TJ Maxx Makes Its Second Attempt At E-Commerce
By Sam Lewis
Deep discounting retailer is back online after eight years
Back in early August, discount retailer TJ Maxx announced its decision to take another crack at the increasingly popular sales realm of e-commerce. Just about six weeks later, the site had gone live on September 17 without so much as a peep of a press release from the retailer regarding the site’s launch.
Most retailers want to drive as much attention to new endeavors as possible, giving as much positive press as possible, in efforts to make its labors as successful as possible. Take Stein Mart for instance. The direct competitor of TJ Maxx launched its much anticipated e-commerce site early in September, immediately after posting positive numbers in the second-quarter. But that approach was not taken by TJ Maxx. “I'm not too surprised they didn't make an announcement,” says Jennifer Davis, Lazard Capital Markets research analyst. “They want to make sure they can do it right, and profitable. They want to start slow, and make sure they can handle it.”
That caution comes from the company striking out in its first attempt at e-commerce back in 2004. The site was launched and operational for just one year, and then shut down due to an abundance of negative feedback from shoppers. TJ Maxx’s failure in e-commerce has a lot to do with the nature of the business the company is in. By selling excess and off-season fashion merchandise, the company has a very inconsistent inventory from store to store, proving to be an enormous challenge in the company’s first try.
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But, like the rider who has fallen off his horse, TJ Maxx has not let its past shortcomings stop it from trying its hand again. The company’s acquisition of online retailer Sierra Trading Post has given TJ Maxx the expertise it needs to join the world of e-commerce once again, albeit many years later. “Their business has been so strong without it,” says Deutsche Bank Securities analyst Michael Baker. “There hasn't been a great urgency to launch.”
The new site is expected to stock a few products that are available in large quantities to avoid the cardinal sin of online retailing: don’t sell what you don’t have. This was a major problem the retailer had in its first e-commerce adventure. The new website should not take away sales from brick-and-mortar stores simply due to the “treasure hunt” nature of the in-store experience of TJ Maxx. “Consumers like to shop all kinds of different ways,” says Davis. “There are some people who shop online, and because TJ Maxx doesn’t have a website, that consumer might not shop at all. It’s a way to gain a new customer or an incremental sale from an existing customer.”