About a decade ago, the frenzy for cabbage patch dolls caused many broken bones and heartbroken children. Parents scrambled violently through shopping mall mobs to procure the Christmas season's "hottest" toy for their children. Every successive Christmas has produced a protégé: the Power Rangers, Tickle Me Elmo, Furby. This year, however, there is an alternative to the black market and brawls at the mall: KBkids.com. Consider the virtual, home-shopping experience a safe haven from the wounds and posttraumatic stress of department store Christmas shopping.
The Denver-based e-tailing venture was launched on July 12th, 1999 when KB Toys' original Web site merged with the two-year-old retail site, brainplay.com. Already, the company boasts nearly 200 employees. It is viewed as an Internet start-up, an investment of KBkids.com. As such, it operates autonomously. "We are independent of KB retail stores," explains Shawn Davison, vice president of technology and operations, "yet, we still complement one another. The retail stores provide us with benefits that other retail Web sites don't offer: in-store returns and exchanges, product forecasting, marketing advice, and purchasing. Our brick-and-mortar relationship builds significant customer confidence."
The Catalyst For Change
The reason for such a dramatic shift in corporate plans and structure is easily explained; the company's old technology and infrastructure were not in accord with its goals for growth and scalability.
Prior to July 1999, the company was using a number of small-scale systems, such as custom interfaces with Microsoft Access and SQL Server for order processing and shipping management. The company was also using a Peachtree accounting application. These low-cost solutions worked well, but they were unable to handle large-scale orders. So, the company found a long-standing Internet toy store (brainplay.com), assimilated it into the start-up, and began searching for the integrated solutions that would establish the retail, e-commerce start-up.
Where Business Begins: The Front End
At KBkids.com, business begins on the Web site. The front end is built on Sun Microsystems hardware and an Oracle database that provides most of the content and front end interaction. When Virginia Ripinski, mother of three little tyrants, searches the Web site for Teletubbies Talk Together Tinky, Winky, and Po, these are the components that deliver the content.
When Mrs. Ripinski proceeds to the check-out under the duress of whiny young children, a Smith-Gardner Retail Enterprise System, WebOrder, takes over. The order is then committed and goes directly into the WebOrder system, undergoing fraud review, credit card verification, and order processing.
Please, Please Me: Satisfying The Customer
Human beings often exhibit a resistance to change - an inveterate suspicion of new and unfamiliar things. Consequently, doing business on the Web also entails providing cynics with the assurance, that "Yes, Virginia, there really is a person behind the browser who will process your order without stealing your credit card account number." Even front end systems that function with divine accuracy need a customer service center to handle the unforeseen contingencies of business.
With this in mind, KBkids.com has used integrated technologies for the customer service center, as well. All the CSRs (customer service representatives) have access to the same information as the customers browsing the Web site. Additionally, the WebOrder system gives CSRs the ability to do special credits, returns processing, and exchanges over the phone. Should Mrs. Ripinski need the assurance of warm bodies behind the browser, the CSRs are there to oblige. Or, if she only needs help in returning her Spice Girls Viva-Forever doll, a CSR can help her with that, too.
How To Find A Retail Enterprise Solution
The management of inventory at KBkids.com is handled by the WebOrder system, which was provided by Smith-Gardner, a supplier of enterprise-wide software systems to the direct commerce industry. KBkids.com went live with the system on the first of September, 1999; but, the site started its search at the time of the site's inception in July of that year.
"Typically, the installation for the WebOrder system is four to six months," explains Davison. "But we needed it faster – we had to have a scalable system in place for the Christmas season. Fortunately, we were able to do the implementation in only two months. The Smith-Gardner system was originally designed for direct marketing and catalogs, but is now also used for Web applications. It was a good fit for our needs." Davison's decision was also influenced by the integrated financials of the WebOrder system.
Santa's Little Helper: The Warehouse Management System
When one of Mrs. Ripinski's brood ruminates over Santa's ability to produce a Blues Clues toy, somewhere a corporate executive similarly ponders his ability to move the doll from warehouse shelves to the hands of the waiting child. The satisfying solution for both: a warehouse management system (WMS). A successful WMS keeps executives employed and little boys in toys – without corrupting either's faith in Santa Claus.
Logically, KBkids.com has spent a great deal of time planning its warehouse for these very reasons. But, in examining the links of the supply chain, you will find that the Denver-based company leaps to Roanoke, VA for this segment of its supply chain. KBkids.com hired Hanover Direct, a third party warehouse provider, to meet its current warehousing needs.
"As a start-up, using a third party for warehouse technology has many benefits," comments John Jolly, vice president of operations, KBkids.com. "It's much more cost-effective, since the technology and infrastructure is already in place."
Jolly spent nearly two months searching for a warehouse provider before deciding on Hanover in July 1999. Although Hanover's integrated technologies were appealing, a large portion of Jolly's decision was based on Hanover's ability to interface with the Smith-Gardner package. The 750,000-square-foot facility has a tilt tray sortation system, RF scanning, an Accusort manifesting system, and a Smith-Gardner MACs system.
When an order for Laa-Laa and Dipsy Teletubbies comes in, the system checks for inventory availability. It then sources to a respective distribution operation, since product mix can sometimes require additional facilities. The doll order then goes to a distribution operation where a number of location lookups are performed. Once located, the order is broken down according to handling characteristics, such as special packing needs and routing or shipping requirements. Then shipping operations become involved. With other information processed, scanners direct the pick-force to the proper bins to pull the dolls, at which point Laa-Laa and Dipsy are sent to their destination via UPS, USPS, or CTC Consolidation.
Third Party Warehousing: A Temporary Solution
It's the mantra of every toy-hungry child: "I want it, I want it, I want it!" Similarly, KBkids.com wants something, but it is not toys. Rather, KBkids.com hungers for a larger toy box — a warehouse for its very own.
Although the third party solution has worked well, the company wants control of a corporate-owned warehouse. Jolly sees the initial third party solution as a strength not only for the expenses and headaches the company avoided, but also for the Hanover warehouse, which Jolly has used as a benchmark for future technologies.
"We are going to invest $30 million to 35 million in the new warehouse, and that includes the site," comments Jolly. "There will also be an infrastructure of 400 to 800 employees. Bringing all of that together at once is too much, and that is why we initially used a third party. The first-hand experience with Hanover has been invaluable in helping me plan the new facility."
KBkids.com will spend the next three months designing the warehouse. Once the design is established, the company will begin a search for new technology providers and will accept bids. The final decisions for specific technologies will be made in late March 2000, after which the company will look for a site. Jolly anticipates breaking ground in August 2000 and occupying the new facility by August 2001.
Toys, Technology, And The Future
One of KBkids.com's biggest obstacles will be designing and building its new warehouse. Despite this, the company has a number of other plans, including integrating new technologies and watching the competition. "We are going to develop and release a number of
features on the Web site to make shopping easier and more convenient," says Davison. "We will also continue to refine and expand particular components of our technology platform. We will be paying particular attention to competitors. It seems like smaller start-ups appear daily. We are going to focus on being a successful clicks-and-brick operation, although we won't complain if we can leverage the brick-and-mortar side."
KBkids.com's clientele might be juvenile, but the company's strategies and technologies are anything but. If it continues the successful implementation of integrated solutions, the company has a good chance of remaining successful. Still, the Internet is a volatile and unpredictable medium as yet, and no company will dominate without a hard and constant drive. One thing is certain, though: The e-tail toy store that succeeds will be the one that keeps its toys out of the attic and on the Web, and in turn, the money in its pockets.
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