Mike Cote's Business Editor's Notebook: Kingston company still needs Google in the gift basketMIKE COTE
December 14. 2013 12:59AM
The name GourmetGiftBaskets.com sounds like it would belong to a quaint business operated by someone's grandmother. A website you can tap to send a care package full of cookies, jams and jellies to your Aunt Suzie in Arkansas.
Why, it's probably operated out of grandma's kitchen, where she ties each basket up with a big bow before she boxes it up and sets it out on the porch for the UPS guy to pick up. Then she gets back to baking cookies and canning those jams and jellies.
Even though I knew GourmetGiftBaskets.com was nothing like that, it's the image I had stuck in my head before I listened to CEO Ryan Abood address the Merrimack Valley SCORE chapter on Wednesday at the business mentoring group's annual holiday luncheon in Bedford.
Abood chronicled the New Hampshire company's rise from zero - GourmetGiftBaskets.com didn't sell a single basket the day it debuted online in November 2001 - to nearly $20 million in sales by carving out a niche as a national player, something that took the company a decade to achieve.
During his talk, Abood dished about search engine shenanigans, getting Web-slapped by Google and what it's like to work in his company's warehouse during the holiday season. (Hint: You're encouraged to listen to music on your headphones to help break up the boredom.)
While the Inc. 500 company packs jams from New England favorite Stonewall Kitchen into some of those baskets, Abood emphasized GourmetGiftBaskets.com has never strived to promote local flavors. It aims to pick the best products in every category.
"We're a brand aggregator. We use other people's famous brands," he said, noting that the company doesn't even have a sign outside its Kingston warehouse. "My parents built a local business and struggled with being there."
Abood, 34, founded GourmetGiftBaskets.com in the basement of Chalifour's, the flower shop his family used to own on Elm Street in Manchester, where just a couple of people assembled the gift baskets that soon began to enjoy high demand outside the Queen City. His mother, Trudy Abood, split her time between both companies before the family sold Chalifour's and now focuses on GourmetGiftBaskets.com.
These days, the company employs about 50 people year-round and nearly 125 during the holiday season. It ships its products from an 80,000-square-foot warehouse, where workers are stationed in an assembly line to package the baskets.
During this time of the year, the business is "ruthless to brutal," Abood said.
"My warehouse staff gets paid to sleep for around 300 days. And then for 60 days my staff works unbelievably hard. Not uncommon to go home at 4 a.m. and show up at 8 a.m.," the Portsmouth resident said.
Abood said he expects such hours will be standard for his staff this week. Many of his regular employees have been tasked with taking on four or five untrained temp workers each and assembling them into teams that handle specific tasks, a model Abood said allows the company to maximize efficiency - a crucial factor with so much to accomplish in a short sales window.
"I tell my staff (British illusionist) Dave Blaine stood in a box for a month. You can come to work and put packages on the conveyor belt. And the overtime doesn't hurt either."
To reach that sweet spot where it's tough to keep up with demand, GourmetGiftBaskets.com had to build an audience for its brand, something that happened in fits and starts as the company learned how to manage - and manipulate - its position on Google. While Abood first worked on creating those Web links that build a high ranking on his own - such as favorable stories written about the company in news articles - he ultimately paid someone else to do it.
"When everybody is cheating, then you have to say, 'If I have any chance of winning I had better start doing what they're doing,'" he said. "The problem with buying links is you can't really tell if you are paying for links. There is not a tagline that says, 'This link has been paid for' generally. So literally everybody in our industry was pretty much cheating ... to garner affection from Google."
That worked just fine until it came to an abrupt halt.
Abood woke up one morning in late 2008 to learn that GourmetGiftBaskets.com had plummeted from the No. 1 ranking in keyword searches to an also-ran banished well behind more than a hundred pages. It was as if the company no longer existed.
The Google police had just issued them a big fat fine, one that Abood said cost the company $4 million in lost sales in 2008 and 2009.
"What ends up happening, they take one person who is doing it better than everybody else and slaps them so that everyone else in the market shapes up," he said.
After the company fired off letters to Google, the search engine giant placed GourmetGiftBaskets.com on the bottom of page two for the season. Despite the penalty, the company still managed to grow 300 percent that year, Abood said.
And the blow helped the company become stronger: It was forced to adapt.
"It was a huge awakening that something needed to change very quickly. We ran a really nice basket - the Google basket - but all of our eggs were in it, and that was extremely dangerous," Abood said.
The company quickly hired experts in search engine optimization (SEO), comparison shopping sites (think eBay or Amazon), and pay-per-click sales, ballooning its personnel costs by more than $1 million.
"But we were able to make the business far less risky than it was originally. And when you do that, simultaneously all those new channels were pure liquid growth," Abood said. "Over the last couple of years, we've ramped up to almost $20 million in sales, and there is less risk in our business now than ever before."
There's still plenty of risk to go around for Internet retailers, however, he said, adding that his company is more specifically a "direct-to-consumer Internet retailer manufacturer." "They don't have a code for that yet," he said.
Like many Internet companies that rose during the past decade, GourmetGiftBaskets.com is a creature of its era. Starting a company in a category like his is next to impossible now, said Abood, whose company has acquired similar Internet food retailers like Cheesecake.com, Strawberries.com and KingOfPop.com.
You're better off taking the route that Abood shunned: Go local. The time to sell shoes, pants - and gift baskets - online has vanished for newcomers unless they have deep pockets and a stubborn will.
"SEO is dead. Yeah, I pay a bunch of people a lot of money to do it, but to have the type of success we've had can't be duplicated," Abood said. "That window is closed. It's gone. It can still be done, but not with as little resources as we did it."
Whatever you do, you need not cheat, he said.
"If the keywords are local, just do what you are supposed to do, and Google will naturally pick you up. If you're shooting for the word 'refrigerators' we need to have a conversation outside."
In other words, grandma's kitchen might be a good place to start.
Mike Cote is business editor at the Union Leader. Contact him at 668-4321, ext. 324 or email@example.com.