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Ashord.com: Sheer Elegance

With the huge run-up in the markets this year, the rich are getting richer. They'll need to find luxury items to spend their money this Christmas -- making such companies as Montblanc, Rolex and Versace very merry indeed. In fact, the market for luxury goods is about $133 billion.

There is a way for the rest of us to participate, though: Ashford.com (ASFD) . In less than two years, the company has built a comprehensive product line that includes leather goods, handbags, fragrances, sunglasses, writing products, jewelry, diamonds and watches.

There are several characteristics to the luxury market. First of all, it is fragmented. In other words, there is no one luxury superstore. By centralizing online, Ashord.com can realize cost-savings. Second, there is little price sensitivity and the average purchase is relatively high.

Such advantages are already benefiting Ashford.com. For example, sales are beginning to sparkle. In its latest quarter, they were $4.4 million, a 21 percent sequential increase from the prior quarter. The customer base has zoomed from 2,411 last year to 26,971 this year, with repeat customers accounting for 16 percent of sales.

A major part of the growth came from key strategic distribution agreements. In the Yahoo! deal, Ashord.com is a premier merchant and at AOL, Ashford.com is an anchor tenant at Jewelry & Watches and Accessories.

Ashord.com takes customer service very seriously, which is of paramount importance in selling luxury goods. Customer service reps are available via phone, e-mail and online chat from 7:00 am to 9:00 pm, Monday through Friday and 9:00 am to 5:00 pm on Saturday.

The Ashford.com site has many whiz-bang features, as well. For example, a user can do a virtual "Try It On" feature; that is, click a tie and place it on a suit. Next year, users will be able to submit pictures of themselves and do the "Try It On" feature.

Conclusion

What's interesting is that Ashford.com has little competition in the luxury market. Like eToys last year, Ashford.com is in a great position and should have a tidy windfall. What's more, Ashford.com can use its first-mover advantage to tie-up exclusive agreements with product suppliers. For example, of the 270 brands on Ashford.com, 50 are exclusive.

Right now, Ashord.com is selling like a cheap suit at K-mart. However, as the growth continues, it will look more like an Armani.


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