Ashford Expects Cross-Marketing Boost From Guild.com Acquisition
Ashford.com, an Internet retailer of fine personal and home décor accessories, this month acquired Guild.com, a multichannel retailer of contemporary art. The deal provides Ashford -- which is aiming to become profitable by this year's holiday season -- with $11.5 million in cash and a business model with no inventory or debt.Ashford expects Guild.com to become cash-positive within six months of closing. Guild.com will receive about 8.7 million shares of Ashford stock.
As a result of the acquisition, Guild.com, Madison, WI, let go of about 20 of its 80-person staff in areas such as finance and customer care, the company said.
Ashford, Houston, will gain access to Guild's 60,000 customers and prospects and will add Guild.com's catalog to its online retailing operations. Before the acquisition, Ashford sent a test catalog -- its first -- to about 200,000 people during the holiday season.
The acquisition also presents several cross-marketing opportunities for the companies, both of which target customers with annual household incomes of more than $100,000. For Guild.com, it means being able to tap into Ashford's approximately 200,000 customers and prospects via online marketing, including e-mail and links on Ashford's Web site.
"Our strength is really online marketing and our ability to apply our traffic and our partnerships online to sell to customers their products," said Kenny Kurtzman, CEO of Ashford. "You put the two together, and we get their catalog experience, and they get our online marketing experience.
"We're looking forward to tapping into their experience," he added.
Guild.com plans to produce Ashford's catalog in the next couple of months, said Toni Sikes, founder and chairman of Guild.com.
The companies, both of which received venture capital from Benchmark Capital, Menlo Park, CA, have cooperated in co-marketing campaigns in the past, Sikes said. Though the companies did not share their lists, she said, each was featured in the other's e-mail newsletter with specials or promotions and a link to the Web site.
Sikes said that while the joint marketing ventures were successful, Guild.com initially refused Ashford's acquisition request. The company later decided to go through with the deal because of Ashford's mass customer base and its ability to acquire customers at a low cost, she said.
"We were struggling with acquiring customers at a cost that made sense from a business perspective," she said. "They have great experience at selling at a low customer acquisition cost, and if they can continue to acquire customers at the rate that they do and we can convert a certain percentage of those, it will help us enormously."
The integration of the companies will begin later this month when Guild.com places a link to its Web site on Ashford's Web site, Sikes said. The companies also are working on putting Guild.com products on Ashford's site, she said.
Ashford will not have to worry about warehousing or fulfillment of Guild.com's products, because Guild.com's business model allows artists and galleries to store and deliver the products themselves.
Representatives of both companies said they expect Guild.com and Ashford to be fully integrated in about six months.
