SOURCE: Melrose.com, LLC

Melrose.com, LLC

August 08, 2012 10:00 ET

Melrose.com CEO Interview With Reuters

Retailers Feast on Free Facebook Tools, Shun Facebook Ads

NEW YORK, NY--(Marketwire - Aug 8, 2012) - The following interview with Melrose.com CEO Krishan Agarwal was made by Alistair Barr of Reuters:

Krishan Agarwal, president of online luxury watch vendor Melrose.com, told a roomful of attentive Internet retailers last week how Facebook had helped his company generate about 25 percent more sales in two years.

Then he dropped a bombshell: Melrose spent less than $1,500 on Facebook ads during that time. Everything else the company did with Facebook was free.

"Some of the tools that are free are just a lot better than ads on Facebook," the former Dalton Investments hedge fund analyst explained, echoing other attendees at the Internet Retailer Conference & Exhibition in Chicago.

Agarwal's experience goes to the heart of the issues confronting Facebook Inc as it tries to turn its giant global network into a money machine. Advertisers love the platform but don't necessarily see the benefit in spending money on the ads.

Facebook is hoping to allay some of the doubts with new ad formats that provide better tracking of customer behavior. It's also beginning to insert ads directly into the "newsfeed," the stream of updates that all users receive, which should in turn help the company address the challenge of delivering ads on mobile devices.

Yet analysts increasingly suggest that over the long run, Facebook may have to begin charging for services that are currently free. Concerns about the company's reliance on advertising offerings which, unlike rival Google's, have not proven themselves to be game-changers for customers have helped shave $25 billion from Facebook's market value since it went public last month.

"They're in a huge pickle because most of their business is based on growth in advertising," said Forrester Research's Sucharita Mulpuru. But "why buy that cow when you get the milk for free?"

The experience of online retailers, which comprise a big piece of the online ad market and are thus a crucial sector for Facebook to win over, provides a clear view of Facebook's advertising challenge.

"The retail sector isn't buying it," said Fiona Dias, chief strategy officer at ShopRunner, an e-commerce shipping company part-owned by eBay. "With all Facebook's free stuff, retailers don't have to worry whether it works very well. But the moment they pay a nickel, there has to be accountability."

Katie Ennis, e-commerce head at apparel retailer RCC Western Stores, said she had used Facebook ads until she sat down with the head of finance and analyzed the return on investment compared with other advertising the company uses.

"The conversions were just not there. People would click on the ads sometimes but would not buy," she said. "So we completely stopped doing Facebook ads earlier this year."

After about a month, RCC Western noticed a decline in sales. The retailer resumed running Facebook ads and sales recovered.

"So Facebook ads are having an effect, but we're not sure how and we can't measure it," Ennis said.

Giantnerd was an early adopter of Facebook's Open Graph project, which lets shoppers "love," "want" and "own" products on the website of the outdoor goods retailer. When shoppers click on these buttons, those recommendations are shared with friends through their Facebook Timeline.

Facebook highlighted Giantnerd's success in a June blog, saying website traffic from Facebook more than tripled after the retailer integrated with Open Graph, a free service.

CEO Randall Weidberg was less enthusiastic about traditional paid Facebook display ads.

"It has its place, but won't have amazing results," he said during the conference.

Source: Melrose.com via Reuters News

About Melrose.com

Melrose.com, is the nation's leading online retailer of authentic luxury wristwatches. Leveraging their relationships with the industry's leading manufacturers, Melrose.com acquires authentic luxury timepieces at the most accessible prices and ships them to customers overnight. Their extensive product range includes a myriad of luxury watch brands including Rolex watches, Breitling watches, Cartier watches, Tag Heuer watches, and Omega watches as well as custom diamond jewelry ranging from engagement rings, earrings, necklaces, and pendants. Since launching, the website has captured nearly 1% of the U.S. market recording over 1.8 million users and over $10 million in its last fiscal year.

