Part I: A Case for Social Media Consulting

I just finished a financial statement analysis report on Bluefly, Inc (BFLY) for a class. I plan to post a few entries on Bluefly because I find the firm fascinating and I think it is a really interesting example of a firm that could, through the proper use of social media, truly boost its reputation, sales and stock price.

Background: Bluefly is an online clothing retailer who specializes in high-end designer clothes sold at discounted prices. Basically, Bluefly is an online outlet store.
What is fascinating about Bluefly is its complete and utter reliance on technology in order to conduct business. Bluefly does not have any brick and mortar stores. To process calls, the company relies on a 3rd party call center. If the site goes down, they are in serious trouble.

More interesting, is that despite the fact that the company has sustained a net loss since 1998, George Soros’ hedge fund, the Soros’ Management Fund, has continued to pump money into this company. In fact, Soros owns 75% of the firm. The question is: Why does one of the most famous investors of all time own so much of this company? He’s too old to have a teenage daughter

Online Sales GroWING: According to the ComScore Networks, in 2005 online sales grew to $143.2B over the $117.2B spent in 2004. During the holiday shopping season alone, consumers spent $28.2B. Those are big numbers.
In general, e-commerce is expected to continue to increase dramatically due to

  1. Shoppers’ growing familiarity and comfort with shopping online
  2. The proliferation of devices to access the Internet
  3. Technological advances that make navigating the Internet faster and easier

The Fly’s Strategy: Bluefly raised $7M this summer and then announced a full-scale marketing campaign. This is definitely a risky move for a company loosing money. Marketing is expensive, especially for odd television commercials such as this:


Okay weird commercial right?

So this is what I am thinking.
This racy ad is not going to generate sales for the company. Will a shock-value advertisement get the Bluefly name out there? Maybe, but getting the name out there does not equal sales. Instead, it equals high customer acquisition costs.
Here is where COMMUNITY comes in. Bluefly sells luxury goods. Luxury goods are exclusive. Exclusivity = social media opportunity. For example, do you think a woman in Manhattan who shops at Bluefly wants to date a guy from Kansas City who shops at Old Navy? NO!!!!!! These are like minded individuals (high income) shopping here and that means SOCIAL MEDIA TO THE RESCUE.

Continued Tomorrow.


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