Craft.com CEO Brad Roberts had no comment on the changes. Instead, he referred questions about the new strategy to the public relations department, which did not immediately return phone calls.
The change has angered many of the company's subscribers, judging by the company's message boards. Postings included titled "great craft tip!" with the message "Don't shop at Craft.com."
"I'm very mad at them right now," said Linda Smith, an aspiring artist from Elkmont, Ala.
Smith said that when she signed on a as a charter member in December, she handed over personal data -- including her name, address and e-mail address -- and filled out a survey in exchange for the promotions. In return, Smith said she was promised goodies including a $25 gift certificate, free shipping for a year, and a $5 credit for each person she referred to the site.
On Friday, she got an e-mail saying, "Well, we changed our minds," Smith said.
"They were collecting info," she said. "I wonder if they ever intended to fulfill their end of the bargain at all. If they had investors, I'm sure it looked better having this big database of users."
Eliminating loyalty programs can backfire on dotcoms, even though it can save them money, Jupiter Communications (jptr) analyst Ken Cassar said.
"Generally speaking, any e-commerce player that takes the focus off retention is making a huge, colossal mistake," Cassar said. "Success in this business is absolutely, totally, driven by retention over the next three years."
However, companies need to be smart about the promotions they offer, he said.
They should plan "exit strategies" for short-term promotions such as free shipping, so the programs don't eat away at profit margins forever, he said. And they should be clear about the difference between promotions and loyalty programs.
"Loyalty programs should encourage behavior that is in the long-term interests of company," he said. "A perfect program for a music seller, for example, is not giving away CDs, but giving away CD case or a CD player, because that not only rewards people but encourages future purchases."
If Craft.com has hit on hard times, it would be in good company. The past few months have seen a slew of dotcoms go bankrupt, lay off workers or struggle to find new investment sources.
A new list of possibly sick dotcoms was published today by Barron's, which hired Pegasus Research International to study companies' cash flow and other financial stats.
An update of an earlier study, released in March, the list is topped by marketing firm Genesisintermedia.com Inc. (geni), services firm Convergent Communications Inc. (conv), Internet banking and e-commerce firm Netzee Inc. (netz), online grocer Peapod Inc. (ppod) and fashion retailer Bluefly Inc. (bfly)
