Sweet Deals

Mrs. Beasley's has created a stellar blueprint for integrating "bricks" and "clicks" businesses through strategic partnerships, superior logistics, and some surprisingly simple marketing techniques.

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E-Strategies

Mrs. Beasley's delicious business has grown richer, thanks to a new ingredient: a shrewd E-commerce strategy

Charles Bronson knew exactly what to give his friends for Christmas one year: picnic baskets filled with cookies, cakes, and breads. And the veteran tough-guy actor knew exactly where to get them: Mrs. Beasley's, the Los Angeles bakery whose impeccably presented pastries are widely considered just the ticket for Hollywood wrap parties, opening nights, and Oscar galas. At the time, Mrs. Beasley's didn't actually carry picnic baskets. But what Bronson wants, Bronson gets. So the company found some suitable straw hampers, filled them with goodies, and sent them off to everybody on Bronson's gift list.

Celebrity customer delighted. Case closed. Almost.

The incident got company CEO Ken Harris to thinking. If Charlie Bronson would buy picnic baskets, others might, too. So Harris looked around for high-quality, low-cost picnic baskets. He found them in China for $12 apiece. He bought thousands, stocked them with baked goods, priced them at $100 to $150 each, and watched as they sold briskly in the company's eight retail stores and on its Web site. "I've got Charlie to thank for that," says Harris.

That's just one example of how the CEO thinks up new ways to sell an old tradition in the form of Mrs. Beasley's handmade, attractively packaged baked goods. But he and his team go beyond simply satisfying the stars. They've created a stellar blueprint for integrating "bricks" and "clicks" businesses through dozens of strategic partnerships, superior logistics, and some surprisingly simple marketing techniques.

Over the past 20 years, Mrs. Beasley's has whipped up a loyal following as rich as the company's brownie bars. Started as a home business by two sisters in Tarzana, Calif., Mrs. Beasley's grew from a neighborhood bakeshop into a chain of stores where ordinary folk and such Los Angeles luminaries as Jodie Foster, Cher, and Earvin "Magic" Johnson spend $30 to $200 on gift baskets packed with gourmet goodies.

But even as Mrs. Beasley's expanded into upscale communities like Beverly Hills, its own fortunes remained decidedly modest. In 1990 the original owners sold the unprofitable company to a Los Angeles investment-management company. "When we bought Mrs. Beasley's, it was a $2.5-million company," Harris recalls, noting that it had taken the owners 10 years to reach that figure. "We thought we could make it a real business."

Today things are a lot sweeter for Mrs. Beasley's, which turned profitable in 1997 and reached nearly $11 million in sales in 1999. Harris expects the company to hit $17 million this year (but he's got his bakers making enough muffins and lemon cakes for $18 million -- just in case). The CEO credits much of the company's growth to its aggressive, and highly successful, expansion into E-commerce. Mrs. Beasley's Web site, launched just before the 1999 holiday shopping season, hit $2.1 million in sales in its first 60 days -- almost 20% of the pastry peddler's total sales for the year.

Harris attributes those tasty results largely to Mrs. Beasley's vigorous marketing strategy, which relies heavily on innovative affiliations -- including promotions on corporate intranets and lucrative revenue-sharing partnerships with brand-name Web sites. Now Mrs. Beasley's online business is profitable enough that Harris finds himself beginning to wish he could unload the brick-and-mortar bakeshops where the business began.

"When we bought Mrs. Beasley's, it was a $2.5-million company," CEO Ken Harris recalls, noting that it had taken the original owners 10 years to reach that figure.

The company processes all its own orders, rather than adding a third-party fulfillment company to the mix. Its Web site can handle $7 million a month in sales. It also keeps a private online address book for each customer that includes a gift-giving history. (Harris's own address book includes entries like "Crystal, Billy" and "Ryan, Meg.")

Harris, 57, whose deep, southern California tan contrasts with his tough, native New York accent, is a numbers guy, easily citing gross margin (70%) or the average cost of acquiring a new customer ($28). He readily admits that Mrs. Beasley's recipe for success hasn't come without lumps: wasted expenditures, sour deals. Even so, Mrs. Beasley's offers valuable lessons for any company that's looking to do business in multiple channels -- even those who can't count Oscar winners among their clientele.

Going into the 2000 holiday season, Harris has two wishes. First, he wants to make Mrs. Beasley's "the leading online retailer for shared gift products." The operative word: shared. Mrs. Beasley's banks on the idea that customers -- primarily businesspeople -- send gifts to their own customers who then share the bounty. "You order a gift basket, it goes around the conference table during a meeting, people try the cookies, and they're hooked," says Harris.

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