A Trickle from Your Tchotchkes

The Habaneros chili sauce is flying off the shelves at F*ckedCompany.com, and at $9.50 a pop no less. CEO Philip Kaplan has already sold through his first allotment of 600. That's a lot of burnt gringo palates, but what is the infamous chronicler of the dot bomb era doing selling hot sauce? In this case, the artful Kaplan leveraged the humor and topic of his sites by calling his product "Burn Rate." Then he just sat back and watched hundreds of customers buy into the in-joke.

As other revenue streams dwindle for content publishers, many are revisiting the idea of selling branded merchandise via their sites, but this time they are going beyond slapping logos on coffee mugs and hoping for a sale. Along with the hot sauce, Kaplan designs suitably snide mouse pads that read "You can have my Aeron when you pry it off my cold dead ass." He sold through $7,000 of goods in November and realized $3,500 in revenue from his e-shop partner Cafepress. It is no windfall, but in the current environment, every bit helps.

Newspapers are one segment that has a great opportunity to convert local loyalties into merchandise sales. When the Diamondbacks won the World Series, the Arizona Republic's AZCentral.com started slapping images of the daily's front page "World Champs" headline onto just about anything that could hold ink: t-shirts, mugs, steins, tote bags, mouse pads, and even teddy bears. With a minimal promotion in print and online, the site sold 469 items in little over a month and netted $2,500. "It's nothing we'll get rich off of, but it's been easy money so far," says Mike Coleman, general manager. "We'll take all the non-traditional revenue we can get."

Publishers with hearty traffic, a highly recognizable brand, and a touch of creativity could see more than a revenue trickle off of their branded merchandise, however. NYPost.com started a merchandise program coincidentally around the time of the September 11 attacks. Its Osama Bin Laden "Wanted" poster products and an editorial cartoon image commemorating New York police and firefighters helped funnel thousands of dollars into the city's Tower Fund. As an eventual profit center, however, Jill Carvajal, general manager, has high hopes. Personalized headlines and event-based images (New York Marathon, et. al.) are responsible for thousands of orders a month. "I anticipate a substantial revenue stream from this," she says. "It will certainly help to offset some of the losses of the advertising side due to the current economic downturn."

Money for Nothing?
Behind these merchandising plans is a new generation of no-risk private label e-shop providers, such as Cafepress, which powers AZCentral and F*ckedCompany, and Imagine Your Photos, which hosts the Post's store. Both companies provide publishers with an irresistible model: revenue without investment. In AZCentral's case, Cafepress was able to create a shop with made-to-order items within 24 hours of the Diamondbacks big win. The San Leandro, California firm not only hosts the store on its own servers, but takes the art and product ideas from the publisher, produces the customized mouse pads, mugs, and shirts as needed, fulfills the order, and handles all customer support. Ordinarily, the publisher gets at least 30% to 35% of that revenue.

Cafepress has 25 corporate clients, including United Media, Nickelodeon, and Universal Press Syndicate, and it ships about 1,000 orders a day. It also hosts 200,000 stores for small and mom and pop Web sites. Some partners generate up to $20,000 a month in sales, says Maheesh Jain, vice president business development, and mainly because they have learned to merchandise. One partner, environmental info site Care2.com creates products specific to regular themed campaigns for water management or the rain forest. An early hit was "Piggy Poop" organic fertilizer. "They consistently have a fair amount of sales because it's consistently fresh creative and it's tied to their content," says Jain.

"We're evaluating exactly how much revenue we're getting off of this," says Care2 product manager Hillary Stamper. Gross sales can run from $10,000 to $20,000 off of about 700 items a month, but the site's cut "Isn't the foundation of the revenue stream by any means." Doing this well requires someone like Stamper to devote a good deal of attention to tracking sales and developing products that are timed to holiday and editorial calendars. With endangered animal golf club covers and the perennially hot "Extinction is Forever" shirts, "our goal is to be the largest source of environmental slogan apparel online," she says. But whether all this effort is really worth a 30% cut, even off of $20,000 a month, remains unclear until Care2 finishes its upcoming cost/benefits analysis of the program.

Personal Sells
Similar to Cafepress, Imagine Your Photos also hosts e-shops with made-to-order tchotchkes for the Post, Miami Herald and portrait maker Olan Mills, among others. This company usually does charge some start-up development and hosting fees, but these can be reduced considerably for publishers who will agree to promote the store aggressively. The model dispenses with one of the business elements that helped kill many early ecommerce ventures, unsold inventory. "There is an actual customer who has purchased an item before the investment is made to manufacture that item," says Bob Poller, CFO. Essentially, the publishers are purchasing the goods from the company by the piece, setting their own price, and taking whatever profit the market can bear. Typically, publishers realize 50% margins on these products.

Personalization may be the secret to moving these branded tchotchkes at a faster pace. Imagine Your Photos lets buyers write their own headline and plop it onto the host newspaper's front page template for printing on any of the usual shop items. It may be kitschy, but for customers, "this is not just another giveaway t-shirt that eventually will be used to wash the car," says Mike Poller, company Webmaster. IYP's most active publishing partners are making 2,000 to 3,000 orders a month with an average sale of 2.5 items, $50 to $60. The personalized products also attract repeat orders, with some programs achieving 40% to 60% customer return rates, says Richard Dettman, vice president sales.

Strange as it may seem, tchotchkes can be considered another kind of content delivery vehicle. One of Cafepress's hottest properties is custom reprints (on shirts or prints) of any day's Dilbert comic strip for United Media. Publishers should be thinking about which existing content, headlines, or images might play well off the page and off of the screen. This is the same strategy that made The New Yorker magazine's CartoonBank.com a remarkable revenue driver for the company more than a year before the magazine itself came onto the Web in any serious way. It repurposes decades of cartoons for resale to consumers, corporate buyers, and licensors. "Virtually all publications have archives," says Bob Poller. "This is a way of taking the archive and making it a profit center."

Indeed. But as the success of this model at Care2, F*ckedCompany, and NYPost demonstrate, it does require that content providers start thinking harder about the principles of merchandising, about developing good creative and knowing how to push the goods at their own sites. Again, Philip Kaplan serves as a poster child for clever marketing. Shortly after his e-store opened, users started sending in photos of girls wearing his branded t-shirts. Never one to overlook a provocative marketing concept, Kaplan began retouching these amateur snaps ("Sometimes I have to brighten their teeth") and put them on his front page. "That at least doubled sales," he says.

In fact, Kaplan started brainstorming with us while we interviewed him, coming up with the idea of collecting these women of FuckedCompany into a calendar. Put down the phone and start designing it this second, we urged. "I might or might not be selling them by the time your article comes out," he told us. Oh yeah? Where's our consultation fee and revenue split, buddy?