BlueLight.com announced Wednesday that it is paring its staff and planning to rely more heavily on the resources of its majority investor, Kmart Corporation.
BlueLight said the strategic actions were designed to improve the e-tailer’s overall efficiencies and accelerate its “march towards profitability.” In addition to reducing costs, the actions will “further support a unified brand message for Kmart across all its retailing channels,” BlueLight said.
“BlueLight.com has evolved into one of the most-popular e-commerce sites on the Internet, serving to introduce Kmart and its exclusive brands to millions of online shoppers each month,” Bluelight chairman of the board Randy Allen said.
“Now, as we move past the first-year launch phase, the board of directors felt it was important to take further advantage of the tremendous synergies offered by our Kmart relationship to increase efficiencies, thus improving operations and recognizing greater economies of scale,” Allen said.
The news came a day after it was reported that Kmart was in talks to absorb the 40 percent of BlueLight it does not already own. Under the terms of the plan reportedly being discussed, Kmart would buy out BlueLight investors by issuing shares of Kmart stock.
Inside the Reorganization
BlueLight did not say how many jobs would be cut, but said it expects a reduction in staff as duplicate jobs are eliminated during the restructuring.
The e-tailer said that BlueLight’s merchandising and marketing functions would be supported by similar existing departments at Kmart’s Troy, Michigan headquarters. BlueLight also said that it planned to tap into Kmart’s resources and experience to expand its business and consumer reach.
BlueLight said it would continue to support its online shopping site, free Internet service, in-store kiosk initiative, and other related programs from its San Francisco, California headquarters.
Despite coming late to the e-tail ballgame, having been formed in December 1999 as a joint venture between Kmart and Softbank, BlueLight has drawn heavily on its association with Kmart to become a well-known e-tailer. In December, it was pegged as one of the fastest growing online properties by Jupiter Media Metrix.
In addition to pulling in customers from ads in Kmart circulars, BlueLight acquired customers by offering free Internet access. Initially, customers were given free unlimited Internet access, but BlueLight changed the rules on March 1st.
BlueLight now offers consumers free service of up to 12 hours per month, but charges US$9.95 for 100 hours of service. Shoppers who buy any item at BlueLight are given one month of free premium access.
Leveraging Kmart’s resources could help BlueLight cash in on the trend away from Internet pure plays and toward brick-and-click operations.
A report issued in December by measurement firm Nielsen//NetRatings found that brick-and-click operations saw a 103 percent surge in traffic after the beginning of the holiday season, compared to 77 percent growth for pure-play e-tailers.
NetRatings’ list of sites with the most traffic during the holiday season was heavy on brick-and-click retailers, with BlueLight as well as BestBuy.com and Sears.com making the cut. Overall, 11 of the top 15 holiday e-tailers were connected with established offline brands.