May 30, 2008, 12:00 AM

Keeping Order

Anywhere, anytime: the new benchmark for taking and fulfilling customer requests.

By Paul Demery

Taking orders from passionate customers is never easy, but with the onset of spring and a new golf season underway, Golfsmith knows it must step up its game in the way it handles and fulfills orders.

And like any good golfer playing a tough course, it has more than one way to approach each challenge. If a customer from Maine orders a driver on Golfsmith.com, for instance, the retailer may ship it from its centralized warehouse in Austin, Texas-unless its web-enabled order management system, sensing that the preferred driver is in stock in a store in New York, routes the order to that store for a faster delivery.

Then again, the order management system, sensing that stock levels of the popular driver are low in both its Austin warehouse and its stores in the Northeast, may route the order to a supplier for drop shipping the golf club directly from the supplier`s warehouse to the customer.

A good game

All the customer knows, assuming all goes well, is that the driver he ordered online from home-or through a web-enabled store kiosk or POS terminal, or a contact center-arrived in time for him to hit the links on his first golf outing of the season.

And Golfsmith, a growing retail chain, e-commerce site and catalog operated by Golfsmith International Holdings Inc., is driving up sales largely because it`s playing a good game of web-based multi-channel order management and fulfillment, says Matt Corey, vice president of marketing and brand. The retailer did $40 million on the web last year, ranking it No. 214 among all retailers in online sales, according to the 2008 edition of the Internet Retailer Top 500 Guide.

But while web sales have doubled over the past four years, web-influenced sales across all channels have grown even faster, thanks to Golfsmith`s ability to view and manage cross-channel orders and fulfill them from multiple sources of inventory, Corey says. "We`ve grown well over 100% in web- and e-mail-driven demand across all channels," he says.

Like a number of other retailers, Golfsmith is building on its ability to leverage a web-enabled system that lets it view and manage orders regardless of where a customer places an order, then fulfill orders from the most appropriate stockpile. So even as it has expanded its chain to 72 from 40 stores in the past four years, it knows that the web has influenced a significant percentage of store sales as well, Corey says.

Consumers expect to be able to shop across channels, according to a recent survey by Sterling Commerce, a subsidiary of AT&T; Inc. that provides cross-channel order management and fulfillment for large retailers. 70% say they expect to be able to place or change an order "anywhere, anytime, anyhow," says Jim Bengier, Sterling`s global retail industry executive and former vice president of supply chains at Best Buy Co. Inc.

To capitalize on that cross-channel demand, multi-channel merchants need to have the technology and processes to address three critical areas: visibility and management of customer data related to how they place orders across channels, visibility into available inventory, and the ability to match incoming orders with the most efficient way to fulfill orders.

Go with the flow

"The most critical thing a multi-channel retailer can do is to understand how orders flow through its order management system, what drove the order and where it is shipped from," Corey says.

The benefits fall into three general areas, experts say. Cross-channel order management and fulfillment can provide for the most efficient way to process orders and move inventory, expediting the delivery of accurate orders to customers. It provides retailers with valuable information on how customers like to shop across channels, helping merchants refine cross-channel marketing and merchandising as well as fulfillment. And it enables web managers to quantify the growing value of the web in driving sales across all channels.

"For every dollar of online sales for multi-channel retailers, there are $3 of web-influenced store sales," says Kasey Lobaugh, direct-to-consumer practice leader for consulting firm Deloitte LLP. "Retail revenue is not created in a single channel, because customer shopping behavior is across channels."

The cross-channel strategy and technology system for any particular retailer, however, can depend on the merchant`s legacy operating environment as well as its size and goals, experts say.

Golfsmith, with roots in the 1970s as a cataloger, still operates with a single warehouse in Austin and a home-grown warehouse management and fulfillment system that the retailer has modified to process orders across its web and store channels as well as its contact center. Operating mostly in-house software with Oracle databases, Golfsmith has continually upgraded its system and related processes to serve customers across channels while capturing and using information about how they shop.

The retailer pulls reports from its order management system that show how customers, tagged by identifiers such as e-mail addresses or loyalty account numbers, shop across channels and help the retailer tailor marketing and merchandising efforts. It`s also working with Experian, the consumer database company, to produce automated reports tied to customer identifiers to support more personalized marketing and merchandising.

To gather customer identifiers, it runs online incentives such as the chance to win a trip to the Pebble Beach golf course in California for joining its loyalty club, and offers rewards of cash or trips to store employees who gather the most customer e-mail addresses or telephone numbers.

Knowing the mix

With identifiers in its database, it then tries to match where customers place orders with where Golfsmith fulfills them. "We call it our `demand versus shipped` report," Corey says. "We identify the channel of demand, such as web, catalog or e-mail, and then determine where the orders shipped from."

That helps Golfsmith better understand, for example, how many online orders are being shipped from stores or drop shippers as well as from its distribution center, enabling it to better manage marketing efforts based on how customers shop.

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