CAMPAIGNS: Low costs pay off for new Buy.com

PR Team: Buy.com and ThinkBig (Aliso Viejo, CA) Campaign: Price war Time Frame: June 18-21, 2002 Budget: Part of the normal contract costs

PR Team: Buy.com and ThinkBig (Aliso Viejo, CA) Campaign: Price war Time Frame: June 18-21, 2002 Budget: Part of the normal contract costs

By November 2001, Buy.com was among the many businesses on the scrap heap of failed publicly traded internet companies. But then founder Scott Blum reacquired the company, and took it private after having sold it before the IPO two years earlier. Originally developed as a below-cost seller of consumer electronics, Buy.com had virtually disappeared off the radar with an awareness trajectory inversely proportional to the increase in competitor Amazon. com's market share. Strategy Consumers generally assumed that Buy.com was out of business, so the company needed an immediate turnaround in site traffic and sales. Driving old customers interested in purchasing consumer electronics was one goal, but Blum wanted to position the site as a provider of entertainment products such as books and movies. This meant going head-to-head with Amazon. Blum had also confided in agency ThinkBig that he was planning a surprise extension of the Buy.com brand in the fall of 2002. Thus, the campaign had to deliver instant credibility for both the brand and the CEO in order to properly position the next big move. Tactics On Tuesday, June 18, Amazon. com announced that it was going to offer free shipping on all orders under $49. Aware that her client had been discussing a variety of pricing strategies, ThinkBig's VP of PR Stacey Doherty contacted Blum and suggested a two-point response strategy. First, Buy.com would immediately release a counter-offer announcement. Then, they would follow that up with another release instituting a full-on price war with Amazon. She calculated the window of opportunity for the first release at 24 hours, which meant it had to go out that night. "Being the low-price leader is the heart and soul of our company," says Blum. "We did some quick financial modeling to make sure we could do it without affecting our bottom line." While the official release was being prepared, Doherty got on the phone and alerted key media that Buy.com was beating Amazon by offering free shipping on all book and movie orders. And she played on reporter skepticism. "They were intrigued to find out that Buy.com was still in the game, and they wanted to know how they could play the game by offering free shipping," Doherty says. She facilitated interviews from 6pm-10pm that night, making news in the morning editions of the top business outlets. On Wednesday, June 19, as the media reported on the first announcement, Doherty prepared a second release stating Buy.com's guarantee to undercut Amazon's price on books by at least 10%. "Reporters realized that the first release was more than just a stunt, and that Blum had a real business strategy in play," said Doherty. Results The price war was reported in The Wall Street Journal, The New York Times, the Los Angeles Times, and CBS Marketwatch, among other key business media. In a 48-hour period, Buy.com's site traffic tripled, and book sales increased 800%. When Doherty released the sales and traffic results the next day, she gained even more media attention. The timing of this fast-action campaign coincided with Amazon's earnings announcements. Reporters and analysts frequently mentioned Buy.com in discussions about the effects of the price war on Amazon's results. Future In July, Blum published an open letter to Amazon customers as an advertisement restating the company's commitments and challenging customer loyalty. This led to feature articles in BusinessWeek and Fortune declaring Blum a comeback phenomenon. The success of this media strategy is currently being leveraged for the October announcement of Buy TV and Buy magazine.

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