Alloy Online Sales to Rise as Teens Hop Online: Forum
Boston, July 14 (Bloomberg) -- Alloy Online Inc. sales are likely to double this year to about $20 million as more teenagers buy clothes from its Web site and print catalog, Chairman Matt Diamond said. ''We think of our Web site as mall, where kids go to hang out and occasionally shop,'' Diamond told the Bloomberg Forum.
Alloy Online, which Diamond and co-founder Jim Johnson started in 1996 as a Web site selling snowboarding apparel, targets teenagers' wallets by combining an online clothes catalog with free electronic mail, movie reviews and other entertainment. The company also mails millions of its paper catalog, which accounts for about three-quarters of Alloy Online's sales. ''The catalog is the most effective marketing means we've got because we get into the home. It's a snapshot of the whole Web site,'' Diamond said.
New York-based Alloy Online's sales increased to $10.2 million in its fiscal year ended Jan. 31 from $1.8 million in the previous year. Its losses are widening as it spends more on marketing to grab the attention of ''Generation Y'' consumers, 60 million people between 10 to 24 years old. ''It's a massive market. Teens spend probably spend $40 billion a year in apparel,'' Johnson told the Bloomberg Forum. Nearly 25 percent of Alloy's sales come from its Web site, and that will rise as more teens shop online, he said.
Still, that potential hasn't been reflected in Alloy's shares. After selling shares to the public in May at $15 each, the stock has fallen to about $12 a share. Since Alloy went public, the Bloomberg Internet Index has dropped 3 percent. 'Timing' ''Some of (the drop) has to do with timing,'' said Diamond. ''With $50 million of cash in this market, we are way undervalued.''
Alloy's biggest competitor is iTurf Inc., which also combines content with online shopping, the Alloy executives said. The main difference is that iTurf targets girls more than Alloy, said Diamond.
Alloy now has about 850,000 registered users, up from about 570,000 at the end of April, Johnson said. The company started a registration program about five months ago, he said.
About 90 percent of the company's revenue now comes from selling items, with the remainder coming from advertising. That eventually will shift so that online advertising and sponsorships will account for 25 percent of revenue, said Diamond.
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