Madison Reed has raised $32.1 million since launching 15 months ago.
The mobile phone accessory retailer makes room for drop shipments to other retailers’ customers.
In downtown Los Angeles, where cell phone accessory retailer Accessory Geeks is based, industrial real estate is limited and expensive, and operating costs are high. So when the web-only merchant decided to begin acting as a drop shipper for other retailers it needed to get creative with maximizing space and fulfillment efficiency.
In June of this year, Accessory Geeks, No. 698 in Internet Retailer’s Second 500 Guide, moved into 15,000-square-foot warehouse, and expanded that space by another 50% by building out a second level, providing another 7,500 square feet of usable space.
The retailer is making room for a growing number of wholesale customers that are asking Accessory Geeks to drop ship its cell phone, iPod and iPad accessories directly to their customers, says president David Byun. “These customers are tight on warehouse space and money and do not want to invest in inventory. We thought it was perfect timing and we are very efficient at shipping small quantity items in the U.S. and Canada.”
The retailer has no minimum order requirements to set up a drop ship arrangement, for a policy geared to its customers, which tend to be small-to-midsize retailers or wholesalers, says vice president Karen Kang. “As long as they cover their own shipping costs, we will work with them.”
To facilitate the transfer of order information from its drop-ship partners to the Accessory Geeks warehouse, in-house staffers built an automated feed system that is similar to an electronic data interchange, or EDI, an electronic exchange technology that predates widespread use of the Internet. Now when a customer places an order on one of its partner’s sites, that information is automatically transferred to Accessory Geeks. Also, when the item ships, a confirmation goes back to the retailer, who can then notify the shopper who placed the order.
As another way to maximize warehouse efficiency, the retailer has built its own computerized inventory management system. Employees are able to quickly identify the precise location of items by using the software that automatically links particular products to certain locations in the warehouse. It also assigns particular locations in the warehouse that are close to the packing station for more popular products, thereby cutting down on pick-and-pack time. Since implementing the new system in June, Accessory Geeks has reduced its pick-and-pack time by 20% and increased its previous daily order capacity of 3,000 significantly, Byun says.
“It gives us more accuracy and makes it easier to pick the merchandise and ship the orders out faster,” Byun says. “Before there could have been inaccuracies in the warehouse, and we have been able to reduce the majority of our shipping errors.”