Acquisition Complete, Now Comes The Tricky Part for Allwall.com

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Allwall.com Inc., an online retailer of prints, consolidated the playing field last month by buying competitor art.com. But now it has its work cut out for it as it attempts to make a smooth transition to the name art.com.


To handle this rebranding issue, the company will have to inform not only its own customers but also art.com's house file. Then there are the affiliates of allwall.com and art.com that have to redirect links to the new art.com.


"The challenge is to lose the minimum amount of customers as possible," said Joshua Chodniewicz, CEO of allwall.com, Raleigh, NC.


E-mail is the answer for the 27-year-old Chodniewicz, who founded allwall.com in 1995 in a college dormitory as a retailer of art prints, posters, custom framing and photographs.


Next week, allwall.com plans to drop e-mails to 427,000 customers in the art.com database. Simultaneously, it will send e-mails to 250,000 names in its own customer database. It also will inform 80,000 affiliate sites of allwall.com and art.com that they must redirect all links to the new art.com.


Messages will be tailored to the various constituencies. For art.com customers who have heard rumors of a shutdown, the message will seek to regain their confidence.


To further reassure them, allwall.com will emphasize a wider product offering and new items, encouraging customers to "come back to shop with us and give a gift certificate with $10 or $20 off on a frame," Chodniewicz said.


Customers of allwall.com, on the other hand, will receive an e-mail explaining that it is the same company but under a different name.


"If we neglect it, we'll lose all the value in the purchase," Chodniewicz said. "Most of the value in the purchase is in the people that are coming to the site every day, the people that still believe in art.com, buying their products."


But this is largely uncharted territory for Internet companies.


While there have been a few instances where the buyer has adopted the acquired firm's name, not much ink or talk time has been spent discussing potential problems that arise from such an acquisition of one Internet-only company by another.


In allwall.com's case, for instance, does it need to ask the old art.com's customers to opt in again before e-mailing them? And how is it opt-in when the company sends an e-mail asking them to do so?


"It's a tough issue," said Kim MacPherson, president of Inbox Interactive, Bethesda, MD. "In my opinion, the new company needs to get the purchased company's list to opt in again. Just because they've purchased it doesn't mean the customers have opted in to receiving communications."


Chodniewicz said he is working with former art.com parent Getty Images, Seattle, "in order to have the authority to e-mail to those customers according to their privacy policy and ours."


In its heyday, art.com claimed to attract as many as 60,000 unique visitors a day. By contrast, allwall.com has 100,000 daily visitors. But when 4-year-old art.com did not return a profit, Getty Images ran out of patience and sold the firm to the highest bidder -- allwall.com.


While Chodniewicz would not disclose sales terms, he said it was an all-cash deal for art.com's domain name, intellectual property, affiliate relationships, a few physical assets and contracts for strategic partnerships with more than 300 companies.


"[Getty Images] sold because they couldn't run the company into profitability," Chodniewicz said. "They did not want the loss in the business-to-consumer end to drain on their business-to-business end, according to their CEO, Jonathan Klein."


A purveyor of image rights, Getty Images bought art.com in 1999 for $115 million. But losses forced art.com's sale, which was made public May 25.


Now allwall.com is one of the major Internet-only retailers of prints in an estimated $2 billion-a-year online art and poster industry -- nearly 15 percent of the total worldwide market. The online figure includes sales from sothebys.com and various art galleries.


Allwall.com has named Keith Speer, its vice president of business development, to handle the transition from allwall.com to art.com and the e-mail to prep customers and affiliates. Speer co-founded YesMail, an opt-in e-mail marketing firm.


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