Case Study - Netsplice

o2GearShop.com case study

The start

in 2007, the owner of Outdoor Outlet in Appleton had a simple project in mind: how to get the brick and mortar outdoor store online and compete on a national level with the big power houses.

After assessing the current operations, product mix, and growth targets and existing competitors, we combined our efforts to deliver a scalable solution that would grow with them, while respecting the working capital available to both create the online store, and continue operating the brick and mortar store.

First we created the eCommerce website within the first 3 months, trained employees with products listing, customer services screens, and the basics of operating an online store. We were ready for the first fall/winter season, with a fully functional eCommerce website and the basic marketing mix available at the time, including email marketing which we had extensive experience since 2000, creating our own in-house tools. That first year was a success, allowing o2GearShop.com to recoup its investment, and setting the stage for more aggressive target based on our existing proven strategies.

This was our humble loading dock… just right to operate both the physical and online stores:

The growing pains

The following fall/winter season saw a rapid growth, and almost got both of our team by surprise; orders kept pouring in, the addition of employees to operate the online store quickly surpassed the physical store, our constant improvements were paying off, but the disconnect between the inventory management software and the website started to create a new need: full integration between the online and physical inventory, full order fulfillment automation, and a full upgrade of the physical store cash registers.

So we got to work and implemented Microsoft Dynamics RMS, which provided the inventory management, cash registers and accounting needs, but lacked the fulfillment solution. After a lot of long days and nights of reverse engineering, we developed a custom solution to manage inventory, receiving, and fulfillment, fully integrated with Microsoft Dynamics RMS, the website, and the accounting software. Inventory was accurately managed, the eCommerce website was fully integrated which allowed for an efficient listing and management of a quarter million SKUs online. And with that came the next 2 challenges:

we ran out of physical space to house the inventory
website traffic and the high demand from Cyber Monday required a redesign of the eCommerce platform

The easy part was to first rent a unit across the store’s parking lot, then all 4 available units to allow for physical growth, deploy the network infrastructure, setup a brand new customer service department and related administrative workspace for the online operations. By then, the online activities were around 10 times those of the physical store, and the website itself ran out of possible “optimization”, and needed a platform redesign to ensure continued growth would not impact response time and accuracy.

Scalable Performance Hosting

Network Structure Our simple OSCommerce platform that served us well all those years needed to either be replaced, or seriously upgraded to handle the demand. So we tested and implemented a load balanced environment capable of scaling up during peak demand, and scale down the rest of the year to keep costs low, while maintaining the full integration pieces developed over the years.

As a result the hosting environment had a 99.8% uptime and was able to meet the demand throughout the holiday season, while scaling down in size and cost during lower traffic periods.
The combined environment and the various software and database optimization performed provided an average page load around 1.2 sec throughout the year, with no data loss or major downtime.

The success and growth of our operations didn’t go unnoticed, and soon Vail Resorts approached o2GearShop.com, and the acquisition was on its way.

The acquisition

When VR acquired o2GearShop.com, the entire operations needed to:

upgrade the hosting environment for growth due to an additional 1.1 million SKUs to the existing half million, and tighter PCI compliance because of the nature of publicly traded companies, and the obvious target you become online if you don’t have a tight ship
update the integration points to migrate from the legacy inventory system to the company inventory system on AS/400 and JDA
create a new warehouse (68,000 square feet) to replace the old warehouse, and setup pick/pack/ship systems and processes
all the above while ensuring business continuity and bringing enhancements to the customer facing website.

Inventory System Migration

The legacy system needed to be decommissioned and the VR ERP system needed to be integrated with the e-commerce website, while ensuring business continuity. Although the VR ERP is a robust system of records, it lacked the proper features, configuration, and integration points to be used with an online e-commerce site, as opposed to just a store setting configuration, selling what is in inventory, without consideration for drop-shipping or cross-dock inventory.
Our team worked with the VR team as well as outside consultant to configure the VR ERP for:

new product listing creation on the website, so the website could continue to be administrator friendly despite the sheer number increase of SKUs
inventory levels synchronization (both on-hand and cross-dock inventory) so we can continue to sell items we may not have on-hand
sale prices synchronization, with temporary promotions and discounts, so price updates can be executed in matter of minutes instead of days
new order flow, order statuses and cancelation, and the related training of a team new to online fulfillment
create a new fulfillment software and integrate with various shipper (FedEx, UPS, USPS), so that our previous features can still be used fully
customize fulfillment and PO software to work with backorders and cross-dock orders
communicate to customers for order tracking (full and partial shipping)
ensure accounting and reconciliation

While we were working on the above end result, we had to ensure business continuity, meaning we had to have both the legacy system and the VR system work in tandem while each new feature was being developed and implemented on the VR system. The following tasks were conducted over a 18 months period:

items synch between the 2 inventory system, using product match and customer match to provide accurate management and on-time filfullment
process orders from the new system while item creation was still being done on the legacy system
gradually transfer item creation process on a “brand by brand” basis, resulting on 500K from the legacy system cohabitating with 1.1M VR ERP on the website
fulfillment from 2 systems of records while the “brand by brand” transfer was being developed and implemented. Accounting and reconciliation was a key success factor in fully decommissioning the legacy system.

Warehouse design workflow and pick/pack/ship stations

The warehouse floor plan and workflow had to be carefully designed to allow for high efficiency and scalability. Each pick/pack/ship stations were designed to offer a semi-realtime interaction with the website and available inventory, both to process effectively each orders within 10 minutes of being placed on the website including shipment tracking (during business hours), and also to account for newly received POs that were reserved for existing orders, all while minimizing the “travel” needed to pick multiple orders per batch throughout the isles of the warehouse.

Summary

After the 18 months long project, and numerous man hours spent on this project to incrementally implement each piece of the project, the results showed a 50% increase in revenue at the completion of the project, bringing the full cycle from concept to low 8 figures in less than 6 years.

If your business has the drive to grow, Netsplice has the solutions to get you there! Contact us today and let’s get started.