RedEnvelope – I Think She’s Ready To Pass On Now

RedEnvelope has been struggling for a year now. Their stock has plummeted 97.2% and now Wells Fargo is tired of bankrolling them. I think she’s ready to pass on now.

Sitting here it looks like RedEnvelope was a solid business so I’ll be curious to find-out just what went wrong. If you have any ideas please let me know.

7 thoughts on “RedEnvelope – I Think She’s Ready To Pass On Now

  1. As an individual in their target market, I find it interesting that no one in my peer group ever mentioned them. Good or bad. Red Envelope just never spoke to us. I don’t know if that’s the cause or the effect, but it feels like they drove right by a huge demographic somehow.

    Plus, how many things really need a monogram?

  2. Hey Bill: You are probably right. I think they might have been stuck in their catalog paradigm. Or, maybe their price point was the culprit: they were neither cheap nor super expensive and Seth Godin eloquently describes what happens to those in the middle.

  3. What does happen to those in the middle? I can imagine, but everybody can’t be the low-cost leader or the high-quality leader. It seems the majority would have to be somewhere in the middle. This is a thought-provoking post.

    Do you have a link to Seth Godin’s description you mention?

  4. @Matt: Thanks for the comment. Seth Godin has an awesome book called The Dip (sethgodin.typepad.com/the_dip) in which he claims those in the middle struggle, and I agree. But Seth is not talking about being big or small in terms of just revenue or product category. He claims that one can define their universe any which way, the key is to be the best, or near best, because that’s where all the profits are. You retail science kits online so the key would be to determine if you want to compete on price, findability, service, speed, brand experience, analytics or evangelism. once you’ve identified where you believe your natural strength lies just make sure you emerge on top of the science kits retailer heap on that attribute. If you do, you’ll do well.

    I personally feel finding and growing through evangelists is the best long term strategy, I am no fan of SEM and SEO.

  5. Thanks! Your reply has definitely given me something to consider. It might be tough for a new company (ie., mine) to be the best in too broad of a category. I like the idea of focusing on a tighter niche to become the best at, then gradually expanding that to encompass more areas until finally it’s broad enough to be a major success.

    Unfortunately this takes a lot of time. And that’s typically a strategic advantage for the established players that the new guys have a tougher time overcoming.

    I like your blog. I just subscribed to the feed so start writing more!!

  6. Hey Matt: I’m glad you like the blog and am happy to have you as a subscriber! I must add one element to our earlier commentary: when you do define your natural niche make sure you boldly state that on your site. I find companies are often fearful of alienating stray customers but I’m not sure if stray customers every contribute enough sales to be important.

    Once you identify your core strength and core customers make sure you let them know. Keep me posted about aetoy.com’s progress, I love ecommerce startup stories.

  7. Thanks again! Upon your recommendation (and the reviews at Amazon) I just ordered a copy of ‘The Dip.’ I’m looking forward to reading it. Drop me a email offline and I’ll give you a brief about my ecommerce startup story…

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