RedEnvelope Gets Too Much of a Good Thing

Jan 19, 2004
George Anderson

By George Anderson

Of all the items that make the list of things you can have too much of, business is not usually near the top.

For RedEnvelope, the luxury gift e-tailer, however, too much business is what it had for the recently passed holiday season and the results were not pretty.

The company did not have the inventory on hand to deal with its deluge of orders, or the ability to react to the number of personalization requests it received. There were management issues at its distribution center in Ohio, as well.

Alison May, chief executive of RedEnvelope told the New York Times, “They’re all very fixable issues at a quieter time. But it’s hard to fix a problem while orders are at a peak.”

Orders were coming in at 10 times the company’s normal volume during the busiest part of the Christmas selling season.

Moderator’s Comment: What impact will RedEnvelope’s failure to fulfill its orders have on next year’s holiday selling season? What must it do to avoid
a repeat of 2003?

We think that most RedEnvelope shoppers will give it the benefit of the doubt this one time. If it happens again, it will have a much more profound impact
on the company’s business.

Anderson – Moderator

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