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things that just are

Thursday, January 27, 2005

After Catalog Blunder, Eziba.com Suspends Business
NY Times

"Eziba.com, an online retailer and catalog company well known for selling handcrafted items from foreign artisans, has temporarily suspended operations following a colossal marketing error.

Dick Sabot, Eziba's chairman and co-founder, said the company had sent out tens of thousands of catalogs in late September and early October and waited for the phones to ring.

After a couple of 'grim, quiet' days, Mr. Sabot said, company executives checked with the business that mailed the catalogs on Eziba's behalf. They hoped to find that the mailing had simply been delayed, but instead discovered that the catalogs had been sent to the wrong addresses. Because of a computer error, the catalogs had reached the members of Eziba's mailing list who showed the lowest likelihood to respond to the catalog.

'Sadly, our probability estimates were correct,' Mr. Sabot said.

'The catalog business is a lot like farming, in that you make all the investments up front in printing and creative costs and mailing, and you sit back and wait to reap the harvest,' Mr. Sabot added. 'When there's an act of nature that intervenes, that can be a painful experience.'

The revenue shortfall created by that event put the company in such a tenuous financial position that it was forced to halt operations temporarily on Jan. 14 while it sought cash to pay off creditors. Bill Miller, Eziba's chief executive, resigned amid the problems.

Two years ago Eziba was victimized by a true act of nature, when, following a snowstorm, the roof of its shipping warehouse fell in, forcing it to refinance and restructure the business through the spring of 2003. The company is based in North Adams, Mass.

Mr. Sabot said that on the strength of Eziba's holiday sales, which jumped 40 percent over 2003, with profit margins of more than 60 percent, the company would likely attract enough new funding to hire a new chief executive and restart operations within six weeks.

This time, though, there will be no catalogs. 'If we cut way back on the catalog mailings, many aspects of our Web business are already profitable,' Mr. Sabot said. 'So there's a strong feeling that we'd like to get to profitability as soon as possible, even if it means a lower revenue number than we'd have liked, then build on that foundation.'"


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