The Internet Store Home Delivery Big Lots ecommerce

Transcription

1 The Internet Store Home Delivery Big Lots ecommerce

2 Corporate Overview Big Lots is a specialty retailer with exceptional values at prices below the competition OWNABLE WINNABLE CONVENIENCE FURNITURE / SEASONAL / HOME / FOOD / CONSUMABLES / TOYS / ELECTRONICS Key Facts Sales of $5.3 Billion in 2016 Over 1,445 stores in 47 states Over 36,000 associates $3.6M in sales and 27,000 sq. ft. per average store Mixture of never-out, in-and-out and close-out merchandise Focused on ownable/winnable categories

3 ecommerce Big Lots began its journey toward ecommerce in 2013 after an earlier ecomm mis-start and underperformance of its core business of 26 negative same store sales growth Losing 4-5% of customer base per year to key competitors Negative perception of quality Inconsistent Offering 12 straight flat to positive same store sales comps. Growing customer base Improvement in Brand, Quality, Fashion Consistency of Offering Surprise in Every Aisle Omni Channel Journey Start 3

4 ecommerce Design Principles The journey began as a crawl, crawl, walk, run in order to both understand the key business drivers and minimize costs associated with start-up Core Platform and Fulfillment Integrate Fulfillment Center operations into existing RDC network Systems Minimize initial complexity and pursue the simplest alternatives Omnichannel Enable Supplier Direct Fulfillment (drop-ship) from select vendors Minimize initial outlay of capital and complexity Utilize basic put-wall operation Integrate with retail reserve storage (represents <10% of DC volume in Y5) Utilize Parcel only Integrate and design Reverse logistics capabilities Implement MA e-commerce WMS Treat e-commerce operation as an additional store for planning, allocation and RDC operations Leverage retail PO process but split PO between ecomm and Retail need Assess opportunity for DOM in future with new facility go-live Support BOPUS by shipping on retail trailers to stores only in the RDC where fulfillment operations are located Support future outbound LTL shipments from fulfillment centers and vendors Assess value of regional fulfillment centers, then add additional locations

5 ecommerce Roadmap Big Lots ecommerce and Omnichannel experience is at the beginning of the beginning. April 2016 Jan 2017 H Wave 1 (Launch) Wave 2 Wave 3 Wave 4 DC Direct DC Direct DC Direct DC Direct Drop Ship 1 Drop Ship 2 Drop Ship BOPIS DC to Store BOPIS Reserve in Store NOTE: 1 Parcel only 2 LTL/Final Mile Store Direct (Ship-From-Store) 1 Drop ship scale TBD, based on defined strategy and qualified vendors identified Big Lots Confidential 5

6 Product Assortment Offer and Roadmap As a value-based retailer, a key decision was the assortment and appropriate channels for each product category Big Lots Confidential Wave 4: H

7 Carton and Item Attribute Considerations The intersection of assortment, fulfillment design and transportation practicalities is critically important Conveyability Does the item fit in the tote? Does the item fit in the Put Wall? Put Wall configuration is the critical design point Cubby volume tied to Carton Volume Need to understand order characteristics to determine if wall should have larger cubbies with fewer per wall Convey Cartons Postal Insertion Surcharges Balloon Non-Machinable Order characteristics UPT Volume Critical Dimensions # of boxes tied to Pack Station design/flow Polybag options Non Convey Cartons Ship Alone based on size/weight Ship Ready Carton or in need of overpack Combines with the majority of non-convey items or combines only with non-convey items with a similar shape (rugs/umbrellas) 7

8 Key Transportation Design Concepts The design point for transportation was to enable a high service/low cost model that reduced the complexity for IT Single Source Leverag ed spend Parcel Only Solution Broad weight spectrum Multiple service levels Solution Set FedEx UPS USPS Big Lots Confidential 8

