VitaminShoppe Debuts Intranet Strategy

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VitaminShoppe.com Inc. has launched an aggressive intranet program as part of a customer acquisition strategy.


First to sign up are Oracle Corp., OnlineBenefits Inc., Arthur Andersen and PricewaterhouseCoopers. Inclusion in these companies' intranets -- internal communication networks -- gives VitaminShoppe.com exposure to more than 150,000 employees who mirror its own upper-income and computer-savvy customer base.


"As we expand the strategy, we're acquiring new customers and not paying separate media costs for them," said Lloyd Cheu, vice president of strategic planning at VitaminShoppe.com, a New York subsidiary of Vitamin Shoppe Industries that retails vitamins, supplements and nutritional products. So, for example, our costs associated with acquiring new customers is the discount on promotions we're offering these purchasers as opposed to a national campaign that we might have to run to attract these same customers."


The intranet VitaminShoppe store mirrors the Web site at www.VitaminShoppe.com, with 20,000 products. Depending on the individual arrangements with companies, employees can access it through a VitaminShoppe.com text link, banner, tile or button.


Once an employee clicks on the icon, he or she is greeted with a welcome message. So, for example, Oracle employees are greeted: "Welcome Oracle Employees! We have a special offer for all health-conscious employees. We've teamed up with Oracle to give you an unsurpassed offer on everything you need to keep your body and mind healthy."


The message goes on to promise free next-day delivery for orders placed by 5 p.m. All products will be fulfilled by VitaminShoppe.com and delivered nationwide.


"As we develop a history with each of the companies, we can change the promotion given to the employees based on what types of products they've received or like buying or anything close that might be more appropriate for that consumer base," Cheu said.


This customer acquisition strategy was mapped out after VitaminShoppe.com recognized that most of its 155,000 customers are working people whose employers often compensate longer work hours with more employee-friendly benefits.


"And, as companies expand, the Internet has become more of a presence in both extranet, intranet and e-mail systems in most companies," Cheu said. "We realized that corporations with employees similar to our targeted consumer base became a very viable target."


Cheu said his company explored online and offline media campaigns "but those can get expensive ... and often times TV is more mass-oriented and we're not trying to get a mass audience and just spread our name throughout the world."


The companies that VitaminShoppe.com initially targeted represent disparate branches of the customer acquisition strategy. Oracle represents the large high-tech corporation. OnlineBenefits helps create corporate intranet systems. And Arthur Andersen and PricewaterhouseCoopers have employees who often use their intranets while on the go.


"Across these three different areas, there's another strand: Companies are demanding more and more from their employees," Cheu said. "They're trying to find ways to help the employees cope with the realities, and one way is shopping and getting the benefits and things that you need from your desk."


VitaminShoppe.com, which has had e-commerce capabilities since April of 1998, has grown rapidly since the second half of last year. Last year, it posted sales of $13.6 million, compared with $2.9 million in 1998. Performance was better this year. First-quarter 2000 sales were $9.3 million on losses of $10.1 million. Sales in the first quarter of 1999 were $1.9 million.


By year's end, VitaminShoppe.com hopes to get installed on corporate intranets of 20 companies. This should expose the online retailer to another 300,000 to 400,000 prospects.
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