Omaha, NE— Hayneedle celebrated 15 years in business on February 21, and Jon Barker, the company’s president and CEO told HomeWorld Business the evolution that took the operation from being a niche retailer to a broad-based home furnishings business recently acquired by Walmart continues based on established initiatives and new opportunities.
Hayneedle started out as hammocks.com 15 years ago. The company, as then constituted, began to rapidly expand as product-specific websites focused on providing a depth of offering that might be otherwise difficult to find. With items ranging from Adirondack chairs to mirrors, the business grew to more than 250 online stores.
Yet challenges emerged with the business model as the operation grew.
“It took us from a humble beginning to our becoming a fast growing business,” Barker said. “But by 2007, 2008, we determined the model was working well but not giving us an opportunity to build relationships with customers across the full range of what we do.”
Hayneedle, at that point began a process aimed at recasting its relationships with the customers of its various websites. In 2009, the company that up until then was called NetShops became Hayneedle as part of what became a multi-year rebranding and reorganization process. An initial aim was positioning the business as an encompassing brand incorporating the various unique storefronts and offering consumers with a unique retail proposition.
Then, a new kind of opportunity came knocking.
In February 2016, Jet.com completed a friendly acquisition of Hayneedle. In fact, Barker said that the executive teams at Hayneedle and Jet, headed up in the case of the acquiring firm by CEO Marc Lore, had worked together extensively arranging the deal.
The acquisition came at a time when Jet was pushing aggressively to add customers. With sales estimated at between $350 million to $400 million, according to published reports, Hayneedle delivered a sizable pool of new customers and also gave Jet, which is more focused on consumables sales, a boost in sectors where it was less active. Just weeks later, in August of last year, Walmart announced that it had purchased Jet, with Hayneedle coming along for the ride.
“We were planning for and so were aware of the Jet acquisition, working with Mark and his team for awhile,” Barker said. “The Walmart acquisition was less visible to us. It would create challenges for most small entrepreneurial companies to become part of the largest retailer in the world, but what actually occurred is the acquisition created greater opportunity for Hayneedle and its employees. It took a little time to understand what it means but now, five months in, the value to Hayneedle, its employees and its customers is turning out to be in a very successful relationship.”
As for the vendor universe, Barker said, the relationship forged with Walmart gives Hayneedle vendors greater access to suppliers who have been working with Walmart and now can reach consumers through Hayneedle as well. In addition, Hayneedle suppliers have the opportunity to work with Walmart.com and Jet.com to reach a vast additional customer base. Vendors of each operation now have the means to reach consumers through three online retailers who each have a unique approach to the market and also have particular strength with different audiences.
Indeed, Barker said Hayneedle is encouraging vendors to look at all the sites now under the Walmart umbrella then assess and think about how they can customize their approaches to the core audience of each.
The opportunities afforded by the acquisitions provide Hayneedle with additional resources it can use internally in developing new and ramping up existing initiatives devised to enhance the customer experience.
“The team now has the ability to invest behind the brand, what we stand for, in a larger and different way,” Barker said. “As part of that, you will see us invest into technology that helps the consumer, pulling inspiration and action together in various platforms for room planning, such as augmented reality and virtual reality.”
The company also has the means to make fresh investments in its assortment, including national brands and its private label program, which includes the Belham Living and Coral Coast furnishings banners. As it continues pushing to improve its standing with consumers Hayneedle has been reengineering the site to improve search, upgrade content and otherwise enhance the customer experience. Lately, the drive to augment shopper interaction with the site has included the launch of an adaptive web platform as the company works to ensure consumer customer satisfaction whether using a fixed or mobile device.
Still, although it is investing substantially in the post-merger environment, Barker said, Hayneedle is doing so in a focused way, with shopper satisfaction the central preoccupation.
“We will tailor technology to the needs of the customer and design investments in areas such as adaptive web designs as we move into mobile from desktop and laptop operations,” he said. “That’s a multi-year investment, and we already are in year three. So, we’ll continue to invest over the next couple of years to fully roll that out. I can tell you, the investments we are able to make as part of a larger organization, the capability we have to access resources we didn’t have, are immense, and we will use those resources and capability to enhance the business.”
Although it has garnered attention recently because of the Jet and Walmart acquisitions, Hayneedle’s platform is founded on the measures the company has taken over the past eight years to create a brand and an operation that offer consumers a comprehensive destination for home-related merchandise. To get where it is today, Hayneedle needed to undertake virtual nuts and bolts efforts such as developing a universal shopping cart, a project undertaken in 2009, to link all the company’s sites with the larger and newly launched Hayneedle.com operation. It also featured product line expansion especially in categories where Hayneedle wasn’t well represented such as small kitchen appliances, tabletop and storage.
Hayneedle also has been building up the fulfillment end of the business. In January, Hayneedle announced that it would open up a 994,000 square foot fulfillment center in Monroe, OH, to supplement an existing 721,000 square foot facility located five miles away. With the company’s 300,000 square foot Riverside, CA, facility, Hayneedle has a fulfillment capacity of more than two million square feet and, Barker emphasized, the ability to ship from the eastern and western time zones.
As it developed under the Hayneedle banner, the company also needed to realign internally. Barker noted that running “200-plus web sites made for a very entrepreneurial culture. Now, all of the sudden, everyone’s part of a brand that has to be running cohesively. We have to create content, develop marketing to support the brand. It was new and different, and you have to think holistically with the customers.”
Although it took time to execute, Barker characterized the realignment as a success.
“Over the past two years, we seen interaction with the consumer increase, and not only in terms of what we’re selling but also repeat business, and our satisfaction survey numbers are going up,” Barker noted.
To boost its relationship-building efforts, Hayneedle launched a loyalty program two and a half years ago, Barker said, one that offers 3% cash back on future purchases for every dollar spent, $2 for a written review of a product purchases and $3 for a review that includes an image or video.
At the same time, the e-tailer has been refining its marketing program, where e-mail is a critical factor. Hayneedle has concentration on more effectively using calendar-based scheduling and personal preference data, including that derived from tracking shoppers as they navigate through its various presentations, to make communications more relevant.
A critical point of differentiation between Hayneedle and other online retailers is its call center operation, Barker noted. What it calls its customer care center is located near its headquarters, in Omaha, NE. Barker said Hayneedle promotes contact with the center throughout the site. Staff includes specialists who have detailed knowledge of just about anything in the Hayneedle product assortment so they can help consumers consider purchases, a factor that can be especially important when consumers shop big-ticket items or products from categories where available features vary widely. If they can’t immediately answer customer questions, the specialists contact vendors and get answers for customers in a timely fashion.
“We take all our own calls,” Barker said. “It sets us apart from anything in the industry. We’re heavily invested in the call center operation. We’re aware of the cost, but we believe the call center is not about cost, but the relationship with the customer and what the customer needs. We don’t have plans to ever to go offshore.”
Today, Hayneedle’s evolution has reached a new stage with expansive possibility.
“Rarely do you hear, in the world of mergers and acquisitions, of one that turns out to be positive for all involved. Now, we’ve been involved in two in one year, and both have been successful for all parties involved including for employees, suppliers and investors,” Barker said.
