Kohls.com Direct Ship Network (DSN) 2013 1
What is Direct Ship? Direct Ship - When product is fulfilled by the vendor and sent directly to the customer; non- Direct Ship product is fulfilled through the EFC (Ecommerce Fulfillment Center). 2
Direct Ship Overview Kohls.com brokers orders to suppliers, who then ship product directly to customers. Kohl's takes order and maintains all customer contact. Standard Kohl's branding is on all supplier packaging and labeling. Supplier-Direct Network Supplier X Kohl's.com Infrastructure Supplier Y Residential person Customer Web Storefront or Call Center Web Server Order Mgmt + Order Broker Supplier fulfills order and processes returns Kohl's-Branded packaging and labeling returns delivery Carriers 3
Minimum Vendor Requirements Vendor Set-up & Assortment Provide Vendor Financial Information & Dunn s & Bradstreet # Willing to sign the Kohl s Direct Ship Network Vendor Agreement Able to support an economically viable Product Assortment (Terms and Margin) Terms exist at a vendor/department level and must match B&M terms if B&M vendor Terms and assortment are owned/negotiated with your Buyer complete DSN Assortment Worksheet Operations Product Provide a unique bar-coded (for POS scanning) UPC on each item in selected assortment Inventory must be available and ready to ship at the time of launch ability to hold 8 weeks of supply on all skus Provide daily in-stock inventory availability quantities, maintain an in-stock service level of 100% Provide images or samples for photography: Review style guide on Kohl s vendor portal (www.connection.kohls.com) for photography instructions by product category Operations Warehouse & Logistics All orders must ship from a warehouse in the U.S. Ability to fulfill (pick, pack, and ship) directly to Kohls.com customers in individual units Ability to pick, pack, ship and close orders in 2 business days Support UPS or Fed Ex Home Delivery and 3rd party freight billing for shipping Produce Kohls.com branded pack lists and shipping label (UPS) Maintain a 99.5% Fill Rate (0.5% or less order cancellation rate) Accept delivery & process undelivered returns for Kohls.com DSN shipments Technical Ability to integrate with CommerceHub, Kohl s 3rd Party DSN order interface provider (EDI, ASN, Manual Browser Interface) www.commercehub.com Provide the shipment tracking and invoice information in the shipment confirmation at time of closing order GOAL: Complete OnBoarding in 6-8 wks from Kick-off 4
DSN Vendor Compliance Program Goals: Positively impact sales performance through strong vendor compliance Maintain a positive and consistent customer experience through Direct Ship fulfillment Reduce the number of customer service issues stemming from Direct Ship orders Measure: Unit Fill Rate (% of units ordered that have shipped) Shipping on Time (within the allotted fulfillment timeframe) Product Presentation Upon Delivery (Secret Shopper) Vendor Performance Scorecards Timing: Vendor Scorecards completed quarterly Emailed to vendors within the first two weeks of the current fiscal quarter Scorecard results reflect the previous quarter s performance Format: Optimal score is 80 points 72-80 = A, 64-71 = B, 56-63 = C, 48-55 = D, 47 and Below = F Modeled after the existing Brick & Mortar Scorecard for Top 300 Vendors Non-Compliance Chargeback Fees Note: Kohl s has a system in place to recoup the costs accrued with negatively impacting our customers experience with the metrics listed above. 5
What are the costs & benefits associated with Direct Ship? Costs: Minimal initial set-up fee and monthly service fee (CommerceHub) Applicable Kohl s allowances and terms No additional costs from Kohl s for item set-up, photography or OnBoarding Benefits: Incremental Sales opportunity New Categories Expanded offerings in Existing Categories: New Brands New Products Size optimization(existing Brands/Products) Colors(existing Brands/Products) Higher Retails Ability to test products prior to rolling them out into stores. Oversized products that would otherwise stress DC/Store capacity Access to high volume of unique visitors each day In store presence via the new Kohl s Kiosk 6
