Question-and-Answer Session
Operator
(Operator instructions) Your first question is coming from George Walsh with Gilford Securities. Please go ahead.
George Walsh – Gilford Securities
Good morning, gentlemen.
Mark Layton
Hi, George.
George Walsh – Gilford Securities
Just a few questions regarding the PFSweb services on the margin side, it looks like sequentially just quarter-to-quarter that there was a – on the gross margin, there was – it was bit lighter there. Can you just walk through what was going there, is anything were there plan through for new contracts or anything?
Tom Madden
It's tough to look at just a quarter by quarter basis, because of the timing of project activity that occurs on quarterly basis with the different clients. I think that last year we would have had some new client activity that has negatively impacted our gross margins, but also some higher level of project activities. So, we kind of take a look at it on an overall basis for the year, our overall desire is to try to maintain a gross margin performance for the service fee business in the 25% to 30% range.
George Walsh – Gilford Securities
And I was just looking as much as you can see with the new clients that you signed up for the balance of the year in terms of the revenues and the margins?
Tom Madden
I think, George, as we look to onboard new clients there staying pretty consistently in the range that we are targeting. We haven't seen to this point any sort of devaluation [ph] in the deals that we are looking at. So, I expect to continue to see the kind of results we have seen and as Mark indicated in his comments earlier we do continue to gain leverage from our platform and the investments that we have already made. So, as we onboard new clients we continue to see the positive impact in the bottom line.
George Walsh – Gilford Securities
And you just further commented that you could make on the pipeline in reference to the numbers up there, but the kind of activity you're seeing and anything maybe a little bit more detail on initiatives with Demandware?
Tom Madden
I can't say I think it's indicated earlier that we are seeing a very positive impact in our pipeline from the end-to-end announcement. A good percentage of the prospects there in the pipeline as well as the once that are earlier – in earlier stages that are reflected in that pipeline value. What I would call image and luxury brands, that are looking to have an e-commerce initiative either North America or globally, and I think primarily that increase that is due to the announcement of the relationship with Demandware as well as putting together the rest of the components of the end-to-end solution including some of these interactive marketing partnerships now. One of the interesting things as we look at our target marketing (inaudible) there is some research out there that indicates for a image and luxury brand only about 30% of those brands actually have in direct-to-consumer online initiative today. So there is a huge untapped potential out there in the marketplace for over 70% of these high quality luxury brand will be – I believe over the next year to 18 months having to seriously consider putting online initiatives up and an outsourcing alternative is the quickest least risky path to doing that. So I think we are really well-positioned with our end-to-end offering to take advantage of those trends.
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