CEO Sharon Price John says Build-A-Bear’s old e-commerce system is a big reason for disappointing online sales in December.
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Here's how it works, with the use of Shopatron Manufacturer software: A customer places an order from JLAudio.com. Upon checkout, the e-commerce system can determine the dealer nearest to the customer. The order goes into what online marketing manager Jeremy Dawson calls a "bidding pool" that is updated daily at 1 p.m. Eastern time and eligible dealers can request to fulfill that order. There is no actual bidding; in the event of a tie, the dealer nearest to the customer with the inventory available wins the order.
Online customers at JLAudio.com also have the option at checkout to select in-store pickup; if the dealer nearest the consumer does not stock the item, then JL Audio ships it there. If no dealer successfully bids, or requests, the order, then the manufacturer can usually fulfill it from its own reserved stock, Dawson says. He estimates that dealers fulfill 95% of orders.
The manufacturer only allows dealers able to ship orders from their stores within 24 hours and that refrain from shipping demonstration products to customers to take part in the program. Dealers who fumble shipments risk harming JL Audio's reputation, Dawson says. About 250 JL Audio dealers out of a nationwide network of more than 2,000 currently participate, he says.
The dealer assigned the order sees the customer's name, phone number and shipping information within the Shopatron system. Orders are shipped with UPS and have tracking numbers. If products don't reach the customer, or the dealer fails to ship within 24 hours, JL Audio may revoke the dealer's right to ship future orders.
The advantage to dealers for shipping orders on JLAudio.com's behalf is important because JL Audio products often require customers to seek advice or services from dealers regarding installation and other issues, a point of contact that can lead to a long-term relationship with the dealer. Dealers also earn their usual margin on the product minus a small fee to Shopatron for payment processing and use of the platform. JL Audio credits the program with helping to increase online sales by at least 28% since 2011.
Oregon-based jewelry, apparel and fragrance retailer and wholesaler Betsy & Iya is among the smallest of the small in terms of manpower and footprint. The retailer, founded in 2008, employs 13 workers and operates an e-commerce site and one bricks-and-mortar store, in Portland; the building also doubles as a manufacturing center for the merchant's handmade goods. By default, then, virtually all online orders are fulfilled from the retailer's store, but that doesn't mean Betsy & Iya got off easy in deploying the necessary technology.
In the last year or so, as its e-commerce business continued to grow, Betsy & Iya replaced a point-of-sale system that tended to "freeze up" with one from Shopify that could cover web and store transactions, and which resides as an app on the retailer's iPads, says Will Cervarich, the retailer's director of development.
The e-retailer also added inventory management software from Stitch Labs to connect to the point-of-sale data with inventory data. "Stitch is the glue," Cervarich says, and Betsy & Iya keeps track of wholesale orders alongside retail orders with it. Built-in status indicators—for instance, a green light appears on employees' iPads indicating an order is paid for and completed—help guide employees through the order flow, and helps them arrange those orders designated for in-store pickups.
The employees all see the same data feed, and can filter products by order status. The order management system also flags when a particular item is running low, Cervarich adds.
Integrating new software and crafting new processes requires time and thought. Cervarich estimates he and his colleagues devoted 16 hours to figuring out how they wanted the system to work, four hours on installation and about two hours for training—22 hours in total, though the estimate is likely conservative, he says. Other retailers can certainly understand: Crafting a workflow process to pick, pack and ship from stores is cited as among the top challenges by 49% of those retailers and manufacturers who plan to or have already launched ship-from-store programs, according to Forrester.
As store fulfillment advances in the near term, experts anticipate the trend will have an effect on store operations, especially on staffing and service. 37% of retailers in the Forrester survey also cite the training of store associates on how to ship from store as a significant challenge.
Adkins of West Monroe Partners notes that store fulfillment saddles store employees with more duties—which can take their attentions away from providing the attentive in-store service that is crucial to them. "In many respects, that's all retailers have left," he says. "If you have [bad] service levels, why should people come into stores when they can just buy online?"
That's the balance some retailers will have to strive to strike as they further tie their stores with their e-commerce operations.
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