It's Real Groovy selling CDs online

It may be comforting for its rivals to know that Real Groovy Records faced the usual difficulties of any fair-sized retailer in its move into cyberspace: merging incompatible third-party supplier catalogues into one searchable database, integrating instore and online loyalty systems and keeping customers informed about the status of their orders.

But the 22-year-old Auckland company, which sells new and second-hand CDs, records and DVDs, as well as games and related merchandise, has no intention of going back to solely a bricks and mortar existence. It's had 10% growth per month since its inception and put systems in place that could manage a 300% increase in volume, says business development manager Marty O'Donnell.

Real Groovy’s online store was launched in November 2001, missing overlap with disintegrating e-tailer Flying Pig by just a few weeks, and began making money straight away, according to Unlimited magazine. By December, online sales were high enough to cover costs and return a profit, and by April 2002 they accounted for more than 5% of the company’s turnover. The site is proving invaluable for those not within reach of the Auckland (1600 sq m) and Wellington (750 sq m) stores, and for special orders obtained for customers from overseas, which were quickly coming in at twice the rate of before the launch.

Just as important as making money, though, was duplicating the instore experience online; as an almost incidental result Real Groovy now knows a lot more about its customers.

Real Groovy waited a while before taking the calculated leap. Around 1999 the company was being approached by one or two e-commerce providers every month. O'Donnell and Real Groovy founder Chris Hart did the conference rounds trying to understand how to make money online, at one meeting hearing a CDNow executive say he wasn't in the business of selling CDs but acquiring customers. To his credit the CDNower changed his tune the following year, but the company has since "teamed" with Amazon.

After the dot-com crash (a "welcome event", says O'Donnell, as it ushered in sound business concepts), Real Groovy went with Estaronline, founder of the now-defunct CD Star online music shop, because of its pioneering experience in the business and its supply chain and logistics technology. Estaronline has since built all its online tools, including the Launchpad email marketing software. Launchpad can personalise emails and track in fine grain the success of campaigns by viewing customers' subsequent actions.

Online customers, says O'Donnell, speaking at an Auckland Chamber of Commerce CRM event last week, want a highly searchable, extensive catalogue with flagged new items, an up-to-date inventory of second-hand items and a "watch for my preferences" facility.

Pricing was a "tough one", but the company eventually opted for no difference between online and instore prices, and free delivery.

Loyalty was recognised early on as important to the music store's long-term success. That was the thinking behind its Tuesday discount for students (as well as jazzing up a traditionally quiet retail day) and its "Club" booklet. This stamp-based system, which was replaced by the current loyalty cards and email contact, was used to drive the collection of names and addresses.

Real Groovy intends to keep adding features to the site and smoothing the usual kinks in its supply chain. O'Donnell says the company is working on EDI solutions to further improve its long-term supplier links.

The site is backed by Windows 2000 and SQL Server, and coded largely using Visual Basic. Estaronline's central technology, iSAMS, is also behind Line 7's online operations, and the Rugby World Cup merchandising sites and