Gift sites are notoriously hard to merchandise. Red Envelope did an ok job but apparently not good enough. The chat at TechCrunch speculates management issues because the company has $12.3M in the bank according to TC. Traffic failed to bump much for the big gift days 2 years straight though, indicating that online gift seekers found other avenues online or off.

Their catalog was ok but I’d say could have benefited by having fewer “premium” style goods and more personable items like those found at Etsy which is doing great on traffic. Their catalog did have the occasional jaw-dropper pricey item such as these braided bracelets for $150. yikes.

Again gift giving is a difficult play but still, this should have been a viable business by any measure.

So what wen’t wrong? Somehow the site dropped out of view in the storm that is 2.0. Without a strategy to mix into other sites I’m hard pressed to name any retailer strong enough to be a destination site on its own. Relying on affiliates is like relying on a volunteer workforce - it is outreach but looks like you can’t just sit back and watch the orders come in anymore.

On the other hand, it may indeed have been sustainable in operations, but mismanaged from the inside as some are commenting. This is often the case when things just don’t add up. Interested in avoiding this fate? Call me at 408-667-5949.