Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
The web grew nearly 40% for Dick’s in Q2 while store sales were flat.
With online sales that grew nearly 40% in the second quarter, e-commerce continues to grow at a rapid clip for Dick’s Sporting Goods Inc. But the growth isn’t coming from an elaborate series of new strategies, CEO Edward Stack told Wall Street analysts on the retailer’s second quarter earnings call.
Instead steady growth online is coming from a better understanding of customer behavior and using the company’s deep relationships with big sports equipment manufacturers to broaden the number of products carried on DicksSportingGoods.com.
The dramatic growth in e-commerce was in stark contrast to flat store sales, which the retailer blames on cool summer weather and slower consumer spending. “Our second quarter results were below our guidance as a sluggish consumer environment along with higher levels of precipitation and cooler temperatures contributed to a decrease in traffic, resulting in lower than expected same-store sales,” Stack told analysts. “We couldn't be any more pleased with what's going on from an e-commerce stand point.”
For the second quarter ended Aug. 3, Dick’s, No. 94 in the 2013 Internet Retailer Top 500 Guide reported:
- E-commerce accounted for 5.6% of all sales. Based on that percentage and similar numbers from a year ago, Internet Retailer estimates web sales reached $85.7 million, up 39.3% from $61.5 million in the second quarter of 2012.
- Total sales increased 7.0% from $1.43 billion to $1.53 billion.
- Comparable store sales increased 0.4%.
- Net income increased 56.6% to $84.1 million from $53.7 million.
- The web’s share of total sales grew to 5.6% from 4.3% in Q2 of 2012.
Dick’s continues to grow its e-commerce business by leveraging its relationships with manufacturers and offer a much broader and deeper level of products on its web site, Stack told analysts. “We've been able to increase pretty significantly our direct-from-vendor shipments to our consumers, which allow us to provide a much broader selection of product online than we're able to in the stores,” Stack said. “FootJoy is a perfect example on the golf side that we can show every FootJoy shoe that's made and show that online. We certainly couldn't do that in the store.”
In September Dick’s will roll out a buy online and pick-up-in-store program, Stack told analysts. But what’s making the biggest difference in growing e-commerce at such a rapid rate in the slower sales months in summer is concentrating on better promotions based on a deeper understanding of what customers want online. “Our e-commerce group is really doing just a very good job of keeping up with promotions and who's buying and communicating with those customers, and we're just getting better at that every day,” Stack told analysts. “We expect that business to continue to be an important driver of our comp sales, and this business is becoming more and more profitable for us each month and each quarter as we do a better job through our fulfillment channels.
For the first two quarters:
- Dick’s didn’t break out e-commerce or comparable-store metrics
- Total sales increased 5.5% to $2.86 billion from $2.71 billion.
- Net income increased 35.3% (I get 34.4%) to $148.9 million from $110.8 million.