August 19, 2002, 12:00 AM

Balancing investments in back-end functions with investing in sales growth

School uniform retailer’s greatest need for warehousing and fulfillment is in the summer. With New Roads, it gets it, without paying for unused capacity off-season., the direct marketing arm of school uniform manufacturer French Toast Official School Wear, finds that outsourcing key back-end functions for its Internet and catalog business solves two critical problems: gearing up for seasonal spikes and freeing up time and resources to focus on sales and marketing. is in the second year of a contract with NewRoads Inc. to handle order taking, fulfillment, customer service and returns. “The greatest benefit has been because of the peaks in our business," president Michael Sutton tells Internet Retailer. “Because NewRoads has the staff and systems in place all year, they can spread that cost among all of their clients, many of whom aren’t busy in the summer, which is our peak time.”

French Toast, which has provided school uniforms though specialty stores and major retailers including Sears for the past 10 years, launched its Internet and catalog business in 1999. A year of fulfilling its own orders convinced the company that it made no financial sense to invest further in the infrastructure and technology to run the warehousing and fulfillment operation as its business grew, particularly as it wanted to focus more resources on sales and marketing. In addition, French Toast, with a largely seasonal business, needed to reconcile unused space and resources in the off-season.

Sutton describes the Internet channel as a “growing segment,” especially useful to sales at off-peak times. “Retailers are pressed for floor space, so they carry uniforms in stock during the back to school season, but during the rest of the school year, many retailers can’t afford to use their valuable floor space for uniforms, so a lot of consumers look to the Internet and catalog for items they need to replenish,” he says.

Sutton adds that outsourcing has allowed the company to shift its focus to growing the business. It’s been able to devote more attention to product development, market research, and building new relationships with customers. NewRoads’ order management system generates sales data and forecasting reports that inform daily business operations as well as strategic modeling to identify trends. New Roads prices its services based on a combination of fixed costs and transaction fees that varies depending on what capacities a client buys from New Roads, the company says.


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