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Refusing to pack it in

Hurt by sagging sales after 9/11, eBags got creative

Janet Forgrieve, Rocky Mountain News

Published September 9, 2006 at midnight

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Greenwood Village-based eBags was $50,000 away from turning a profit when terrorists flew planes into the World Trade Center and Pentagon five years ago.

On Sept. 12, 2001, the online bag retailer dedicated its resources to raising money for the Red Cross, ringing up $124,000 in customer donations in just a few days.

Then a hard reality hit - customers were donating, but they weren't buying, said CEO and co-founder Jon Nordmark.

"We were about four days into it when we realized 'Oh my God, we're not getting any orders,' " Nordmark said.

The company had already weathered the tech downturn, which started the previous year and had sounded the death knell for hundreds of other e-commerce and Internet- based companies.

"For us, what was difficult (9/11) was right in the middle of the dot-bomb," said co-founder Peter Cobb. "So you had a layering effect of business being cold in the e-commerce world; everyone loved to bash e-commerce. We were really just in a foxhole waiting for nuclear winter to end."

The end was in site - eBags' luggage sales had been growing about 40 percent per month before the Sept. 11, 2001, attacks. That slowed to 2 percent for several months afterward.

Nobody was traveling, so nobody needed new luggage. EBags needed to shift gears - fast.

The company scrambled to add "day" bags - briefcases, backpacks and purses - to its lineup, Cobb said.

EBags does what's called "drop shipping," ordering inventory from suppliers as it's ordered by customers, with suppliers doing the shipping. That meant the company wasn't left with a warehouse full of suitcases and made it easier to transition to the new products, Nordmark said.

By the end of 2001, luggage sales were still sluggish, but overall sales had rebounded, and the company turned a profit for the first time. Business continued to grow in the ensuing years, even as more than 500 U.S. luggage stores closed their doors.

In the years since, the company has continued adding products, including Transportation Security Administration-approved luggage locks.

Sales of the locks picked up again recently because new carry-on restrictions mean more people are checking their bags.

EBags acquired a separate shoe site, Shoedini, which last year changed its name to 6pm.com and features software that matches shoes and bags.

New operations in the U.K., Germany and Japan are also broadening the company's reach geographically.

As time passed, business also picked up for other surviving luggage sellers.

Customers spent $19.2 billion on travel goods last year, according to the Travel Goods Association, but the lineup is more diverse than ever.

At eBags, "luggage cubes" that allow inspectors to easily see what's packed without rummaging through suitcases, are a hot seller.

They weren't even on the radar five years ago, Cobb said.

As the company's commerce grew, another lesson wasn't lost.

The fundraising efforts for the Red Cross helped define the soul of the company, Nordmark says now. Two years ago, eBags focused on another cause: breast cancer.

Today, 10 percent of the sale of every pink item goes to the Susan G. Komen Breast Cancer Foundation, Cobb said. The effort has raised about $400,000.

So Sept. 11, 2001, has meant five years of changes - and growth.

"It kind of established the DNA of eBags; it helped us be who we are," Nordmark said. "In the saddest way, it made us a stronger company. It killed a lot of companies in our space, but it made us a stronger one."

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