CommerceHub Connectivity Options Multiple options to comply with retailer s business requirements CommerceHub helps supplier select best option Vendor Connection does not affect retailer and can change over time For more information, visit their website at www.commercehub.com Option 1 Browser Option 2 - Hybrid Option 3 Integrated Supplier Usage CommerceHub Drop Ship Master (DSM) web interface to receive orders and process all messages related to those orders Combination of Browser and Integrated connectivity Electronic exchange of files with CommerceHub in formats such as EDI, XML, or Delimited Files to receive orders and process all messages related to those orders Technical Complexity Low Medium / High High Expected Order / SKU Volume Low Medium / High High One Time set-up Fee $750 $1,750 $1,750 Monthly Subscription Fee $65 $65 $65 Per Order Fee $0.50 $0.50 $0.50 *Additional Fees may apply based on connection details: EDI VAN Processing: $.06 per Kilo-character VPN Connection: $ 1,500 AS2: $ 500 + additional $20 per month 7
Kohl s DSN OnBoarding Process While implementation timing varies among vendors, the new OnBoarding process should take 6-8 weeks from Kick-off to Go Live. Vendor Selection (Buyer/OBC) Vendor completes Assortment Worksheet Buying Office negotiates terms Buying Office runs & posts profitability OnBoarding Team prequalifies vendor OBC requests Financial Solvency Pre-Kick-off DSN Vendor Kick-off Invite Sent (OBC) Analyst creates vendor forecast DSN Vendor Agreement Signed Assortment Set-up (Merch Spec) Pre-Kick-off 1 2 3 4 5 6 7 8 DSN Vendor Kick-off OnBoarding Route Assortment Worksheet Weekly OnBoarding Calls Content Build and Site Architecture Dev. CommerceHub Set-up & Testing Live Production Testing Go Live Approval Meeting 6 Weeks 1-4 Weeks 1-2 Weeks Vendor is LIVE Kohls.com 8
Sample DSN Vendor Kick-off Invite Invite includes: Kick-off Date Required Documents and due dates Agenda for DSN Vendor Kick-off Event Sample Invite: 9
DSN Vendor Kick-off Meeting Kickoff Event Once a vendor has been selected to participate, they will receive an invite to our 1 day Kickoff Event Kick-off Event covers the Direct Ship standard operating procedures, vendor guidelines, CommerceHub integration and answers any questions they may have. It is mandatory for a vendor to attend the kickoff in order to participate in the DSN program. Recommended attendees: Operations, IT, Logistics, Customer Support, Warehouse Reps OnBoarding Meeting After the morning Kick-off Session, each vendor will attend a 30 minute OnBoarding Meeting. Attendees: OnBoarding Coordinator (Kohl s) and all vendor attendees. The Buying Office DOES NOT attend this meeting. Goals of this session: Review any questions and discuss open Direct Ship options Shipping Methods Integration Options Develop the DSN time and action calendar and review the expected deliverables Provide an estimated Go Live date for your vendor Additional Questions? 10
Contacts Burns, David Herrell, Nichole Ostrowski, Mary Beth Bremer, Michelle Wilson, Amy Ihlefeld, Courtney Hogan, Dylan Pfeifer, Craig Director Direct Ship Program Direct Ship Manager. Onboarding Direct Ship Onboarding Coordinator Direct Ship Onboarding Coordinator Direct Ship Onboarding Coordinator Direct Ship Onboarding Coordinator Director of Strategic Accounts Director / Vendor Implementation Direct Ship Team Contact Information 262.703.7246 David.Burns@kohls.com 262.703.2596 Nichole.Herrell@kohls.com 262.703.7659 Marybeth.Ostrowski@kohls.com 262.703.5746 Michelle.Bremer@kohls.com 262.703.2660 Amy.Wilson@kohls.com 262.703.1449 Courtney.Ihlefeld@kohls.com 518.265.8600 dhogan@commercehub.com 518.810.0700 cpfeifer@commercehub.com 11