Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
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To learn how to process orders through the JDA system, store employees spent about an hour watching a training video that explained the new computer interface, how to pull orders and shipping labels, and confirm that orders were shipped.
Although neither Follett nor JDA would give the overall cost the retailer paid for the JDA system, Dillon says it has satisfied the business case he and others prepared before deploying it. “It has clearly met expectations,” he says.
Finding lost opportunities
Jones Apparel Group is using information in its cross-channel VendorNet StoreNet Manager application to identify demand from both online and offline customers for specific products that otherwise might have gone unsold in warehouses or never been sufficiently stocked in the first place, says Ron Offir, president of e-commerce for Jones Apparel, which operates about 1,000 stores and several e-commerce sites for brands including Jones New York, Nine West and Anne Klein.
“The implementation of VendorNet StoreNet Manager is part of Jones Apparel Group’s overall strategy to fulfill sales on our e-commerce platform by optimizing our current inventory to meet online demand and deliver best-in-class customer service,” Offir says. “Our partnership with VendorNet is helping us improve service to our customers by showing web shoppers inventory across all channels and capturing demand that may otherwise have been a lost opportunity.”
VendorNet’s StoreNet Manager operates as a web portal that connects with a retailer’s online order management, store point-of-sale and inventory-management systems. VendorNet takes about 60 days to map data connections throughout the system, requiring retailer clients to provide only an Internet connection from each store to StoreNet Manager, says VendorNet president Sharon Gardner.
StoreNet Manager constantly pulls information on web and store sales and inventory levels, enabling it to direct online orders to the most appropriate store for fulfillment. Depending on the number of stores connecting to the system, the system generally carries a one-time licensing fee of $25,000 to $50,000, plus a one-time fee of $300 to $1,000 per store, Gardner says. In addition, clients pay annual maintenance fees of about 20% of the full deployment cost, she adds.
Where’s that pantsuit?
The StoreNet Manager system serves two basic functions. It provides the retailer with product SKU-level information on what customers are ordering on the web, in stores and in call centers, enabling it to plan the right allocation of inventory in its distribution center as well as in each store. And it enables the retailer to automatically re-route orders to provide fulfillment from the most appropriate stocking location.
For example, if a Jones New York label tan summer pantsuit is not available through the online channel’s distribution center, the system will automatically send the order to a store with that suit in stock.
VendorNet applications, which are also deployed by Neiman Marcus Group Inc., David’s Bridal Inc., Spiegel Brands Inc. and The Orvis Co. Inc., are also designed to extend the selling seasons of products without forcing retailers to over-rely on price markdowns, Gardner says.
Before Jones Apparel deployed the VendorNet system, for example, it would follow the common retailing practice of marking down items in physical stores late in the selling season. At the same time, it would remove product images from its web sites once they were no longer available in a web distribution center.
But with centralized information on order flow and available inventory across channels, the retailer can now better plan merchandising and pricing strategies that cut across multiple channels. If it sees continued demand online for products slated to be marked down in stores, it might decide to keep selling them at the regular price or at least at a higher mark-down price while promoting them online for fulfillment from stores.
Jones Apparel can also use information on online demand, including geographic location based on online shoppers’ IP addresses, to reallocate products to stores in areas where web activity shows continued strong demand.
Supporting its online channel with an effective means of fulfilling from stores is one strategy that has helped Jones Apparel Group excel on the web, the company says. Although the web channel still only accounts for 1% of overall sales, Internet sales last year rose 52% to $32 million from $21 million in 2007, as total sales fell 6% to $3.62 billion from $3.85 billion.
As retailers continue battling the down economy, having the right products in the right places can go a long way toward satisfying customers who are ready to buy.