-bearers with an "upper level of income," according to May. Most of its actual client base is exactly in line with that target: urban or metropolitan-area 30-to-mid-40-somethings who are "basically affluent and educated." Forty percent are men; 60 percent are women.

"It speaks to people who are young at heart but have a high discretionary income," said Marian Salzman, chief strategic officer for EuroRSCG Worldwide. "It speaks to a taste level that you associate with money."

RedEnvelope's marketing tactics seem to be working. Last fiscal year, ending March 31, the company reported revenues of $56 million – compared to $1 million in 1997, its first year of business. And in March of 2003, when it expects to report its first profitable year, May said earnings are projected to exceed the $80 million mark.

Analysts and consumers say RedEnvelope’s appeal is in the wide array of gifts (many exclusive) and suggestions offered; the buyer-friendly way they’re organized; the sleek, signature red-box packaging; and the promise of quick delivery for last-minute shoppers. May said orders taken by Dec. 23 at 10 p.m. ET are still guaranteed to arrive by Christmas this year.

Other sites consumers might turn to for gifts --,, – certainly give RedEnvelope a run for its money. But their product lines tend to be more limited: Martha Stewart is associated with home, Tiffany with elegant, expensive jewelry and Smith & Hawken with garden accessories.

"I think we compete a bit with everyone," said May. "We have 14 different products lines."

Among RedEnvelope’s holiday-themed gifts this year, many of which have gone on sale: gingerbread house ornaments ($14.99-$23.99); a snowman pillow ($19.99); a "jingle bells wreath" for $49.99; and a hearth candelabra for $55.

May said popular gifts this season have been a friendship bracelet with semi-precious stones and a silver "friends" charm; men’s accessories like the sleek "leather top valet" for loose pocket items; and a host of edible Christmas tree ornament sets.

The site also offers a slew of relaxation and bath sets, gadgets, food baskets and romantic gifts like red boxer shorts monogrammed with a favorite term of endearment.

"It’s a very good mix of offbeat things," Salzman said. "You can do all your Christmas shopping here without being cheesebally on anybody."

RedEnvelope customer Liz Rabii Cribbs, 31, of New York, said she’s used the site several times for a variety of occasions when she didn’t have time to go out and buy a present.

"I don’t like to spend any time online or shop around," said Rabii Cribbs. "It’s one-stop shopping. I can be on and off in 10 minutes and find something."

She’s also drawn to the RedEnvelope packaging. The presents are sent in crimson, beribboned boxes with a message card in a red envelope to mimic the Chinese tradition of gift-giving, which is supposed to bring good fortune.

"It’s a little added extra, and that’s what I like about it," Rabii Cribbs said.

When the San Francisco company was founded as in 1997, it catered specifically to last-minute shoppers needing presents in an emergency. But execs found that the concept was sending a mixed message: "I care, but not enough to buy your present ahead of time."

So under the guidance of Chairman Hilary Billings, the site remade itself as the more elegant, romantic RedEnvelope.

Now it offers more than 1,000 items in product categories like "him and her," "spa" and "romance" -- 60 percent of which are exclusive to the company. The merchandise is arranged by occasion, recipient and lifestyle to make it easier on the buyer, who even has the option of searching for gifts by price range or recipient age.

Not everyone is a fan, however. New Yorker Christopher Kamnik, who once bought a Mother’s Day plant from RedEnvelope, thinks the online store is too expensive. Rabii Cribbs also found that to be the case with certain products.

"My mom raved about it, but still …" said Kamnik, 25. "It’s kind of pricey. They killed me on delivery." He said his total for the plant was about $80. He doubts he’ll become a RedEnvelope regular.

"I wouldn’t go out of my way to shop there," he said. "But if I ran out of ideas, I’d check that site out."