The following article appeared in the Wilkes-Barre Times Leader on July 22, 2007.
WILKES-BARRE – Long past the upstart stage, area e-commerce companies are growing in size and outgrowing their bricks-and-mortar surroundings.
Earlier this year Solid Cactus Inc. surpassed the 100-employee mark and announced its plans to move into a new 20,000-square-foot office building under construction in neighboring Wilkes-Barre Township at the beginning of next year.
Close to Solid Cactus in size, Pepperjam is looking to leave its downtown office space for a bigger building as it adds staff and clients such as Nordstrom, the Washington Redskins of the National Football League and Sesame Street.
More clients mean more business and more people to handle the work in an industry where 100-percent annual growth is business as usual.
“We’re expecting growth between 300 to 500 percent annually for the next two to three years,” said Kristopher Jones, Pepperjam’s president and chief executive officer.
Started four years ago by Jones, Pepperjam was ranked among the 500 fastest growing companies in the nation last year by Inc. magazine. The venture that developed from him selling his grandmother’s pepper jam on the Web is recognized as a leader in online marketing.
At the end of April the company surpassed all of 2006’s revenue and is expected to reach between $16 million and $20 million by the end of this year, said Jones, 31.
Pepperjam occupies all 12,000 square feet on the third floor of The Innovation Center @ Wilkes-Barre and is approaching 100 employees.
Needing room to accommodate the growing staff, the company is looking to either build or buy a building in the area. A decision “should be made soon,” Jones said.
Growth might come from outside as well. Jones hinted at making an announcement before the end of the year. “We are in the process of making one or more acquisitions,” he said.
A tireless promoter, (Jones is speaking in London in October), he has attracted business from established merchants and Web-based retailers and linked up with industry giants Google and DoubleClick.
“Solid Cactus is the leader in developing Web sites for Yahoo sites. We’re that equivalent in the online marketing space,” Jones said.
Gradually Solid Cactus is adding search marketing services similar to those offered by Pepperjam. That department and its call center operations have taken off, said Scott Sanfilippo, the firm’s 36-year-old president.
Solid Cactus will hire 15 customer service representatives this year, eight of them by the end of this month. In the next two years, the work force should more than double to 252.
“I believe we’re past the upstart stage,” Sanfilippo said. “I think we’re in the extreme growth mode.”
At some point it could become a very attractive acquisition, along the lines of the big fish swallowing the smaller fish, he acknowledged.
The company does good work and word about it gets around. Solid Cactus is a full-service provider, he explained, saying it creates the Web site and markets it. “The only thing we don’t do is pick, pack and ship your orders,” Sanfilippo said.
Leave that to igourmet.com in West Pittston.
The specialty food merchant that moved from West Chester County, N.Y., nearly three years ago is the bedrock of online retailing.
“Companies like ours started first,” said Spencer Chesman, 37, chief executive officer of igourmet. The service industry that includes Pepperjam and Solid Cactus grew up around online retailers, he added.
But igourmet wasn’t left behind. It’s still growing. The company’s lease on the 40,000-square foot building it occupies on Delaware Avenue is up at the end of next year, Chesman said. Something in the 100,000-square foot size would be a better fit.
The company is working with Mericle Commercial Real Estate Services to find a new place. “We’re going down the path of trying to figure out what our next move would be,” Chesman said.
The work force has doubled to 40 from a year ago. The company also is investing in technology to maintain the service it’s noted for – quick turnaround and accuracy in fulfilling orders.
The combination of good people and good systems has led to a very successful operation.
“We have a three-pronged approach to building the business,” said Chesman, who runs the company with his wife Jessica, 34, a native of the Wyoming Valley. It will continue to establish the igourmet brand in the marketplace, partner with other larger online retailers such as Amazon.com “to be sort of their drop-in food solution,” and grow the wholesale aspect of the business through wine and specialty stores nationwide.
Within the past few years, the area has become a hub for e-commerce talent with the expansion of Solid Cactus, Pepperjam, igourmet, Babyage, the online retailer of baby and children’s clothing, furniture and infant and juvenile products, and Vintage Tub & Bath, an Internet retailer of vintage and reproduction claw foot tubs and bathroom fixtures.
The companies draw from local colleges and universities and lure people back to the area to fill staff positions, said Chris Haran, chief executive officer of the Great Valley Technology Alliance, created to foster the development of a knowledge-based and technology-centered economy in the region.
Even among the companies there is some movement of employees as they shift to better paying or more challenging jobs. “That’s what drives the knowledge economy,” Haran said.
From his perspective, the growth here is controlled and nowhere near the rate of dot.coms that led to the stock market bubble bursting in 1999 and 2000. The companies are starting to overlap in services, but Haran added, “coopetition” – cooperative competition – is a good thing.
“We’ve got a nice e-commerce cluster developing in the region,” he said.