Reference no: EM131463517

Question: More than 500 luggage stores in the United States closed in the travel slump that began September 11, 2001. eBags, the online luggage and handbag retailer, was just a few years old at the time, and a few thousand dollars away from turning its first profit. But like many other firms, it immediately set up a way for customers to donate money in the wake of the terrorist attacks, collecting almost a quarter of a million dollars. "We were about four days into it," however, says cofounder and current CEO Jon Nordmark, "when we realized ‘Oh my God, we're not getting any orders,'" As fellow cofounder and senior vice president Peter Cobb describes the situation, the fall-off in travel, and therefore in luggage sales, combined with the recent dot-com bust to spell bad news for the firm. "We were really just in a foxhole waiting for nuclear winter to end." The company moved fast, however, expanding its product offerings to "day" bags-briefcases, backpacks, purses, laptop bags, and so on-and relying on its policy of drop shipping (ordering from suppliers only when customers ordered from eBags, and letting suppliers ship to customers) to avoid holding a big inventory of unsold products. Thanks to quick action and good business planning, eBags did turn a profit that year and never looked back. Today, it is a $100 million company with about 200 employees and has sold over 7 million bags since its founding.

As the biggest online retailer of luggage and bags of all kinds and a leader in the use of Internet technology, it offers about 36,000 different products from 520 brands. Inspired by its fund-raising success after 9/11, the company also continues its commitment to the community, giving more than $500,000 to breast cancer research and donating thousands of bags and packs to foster children around the United States. Hallmarks of eBags' award-winning website are multiple photos of each product, full-color images in every available color instead of mere swatches, and homemade videos starring employees who seek out and interview up-and-coming New York and Los Angeles designers to showcase their products on the site. Google Maps help shoppers locate other new designers around the country. Specialized search tools locate specific products, like airlineapproved carry-ons. Unlimited customer reviews-as many as 4,000 for one popular product and more than 1.5 million overall- encourage customers to rate products and read others' comments. Visitors can even post their own videos. "What we're really saying is, ‘It's your whiteboard,'" says Cobb. The company developed most of these interactive software applications in-house. They're costly to maintain, requiring a staff of forty people and a budget of about $10 million. But eBags believes they contribute directly to sales, which doubled in one recent year and continue to grow. "It is important for us to have unlimited customer reviews, so we do it ourselves," says Cobb. "An outside vendor might limit you to 100 customer reviews. . . . [W]hen you go outside, you tend to be forced to cut corners on innovation-you have to dilute the customer experience to be like everyone else."10 For more information about this company, go to www.ebags.com.

1. What are some of the reasons eBags has grown to be so successful?

2. What information do you think a company like eBags collects from its website, and how does it use these data?

3. eBags was one of the first online stores to allow customer reviews on its website, and it recently announced plans to sell the technology it developed to selected other retailers like Case Logic, which makes camera and laptop bags. How else do you think a firm like eBags can continue to grow online in the future?