Guess.com Arrives Fashionably Early

The retailer is among the first fashion houses to move to the Internet.
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Clothing designers may be plugged in to what's hip, hot and happening in the real world, but so far they remain largely unplugged when it comes to the Internet.

Guess?

(GES) - Get Report

is proving the exception.

While name brands like

Tommy Hilfiger

(TOM)

,

Polo Ralph Lauren

(RL) - Get Report

and

Donna Karan

(DK) - Get Report

have hemmed and hawed over their approach to the Web, Guess? went live with e-commerce in three months.

"After last Christmas, we saw the opportunity we were missing," says Jennifer Makkar, Guess?'s e-commerce manager. The company started working on a plan in January and by March, a full site was launched. In addition to e-commerce, the site hosts special features such as a VIP lounge where registered users can preview commercials and enter contests. Every facet from design to distribution, which is run from a warehouse located at Guess?'s Los Angeles headquarters, was handled in-house.

Makkar says the company's Web sales grew by 50% in the third quarter ended Sept. 25, although revenue is still less than 1% of the company's $472 million in annual sales for the most recent year. While she declined to provide specific details, she says the site is now generating revenue roughly equivalent to an average Guess? store, which pulls in $1.7 million a year. She also wouldn't discuss costs involved in launching the site.

By contrast, other designers targeting teens have been slow to mount Net offensives. Tommy Hilfiger, for instance, hired

AG Worldwide

, formerly

Arnell Group Brand Consulting

, a year and a half ago. Last spring, the consulting firm designed the page at

www.tommyhilfiger.com

, which touts: "We're counting down until the launch of

Tommy.com

."

Apparently, Tommy is still counting. It parted ways with AG Worldwide in September. And although people familiar with the company say it plans to unveil a strategy before year-end, Tommy Hilfiger spokeswoman Katharine Fisher says: "Nothing's been determined regarding our Web site yet."

Consultants say there are a host of reasons why upscale brands have been loath to embrace the Web.

"There's the ego," says Tim Byrne, a partner with

Mercer Management

, a consulting firm. "Designers are perfectionists and they're probably very concerned about what the look and feel of their site will be."

There's the so-called channel conflict. To sell their products, designers mainly rely on department stores, which, conventional wisdom has it, wouldn't take kindly to their vendors selling directly to consumers.

Guess?, which sells its product through department stores and its own retail outlets, debunks those myths. Although

Guess.com

was launched quickly, it's easy to navigate and still retains the look flavor of a Guess? bricks-and-mortar store.

As for the channel conflict, Maurice Marciano, the company's chief executive, says it doesn't exist. For instance, he says that department stores located near Guess? retail stores tend to sell more Guess? products because consumers are more aware of the brand.

"There's no way around e-commerce," Marciano says. Although Guess.com isn't yet profitable, he says, he sees some big payoffs in the future. Perhaps the most significant is how the Internet will allow Guess? to reduce the amount of inventory it carries in both its stores and warehouses.

For starters, Guess? plans to add Internet kiosks to its stores. Let's say the pink cashmere sweater that a customer wants is out of stock in the company's New York SoHo store. The customer can enter the order online, and if Guess?'s warehouse has the sweater, it'll be shipped to her home in days.

Guess? also plans to start communicating with suppliers via the Internet beginning in its first quarter. That will allow Guess? to shorten order and delivery time and require its warehouses to hold less goods.

Next thing you know, they'll be clicking on the catwalk.