9 Key Transportation Design Concepts Enabled routing to allow for be flexible enough to support our customer strategy while maximizes our ability to use the low cost service level Economy < than 10 lbs. (all zones) SmartPost Standard lbs. Zones 3-8 Home Delivery Expedite All weights Zones 3-8 Next Day Big Lots Confidential 9

10 Important Cost Contributors for Transportation There are three key cost drivers for Big Lots transportation Processing and Shipping SLA (Cycle Time) Required Fulfillment Processing Day for Low Cost Shipping Low cost shipping = 45-55% cost reduction/eligible package Wave templates prioritize orders with the furthest distance Achieve the low cost service Improves service Surcharges Surcharges excluding Fuel make up 20% of Total 4.5% AHS & Oversize 4.5% DAS/EAS 11% Residential Dimensional Weight Experiencing ~ 15% variance between actual and dimensional weight DIM Divisor based on product assortment and shipping methods becomes important Accessorials also become important 10

11 Receiving Strategy - Selling Unit Dimension While fulfillment is important to transportation, receiving can be equally important Soft Goods Nesting Irregular Shape Items can be folded, rolled, and squeezed Goal is to increase the number of units that will plan into the largest box Secondary goal is to plan to the lowest volume box by minimizing each critical dimension Cubiscan dimensions alone cannot account for the usable internal volume These items are stackable inside the box as well Work around is to modify one dimension to reduce the overall cube of the item Similar to stackable items, there is potentially usable space Understanding when the space is usable is the challenge If usable, apply the same work around as the stackable items to get the most accurate cube 11

12 Design Criteria: Then vs. Now The design assumptions that were used to develop both fulfillment and transportation design were significantly off-the-mark Original Design ~6K SKUs on line Avg. Order Value of ~$35 - $ units/order 1.1 packages per order 85%/15% conveyable to non-con mix 90% or orders less than 10 lbs. Original Design ~3K SKUs on line but very little overlap to original SKU list Avg. Order Value of ~2X original ~4.5 units/order ~1.4 packages per order ¹ ² 50%/50% conveyable to non-con mix 45% of orders less than 10 lbs. Big Lots Confidential 12

13 Key Lessons for Logistics As a green field start-up Big Lots looked at lessons from other retailers but the uniqueness of our assortment and initial design still challenged Expect the unexpected Be a fast learner Over-collaborate Maintain a service/cost perspective Have fun and enjoy small victories Big Lots Confidential 13

14 ecommerce To Date We better understanding Jennifer s buying preference, behaviors and patters 40% 35% 30% 25% 20% 15% 10% 5% 0% Percent of Sales by Division Baseline now always includes a Free Shipping offer (threshold) Below is the lift vs. Baseline for each major promotion from a standard Ad to Cyber Monday Stores Ecom Stores (Online Articles Only) Limited online assortment Comparing against items in both stores and online, her preferences are different 14

15 ecommerce The Journey We are learning more about Jennifer everyday 76% of orders come from customers who live within 10 miles of a store* 49% live within 5 miles 27% live within 3 miles 55% of orders come from Rewards members Sundays are generally our highest Order day of the week, with Fridays receiving the most visits to the site She loves to Search over 27 million searches since launch Top 5 terms: Fireplace, Desk, Couch, Sofa & Chairs Shipping offers and promotions matter - She wants the best deal and adjusting accordingly 15

16 ecommerce Next Steps Big Lots will begin to ramp SDF (drop ship) and large format items to drive our ecomm growth and deliver value to Jennifer April 2016 Jan 2017 H Wave 1 (Launch) Wave 2 Wave 3 Wave 4 DC Direct DC Direct DC Direct DC Direct Drop Ship 1 Drop Ship 2 Drop Ship 2-3 additional SDF vendors enabled in 2017 Enable non-parcel shipping for both Big Lots DC and suppliers by end of 2017 Continue to explore additional Big Lots DC on West Coast BOPIS DC to Store BOPIS Reserve in Store Store Direct (Ship-From-Store) 1 Drop ship scale TBD, based on defined strategy and qualified vendors identified Big Lots Confidential 16