The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Online retailers dig deeper into order management systems to discover treasure troves of cost-saving features.
When Dave Leonard took a close look at how his staff was spending its time, he felt a tinge of déjà vu. Employee tasks looked eerily similar.
“Business processes were redundant,” says Leonard, founder and CEO of Original Parts Group Inc. “We had different software for warehouse management, marketing and inventory. And so we’d have two or three layers of bodies entering the same information in all these different systems.”
For example, if the manufacturer and retailer of vintage auto parts added a hubcap it wasn’t done in one step, but more like five. One employee would enter data into the purchasing system, another would add it to the web site, and so on, Leonard says.
It was then that Leonard realized he had outgrown his order management system. At some point while sales were increasing 10% each year, SKUs were mounting to more than 50,000, and orders were climbing to close to 1,000 per day, time wasted managing orders also grew.
Original Parts is in the process of converting from a home-grown order management system to one from vendor Morse Data Corp. built on Microsoft .Net technology. The program, which Original Parts will manage in house, draws data from multiple sources and delivers it to employees who need it. “Order desk people will be able get all the information on the products, like how much an item weighs and what people usually buy along with it,” Leonard says. “Before, we were not able to do that because we didn’t have an integrated system.”
Leonard is not alone. As e-retailers feel the sting of the economy, many are migrating to new order management systems or taking a closer look at the features in the systems they already have, looking for ways to save time and money.
Use what you have
In the latter category is Sports Unlimited Inc., which sells sports apparel and equipment primarily through its Yahoo Store e-commerce site, and which has begun tapping some basic features in its hosted system from Stone Edge Technologies Inc. For instance, it now sends orders to its drop shippers in an electronic format rather than via e-mail or fax, saving time and eliminating the errors that come with manual re-entry of data, says treasurer Dave Neff.
The retailer also is organizing pick lists by where products are located in the warehouse, to save time, Neff says.
Original Parts is also using its Morse Data system to minimize employee travel time within its 100,000-square-foot warehouse. The facility has both a bulk storage area and a picking area with smaller bins containing seven to 30 days worth of items. The new order management system automatically sends an alert when a bin’s stock is getting low and tells employees the number of items the bin can hold so that they bring just the right amount. This saves pickers from having to trek to another part of the facility to retrieve items to fill an order.
Additionally, the Morse Data system helps purchasers calculate how much product they should order based on data such as sales in the last 90 days or over the last year.
Pittsburgh serves Pittsburgh
Wrigleyville Sports is using new multi-channel technology from its order management provider NetSuite Inc. to keep better track of store and web sales. The system reduces inventory immediately once a sale is made.
“If someone buys something out of the store, it comes out of inventory,” says Dave Weiss, Internet marketing manager at Wrigleyville Sports. “We never had that before.”
Until implementing NetSuite early last year, the retailer, based across the street from Wrigley Field in Chicago, found it hard to keep count of what was available on store shelves and frequently found it was out of stock on items ordered through its web site. Before submitting orders for payment to its credit card processor, every order had to be manually processed to determine which items shipped and which were out of stock or back-ordered, Weiss says. Employees who used to do that work have now been repositioned in the company, including one as a warehouse manager, Weiss says.
The company, which also operates a store in Pittsburgh opposite PNC Park and a web site called ThePittsburghFan.com, has benefited from the multi-site capability of the NetSuite software. Previously, the retailer had to keep Pittsburgh merchandise both at the store in Pittsburgh and at its Chicago warehouse, from which it fulfilled web orders. NetSuite’s ability to track web inventory in more than one warehouse location has allowed Wrigleyville Sports to fulfill web orders for Pittsburgh merchandise from that city, eliminating the need to keep Pittsburgh-related merchandise in Chicago. That reduced its inventory on hand by about 27%, Weiss says.
NetSuite runs and manages the program for the retailer on a software-as-a-service basis, and the promise of a reduced workload was part of what drew Weiss to NetSuite. “We’ve increased our capacity to ship orders by at least 250% since moving to NetSuite,” Weiss says. “We had the biggest month we’ve ever had this past December, and we barely broke a sweat.”
As retailers try to preserve cash in today’s sour economy, more are opting for such hosted systems because they require less cash up front than licensed software that a retailer purchases and manages on its own, says Sandeep Walia, CEO of e-commerce software technology provider Ignify. “If someone is looking for a quick ROI they can see it more quickly with a hosted program,” he says.
Up-to-date inventory can also boost online sales, says Brian Kinsella, director of product management for supply chain software vendor Manhattan Associates Inc. If the retailer shares information with consumers, for instance by noting precisely when an out-of-stock item will be available, shoppers are more likely to order, he says.
Some order management systems have features that can help retailers better assist customers who call for help. The Original Parts program, for example, enables sales reps to take over a shopping session, move a customer’s mouse cursor, and complete an order for a shopper who is having trouble.