Dropshipping Technology Keeps Up With the Jones Apparel Group Apparel Magazine staff
At a time when the economy is staggering and e-commerce seems to be contributing more and more to revenue dollars, retailers are investigating ways to more closely integrate their sales channels, while leveraging existing resources to provide cross-channel efficiencies, capture consumer demand and reduce costs.
The emphases are proving their mettle at Jones Apparel Group, the holding company for many nationally recognized apparel and footwear brands including Jones New York, Nine West, Anne Klein, Bandolino and Easy Spirit.
With a new CEO taking the helm of the company in mid-2007, Jones Apparel Group took actions to address the impact of the economy and shifting retail trends by building on its core competencies and brands to position itself for growth and increased profitability.
It focused on a number of key areas including the creation of a dedicated e-commerce group to develop a comprehensive online strategy and take immediate steps to maximize the potential of that channel by providing consumers with easier and faster access to products.
An aggressive launch plan
Jones brought former Coach.com executive Ron Offir on board as its president of e-commerce to lead this new organization, tasking him with the responsibility for managing the online sales channel across all of Jones' brands and divisions. This included formulating the Internet corporate strategy, growing revenue from corporate e-commerce sites and prioritizing and launching all new e-commerce initiatives.
"The economy is forcing companies to find ways to improve operations without incurring a substantial up-front investment that takes years to recoup," says Offir in summing up today's environment. "We knew it was important to 'e-commerce enable' more of our core brands, but we had to do it in a way that minimized the financial impact of opening new warehouses, or adding more inventory to existing warehouses." Additionally, Offir says Jones "needed to ensure our current e-commerce platforms were performing optimally."
Under Offir's leadership, the e-commerce strategy was formulated with an aggressive launch plan on multiple fronts: marketing, operations and supply chain.
It included introducing web retailing to Jones' core brands that were not previously e-commerce enabled (as Offir puts it), as well as increasing product availability and selection for brands on existing e-commerce sites.
"For those brands that were already e-commerce enabled," Offir says, "we reviewed sales patterns across channels and found that best-selling styles were selling out online first when there was still inventory available within our stores."
However, when Jones sold out of a particular product online because inventory in its distribution center was depleted, that product could not be ordered and appeared unavailable to the consumer.
"That meant the consumer shopping our web sites may have mistakenly believed we no longer had a product, or they may not have known the product existed at all," Offir points out. "We also discovered situations where we had an item in our warehouse, but not in the right color or size, and again, we weren't taking advantage of inventory available in our stores. Not only were we losing sales and disappointing our customers, we were also losing visibility to the demand for the items."
Utilizing only a traditional fulfillment model to support its enhanced e-commerce strategy would obviously have required Jones to expand its direct-to-consumer warehouse resources. However, Offir led Jones in a different direction - augmenting its fulfillment operations to make corporate-wide inventory available for sales online, and tapping bricks-and-mortar store inventory and personnel to fulfill e-commerce orders when a product was not available in the warehouse.
"To capture demand data, improve our customer satisfaction rates, and increase sales revenue, we made store inventory available for sale on our web sites," Offir says. "Of course using the stores for fulfillment had to be done in such a way that the order is handled electronically exacting the least amount of manual impact to our stores, and at the same time, the entire process needed to be completely transparent to the consumer."
Web technology (for bricks- and-mortar fulfillment)
Jones selected Florida-based supply chain solutions provider VendorNet as its partner to develop the web-based application VendorNet StoreNet Manager to integrate its e-commerce and traditional store sales channels.
Jones Apparel Group rolled out StoreNet to more than 200 Nine West stores in a six-week period last summer, followed by more than 500 additional stores across all its brands through the remainder of the year, including its new e-commerce-enabled Jones New York web site.
Jones Apparel Group's new dropship technology provides a web portal for store personnel to access and fulfill their e-commerce orders. Online orders that cannot be fulfilled by the primary warehouse because of out-of-stock conditions are electronically transmitted to Jones' StoreNet system.
StoreNet in turn routes the orders each morning to the best available stores for fulfillment based on Jones-defined store allocation rules such as inventory availability, safety stock levels, proximity to the customer, and store preference settings. Store personnel access the orders complete with pick list, packing slip and shipping label through the StoreNet web portal.
The store personnel pick the items, and confirm the picked quantities in StoreNet. The pick confirmation triggers the printing of packing slips and UPS shipping labels, and ultimately transmits shipping manifests to UPS notifying the carrier that packages are staged for pickup. In the event a store is unable to fulfill all items/orders, the order, in-full or in-part, is automatically allocated to the next best available store.
Upon receipt of the shipment by UPS, StoreNet obtains pick-up scans confirming carrier possession, and sends a ship transaction including tracking number back to Jones' host order management system triggering a charge to the consumer's credit card.
Each night, StoreNet obtains updated store inventory counts from Jones Apparel Group's retail inventory management system, and transmits the aggregate item inventory counts across all stores and the warehouse (minus safety stock levels, newly allocated orders, etc.) to their e-commerce website.
"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," said Offir.
Corporate-wide availability
With a corporate-wide view of inventory, Jones can sell down products and keep styles live online through their entire lifecycle across all its sales channels regardless of how the order is being fulfilled. Other benefits include the ability to prioritize stores, and dynamically take stores in and out of the program. By not treating every store equally, Jones can take advantage of pockets of inventory or leverage stores that may have less foot traffic giving store personnel more availability to fulfill online orders.
According to Offir, the adoption of StoreNet has gone smoothly, with Jones' store personnel willingly embracing the software for a user friendly interface and ease-of-use. The retailer has discovered establishing an integrated dropship framework between online and traditional store sales channels for e-commerce and in-store collaboration can help retailers sustain growth and gain competitive advantage. It represents a viable opportunity for retailers to increase e-commerce sales, optimize inventory and personnel utilization, improve product availability and customer satisfaction, and capture true product demand that may otherwise have resulted in a lost opportunity.
And, as Offir and Jones Apparel Group indicate, the twist on dropshipping is working.
This article was written by the Apparel Magazine staff.
company at a glance
* Jones Apparel Group Brands: Include Jones New York, Nine West, Anne Klein, Bandolino and Easy Spirit * Headquarters: Bristol, PA (with four offices in New York City) * Founded: 1977 * Ticker: JNY (NYSE)