About Krishan Agarwal

Krishan Agarwal, 35, is the Founder & President of Melrose.com, LLC, one of the leading independent online luxury goods retailers in the U.S., U.K. and Canada with over 1.8 million unique users and 200,000 Facebook fans. Initially creating Melrose.com as a hobby, Krishan single-handedly grew the company to over 50 full-time employees, opened offices in 4 countries, and surpassed enormous obstacles during the second worst economy in history to grow revenues to over $10 million in the company's first three years in existence. In addition to Melrose.com, Mr. Agarwal also manages Lakshmi Capital Partners, a long/short equity hedge and private investment fund based in Los Angeles. Through this platform he has spearheaded unique venture capital investments including Sangart, LLC, a synthetic blood manufacturer with products in Phase III testing, Tocagen, LLC, a leading cancer therapeutic company with products in Phase II testing, and Withoutabox, LLC, an online film distribution company which was successfully sold to Amazon.com in 2008. Krishan has an MBA from the University of Southern California and a Bachelor's from U.C.S.D. in Artificial Intelligence.

About the Melrose Watch Blog

The Melrose watch blog, known for Rolex Watches, is the world's largest independent forum website about Rolex events and Rolex and other luxury watches in pop culture. With over 300 user-posted articles and new articles and commentary updated daily, the Melrose.com Rolex Datejust blog contains articles about Rolex watches owned and popularized by Matt Barkley, Andrew Luck, Barack Obama, Warren Buffett, Steve Jobs, Cristiano Ronaldo, Sienna Miller, Sean Penn, Courtney Cox, Andy Roddick, LeBron James, Tara Reid, Danica Patrick, Matthew McConaughey, Steven Wynn, Calvin Klein, Jamie Lynn Sigler, Eva Longoria Parker, Tobey Maguire, Michael Dell, Ashton Kutcher, the Jonas Brothers, Rafael Nadal, Roger Federer, Colt McCoy, Sam Bradford, who is an avid fan of the Rolex Yacht-Master, Adriana Lima, Arnold Schwarzenegger, Bill Murray, Barry White, Anne Hathaway, Michael Jackson, Tony Soprano, Lindsay Lohan, Eddie Murphy, Anish Kapoor, Tom Selleck, Jennifer Garner, Donald Trump, Jennifer Lopez, Lance Armstrong, John Mayer, Cameron Diaz, Justin Timberlake, Brad Pitt, Drew Barrymore, Matt Lauer, Sophie Marceau, Tim Tebow, Jay-Z, Zara Phillips, O.J. Simpson, Madonna, Ana Ivanovic, Jennifer Aniston, Paris Hilton, Orlando Bloom, Tupac Shakur, Cuba Gooding Jr, Lily Allen, Kim Kardashian, Khloe Kardashian, Kourtney Kardashian, Scott Disick, Lamar Odom, Johnny Depp, Steven Spielberg, George Lucas, Noomi Rapace, Michael Fassbender, Nick Jonas, David Henrie, Sylvester Stallone, Tom Cruise, Idris Elba, Justin Bieber, Selena Gomez, Paul Rudd, Seth Rogen, Amy Adams, Chuck Norris, Nicole Kidman, Robert Pattison, Taylor Swift, Taylor Lautner, Martin Scorsese, Taylor Kitsch, Ryan Reynolds, Kristen Stewart, Antonio Banderas, Selma Hayek, Zach Galifianakis, Amy Sedaris, Robert Downey Jr., John Favreau, Michael Bay, Daniel Craig, Hugh Jackman, Chris Hemsworth, Chris Evans, Samuel L. Jackson, Scarlett Johansson, Mark Ruffalo, Edward Norton, Demi Moore, Keanu Reeves, Charlie Sheen, January Jones, Vinnie Jones, Leonardo DiCaprio, Christian Bale, Joseph Gordon-Levitt, Anne Hathaway, Christopher Nolan, Tom Hardy, Jennifer Lawrence, Liam Hemsworth, Daniel Day Lewis, Daniel Radcliffe, J.K. Rowling, David Fincher, Andrew Garfield, Jessie Eisenberg, Rooney Mara, Aaron Sorkin, Henry Cavill, Peter Jackson, Mickey Rourke, Terry Crews, Ben Stiller, George Clooney, Tiger Woods, Ryan Gosling, James Franco, Danny Boyle. Blog postings on the MJ Rolex Watch Blog are submitted by independent Rolex enthusiasts and not by Melrose.com.