Multichannel fulfillment is nothing new for Eddie Bauer. The iconic specialty retailer of innovative goods and clothing for the outdoors—think down jackets, a garment first developed and patented by the company—was doing multichannel fulfillment long before the phrase became popular. The company, which built a national following through its catalog, also operates a network of more than 320 stores, primarily in malls, around the country.
With a fulfillment operation already designed to handle both store shipments and unit sales to consumers, the company was better prepared than some brick-and-mortar retailers to adapt to the rapid development of digital sales. But in the fast-changing world of e-commerce, even the best-established brands have to make some adjustments.
Now, the company is prepared to take the next step in that evolution in order to meet the demands of increasingly impatient consumers. Just in time for the fall peak shipping season, Eddie Bauer is poised to ship up to 90 percent of the orders it receives on the same day, including Saturday.
Bringing this aggressive fulfillment plan to fruition required adjustments to operations, IT, and its arrangements with its principal carrier, FedEx. But Steve Venegas, who joined Eddie Bauer as vice president of distribution for North America last December, believes that offering rapid fulfillment will give Eddie Bauer a real competitive advantage.
"Our catalog business is a mainstay for us," Venegas says. "We want to continue to compete for market share through the traditional retail footprint, of course, but our direct-to-consumer channel is really evolving and market share is increasing."
As for the retailer's overarching strategy, Venegas says it starts with a focus on new product development. "We are getting back to our fundamentals as an active, outdoor lifestyle brand. But it's really a two-pronged approach. On the back end are our fulfillment services. We want to strengthen our fulfillment services now." Customers are won or lost, he believes, on both product quality and speed of fulfillment. "For distribution, speed to market is our number one priority in terms of making the customer experience a positive one."
THE GOAL: BETTER FULFILLMENT SERVICE
The company fills its direct-to-consumer orders from a cavernous 2.2 million-square-foot distribution center (DC) in Groveport, Ohio. The Groveport DC was built in 1994 for direct order fulfillment for Eddie Bauer and the Spiegel catalog. (The company also handles store fulfillment from the Ohio site, using an entirely separate process flow from its direct-to-consumer operation.) In addition to Groveport, Eddie Bauer operates a 100,000-square-foot DC in Vaughan, Ontario, that serves its stores in Canada.
The Groveport DC fulfills an average of 15,000 direct-to-consumer orders each day—a total of 30,000 to 45,000 units, as orders average two to three items each. "During our peak season, these volumes exceed 80,000 orders or 200,000 units, which demands a high degree of automation," Venegas says. The facility includes four high-speed tilt tray sorters, 13 carton sorters, 18 miles of conveyor, and three 60-foot-high narrow-aisle carton storage bays served by Raymond and Cleco stockpicker cranes.
With all this automated equipment, Eddie Bauer already had in place the robust material handling capability to meet Venegas' goal of six-day-a-week, same-day order fulfillment for the majority of its orders. But making it work did require adjustments to work schedules. "Most importantly, we had to communicate directly with our associates on how they would be impacted," Venegas says. "We needed their help. We were not designing this as a premium or overtime shift. We've redesigned our workweek to have seven-day-a-week coverage. Our associates understand the competitive environment and they have been big supporters. We've implemented a revised work schedule that does not incur an incremental spend for overtime and now have two shifts that work throughout the week."
The change in fulfillment strategy also required some changes on the part of Eddie Bauer's carrier, FedEx, which handles all direct-to-customer shipments. Venegas, while not disclosing Eddie Bauer's annual spend with FedEx, says that the company is a major customer of the carrier.
"We worked with our core carrier to ensure they are on board and ready to go in terms of their services and coordination of their dispatch times from our facility," he says. "The object for us is to have the latest possible pull times so we can process more goods throughout the day and still make those shipments a reality." FedEx stages multiple trailers at the DC, pulling them throughout the day. The last pull time is at 8 p.m.
Also crucial to making the fulfillment plan work were some IT adjustments. "We partnered with our internal IT group to ensure our internal job runs and warehouse management system (WMS) are in sync to make sure we make the order cut times," Venegas says. "It has required an internal effort around process mapping and coordinating those distinct times we have to hit."
90-PERCENT SAME-DAY SHIPPING
Since implementing the "speed of fulfillment" initiative in late February, Eddie Bauer has shipped 90 percent of customer orders received as late as 2 p.m. on the same day. The order management system drops direct-to-customer orders to the DC's Manhattan WMS. Orders are grouped in four to six waves each day for processing. "We prioritize our waves according to our cutoff times," Venegas explains. He adds that the mode of transportation selected by the customer—ground or air—is not relevant to the process. "Whether you order a ground package or an air package, our goal is to get it all out the same day," he says. "We feel that enhances the customer experience. Even if I ordered ground, it is still shipped as fast as humanly possible."
In the DC, as the wave proceeds, order selectors induct goods into the sortation system, which delivers items to order chutes for packing. (Those goods requiring extra services, such as pants hemming or embroidery, are diverted for those services.) Once re-scanned to ensure the right goods are going into the right carton and packed, the packages are conveyed to shipping and onto a FedEx trailer.
Interspersed with the order waves, the system also handles several replenishment waves during the day. "We operate replenishment teams seven days a week," Venegas says. "We run replenishment waves five to six times in a 24-hour cycle to ensure we are staying ahead of the order fulfillment waves."
Venegas is confident that the same-day fulfillment results the company has seen since February will be sustainable even as orders jump in the fourth-quarter peak season. And he sees that as a crucial part of Eddie Bauer's success. "What we are doing from a fulfillment standpoint is giving us a competitive advantage. Creating an enhanced service requires planning and implementation in the off season so you are prepared to deliver the same results during peak season, and that has been our approach to success," he says.