Pacific Sunwear is supplementing its more than $1 billion in sales with a Web site that produces 14 times the average store's revenue.
Launched out of sheer curiosity in 1999 and offering less than 10% of its stores' styles, Pacific Sunwear's (Anaheim, CA) homegrown Web site (www.pacsun.com) was an instant success. Ron Ehlers, the company's VP of information services, says the retailer measures online success by comparing the site's performance to that of the average store. "We take sales figures from all of our comparable stores and divide by the number of stores we had active during that time period, then compare average store sales volume to the Web site sales volume," he explains. During its inaugural holiday sales season (November and December 1999), the site generated sales that were 1.5 times more than the average store. By 2001, the site was generating six times more sales than the average store, but its performance began to falter.
Homegrown Web Site Sputters
While site traffic and transactions increased, Ehlers' Web development staff had done all it could to meet the demand the site created. "As site traffic ramped up, we were seeing problems and glitches with how it operated. The site's design was getting a bit stale as well, so we decided to redesign it on a better platform," he says. Increased bandwidth allocation helped for a time, but only invited more traffic that further bogged down the site. In addition to performance improvements, the retailer wanted to build in more back end functionality via integration with core store systems. "We had difficulty managing any integration we attempted with the old site because interfaces with systems such as merchandising were homegrown and cumbersome to change," he says.
In November 2002, Pacific Sunwear launched its new Web site on version 5.4 of IBM's (White Plains, NY) WebSphere Commerce Suite running on the vendor's iSeries server. The launch followed nearly a year of work on the project, which Ehlers says involved a long learning curve for his development staff. "All of our in-house developers were AS/400 RPG [rapid program generation] programmers, so this was a big change for them," he says. Those Pacific Sunwear developers who were also interested in learning J2EE (Java 2 enterprise edition) and the object-oriented approach to development were offered in-house and IBM-sponsored classes on the topics. Still, Ehlers says outside assistance was necessary. "After an initial false start in 2001, we decided that we needed to bring in some expertise, so we contracted with IBM to bring people in at different stages of the project. For a period of time we had an architect/designer around to help us make decisions on our design of the site. Then we had a database expert come in to help us for a time, and through the bulk of the project we had an IBM developer on site."
Order Processing, Fulfillment Integration
From the outset, integrating Pacific Sunwear's e-commerce arm with enterprise order processing, merchandising, and fulfillment systems was a main priority. "In our merchandising and financial systems, we simply take Web data and treat the site like a store. We plan the store's sales and inventory and we allocate to that inventory plan," says Ehlers. The physical inventory that stocks the site is stored in a fulfillment center at Pacific Sunwear's DC/headquarters. Orders are received, packed, and shipped the same day. "If a customer in New York orders something at noon on Tuesday, they'll receive the package on Thursday," he says.
After a sale, transaction data is pulled from the Web into what look like T-log records from a POS terminal and then fed directly into the Pacific Sunwear sales audit system just as store transaction data is. In turn, the merchandising, financial, and credit card settlement systems are updated. The online product catalog is also updated every day with all the new items that have been put away in the retailer's DC. "We track Web sales against the catalog inventory during the day, so as items sell out they disappear from the Web site because we don't do back orders. Our core consumers see what we're selling out of, and it creates a sense of urgency to buy," Ehlers says.
While the sense of urgency helps spur sales, Ehlers and company credit the powerful new e-commerce suite for Pacific Sunwear's online growth. The ability to stock every style its stores carry and handle growing traffic helped the retailer's e-commerce site achieve 14 times its average stores' sales during the 2003 holiday season.