Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
One of the constants about providing what once were thought of as fulfillment services to online retailers is that the market and merchants` needs keep changing. Once primarily pick-pack-and-ship operations, fulfillment providers today must step into a much broader role to satisfy clients` needs. "Our role is continuously broadening," says John McGovern president of Progressive Distribution Inc., which, in spite of its name, provides a broad range of services to online retailers and would-be retailers. "In many cases, we are in a unique position to assist our clients further up and down the infrastructure."
Progressive today provides services that help clients increase average order values, improve conversion rates, decrease credit card fraud, minimize returns, decrease customer service costs, and maximize freight discounts, McGovern notes. "We want our clients to be profitable and stable, so we focus on providing the advanced systems, infrastructure and management experience needed for them to have a successful business," he says.
One of Progressive Distribution`s most recent expansions has been into online marketing. "Because we know in real time the click-throughs and where people are coming from, we can analyze what`s taking place and help make keyword purchases much more efficient," McGovern says.
Progressive integrates that information into its order management system and then extracts marketing recommendations. "Our OrderLink e-commerce platform is able to automatically embed data into incoming web traffic that allows us to perform media cost analysis against actual orders taken, without custom programming or maintaining an external or separate tracking system, as required when using the tools provided by the major search engines or the web metrics software packages," McGovern says. "We then give our clients this information in real time through our web-based business management tools."
In addition, Progressive has developed software that provides turn-key access to affiliate channels such as Amazon, Yahoo Store, Froogle, and Shopping.com.
Progressive also can use its broad perspective to analyze marketing results in the context of a client`s overall business, McGovern says. "What really matters is the marketing cost per order expressed as a percent of the order value and not the raw dollars spent on marketing," McGovern says. "Marketing spend has to be compared against the financial side of the transaction."
One of the things that this broad experience allows Progressive to do is acquire customers who are looking for the full range of services and who might not have retail background. "Increasingly we are working with owners of national brands or product lines who need to quickly grow their business in new channels such as e-commerce and give a great customer experience on Day One," McGovern says. "They also require the entire business channel to be operating at best practice level right from the start."
Among Progressive`s recent clients who were seeking e-commerce expertise are A.H. Schreiber Co., manufacturers of swimwear, and Gold`s Gym International Inc., operators of fitness centers nationwide. "With the retail consolidation that is happening, a manufacturer definitely needs more access to the consumer," says Avram Schreiber, vice president of A.H. Schreiber, an 80-year-old manufacturer with annual sales approaching $100 million. "I`ve always believed that the Internet should be part of our business, but I didn`t want to deal with marketing, packing, shipping, web site hosting, tax issues--all the back-end stuff."
Schreiber has been selling online for two months at SwimSensations.com and expects to sell $1 million online this year.
Gold`s Gym went online to more efficiently reach customers looking for merchandise or workout equipment, says Ed Powderly, senior vice president, product licensing of Gold`s. The company turned to Progressive because it had no expertise in selling online. "They helped us work out a business plan, told us what to expect, helped us set goals upfront," Powderly says. "We`re dead-on in meeting our expectations and a lot of that is because of the knowledge and expertise that came from Progressive."
McGovern says Progressive expects more of those kinds of customers as the Internet continues to offer opportunities to retailers and non-retailers alike. "More and more, our clients have limited administrative staffing and need a solution that leverages their resources," he says. "Because the infrastructure we provide is so integrated we can usually support those needs for less cost."