Cabin Fever

Sep 01, 2003 9:30 PM  By

THE WOOLLY SHEEP is no mammoth retailer, but from its little corner of Weed, CA, an historic lumber town (pop. 3,100) on the western slopes of Mt. Shasta, it has managed to do what some much larger businesses have not — thrive in a weak economy.

Launched online in 2000 by the husband-and-wife team of Chad and Kim Goldsmith, The Woolly Sheep still operates on a shoestring, but now it sells its wildlife-theme and lodge-style décor through three channels, is set to double the size of its shipping facilities, and should be in the black by early 2004.

TRACKING MOOSE AND BEAR Company president Chad Goldsmith projects revenue of $350,000 for 2003. Wal-Mart, they’re not. But, says Goldsmith, “Every month this year our growth over last year has continued to increase. We’ve not only increased 300-plus percent over last year, each month that gap is widening over the prior year.”

The Goldsmiths founded The Woolly Sheep as a way of indulging their shared passion for collecting moose- and bear-related decorative items, a love that ignited while they were living in New England and spending a lot of time in the White Mountains of New Hampshire. When they moved to California, they discovered that these products were difficult to find. So, they did their homework, saw a niche, and went for it, utilizing their backgrounds in Internet marketing, Web design, and systems development to bring these hard-to-find items to like-minded afficionados of rustic style — people who own log cabins, cottages, and lake homes and don’t have easy access to retail centers where such goods are sold.

Clearly, the Goldsmiths are tracking down enough of this specialized merchandise to keep customers happy and coming back for more. Their 1,600-sq.-ft. order/shipping facility is filled with an inventory of 5,000 items ranging from rugs, lamps, and bath accessories to garden accents, candles, and other goods featuring moose, bear, fish, cowboys, and yes, even woolly sheep. They find the stuff at gift and furnishing shows throughout the U.S. and currently deal with 92 suppliers, including manufacturers, importers, and artists.

BIGGER AND BETTER The Woolly Sheep’s customers prefer rural living, but their shopping habits are decidedly modern. Eighty-five percent of orders are received over the Web, 5% by phone, and the rest through a new 800-sq.-ft. store located in a prime spot off a scenic byway.

The Goldsmiths have lofty aims. They plan to open nine more brick-and-mortar stores within the next decade, along with another shipping facility in the central U.S. to support East Coast shipments. Currently, 80% of orders ship to customers east of the Mississippi.

Inventory for all three sales channels runs through the Weed facility, into which the company moved on June 1. The new facility is three times larger than the one The Woolly Sheep previously occupied, and it’s about to get bigger. The new building is part of a commercial complex where Chad Goldsmith plans to lease another 1,600 sq. ft. to support the upcoming holiday season’s sales.

Goldsmith foresees a very merry Christmas, indeed. He’s predicting that the current weekly volume of 50-100 packages will mushroom into 400-500 packages. To handle the increase, he’s planning to supplement his four-person firm with up to four temporary employees and have a new inventory management system in place.

STRETCH PLAY The Woolly Sheep currently runs two inventory databases. One is part of Miva Merchant, the firm’s online business software. The other is part of, ahem, QuickBooks.

“Right now, we’re really stretching some off-the-shelf software to the limit,” says Goldsmith. “In order to meet the growth that we’re seeing, we need to get some new solutions in place for managing inventory and getting orders sorted and shipped out.” He adds that although QuickBooks has inventory management built into it, “it’s primarily an accounting system meant more for invoicing B2B and not to consumers. We’ve made some customizations to get it to work for us, including in the store. Instead of using POS software, we utilize QuickBooks on computer registers in the store. It’s not really set up for sales to consumers in the way sales receipts are configured, invoices, and things like that.”

Everything runs through QuickBooks — purchase orders, receiving, customer orders, sales, invoices, returns. “The order system is integrated into QuickBooks so as orders are entered, either input from the order file online or directly input from store or phone sales, those decrease the inventory,” says Goldsmith. “QuickBooks maintains the inventory numbers for each SKU, and those are adjusted by receiving purchase orders and outgoing sales.”

To keep both inventory databases current, information about orders, and transactions is transferred hourly between the two systems. “We do sometimes run into issues where those databases get out of sync,” Goldsmith admits. “Combining those and sharing the inventory database is our number-one goal.”

LOW TECH, HIGH TIME The Woolly Sheep is a small enough operation that it doesn’t need million-dollar robots to pick orders. Workers don’t need to be overly concerned with the most efficient pick path. There are no forklifts, just a couple of employees with carts and baskets, using customer invoices as pick sheets, picking and packing orders in the order they are received.

It’s not that employees can afford to be leisurely, though. “Because of the time difference and the high volume of orders we get from the East Coast, when we come to work in the morning there are a lot of orders to get done and not a big window of time,” Goldsmith says.

SHEEP AHOY Still, picking and packing are much easier in The Woolly Sheep’s current order/shipping center. “The old facility was very small, and if you had two people trying to pick an order in the same area they would trip over each other,” says Goldsmith.

That’s not the case in the new facility, he says. “We really took a look at the two years of order processing that we had and took time to get input from everybody on exactly how to lay out its flow — where specific vendors would be located, making sure you could access the inventory area from all sides, with multiple aisles so two people could get through aisles at the same time. Now, we have room. We’ve made a staging area for receiving the items, so when they come in they have a place to go before the purchase orders are matched up. And you can get at the merchandise from three different aisles.”

Shortly after launching The Woolly Sheep, Kim Goldsmith quit her day job to attend to the business full-time as executive vice president. About a year ago, Chad did the same. “The growth we have experienced in the past two years exceeded our expectations,” he says. “We have no debt and the future looks great.”

Dana Dubbs is a business writer based in Escondido, CA. She can be contacted at ddubbs@pacbell.net.

Waiting for to Go

Of the 875 SKUs that The Woolly Sheep sells, only 15 items — high-end products such as custom frames, limited-edition prints, and large metal wall art — are drop-shipped by vendors. Everything else leaves from the Woolly Sheep facility in Weed, CA, and travels primarily by UPS.

The challenge for The Woolly Sheep is to have everything ready to go without knowing exactly when the carrier will arrive, although UPS does generally show up between 1 p.m. and 3 p.m. “We’re in a mountain community, and we don’t have a lot of discretion over when our carrier picks up from us,” says president Chad Goldsmith. “We really have to be on the ball and get those packages ready to go as soon as possible. We make a commitment to our customers that their packages will be sent out within 48 hours of receipt.”
DD

THE WOOLLY SHEEP

Headquarters: Weed, CA

Revenue: Projecting $350,000 for 2003

Total employees: 4

Phone: (866) WEB-WOOL/932-9665

Fax: (866) 390-5832

Web site: www.thewoollysheep.com

Order/shipping ctr. size: 1,600 sq. ft.

Warehouse employees: 2

SKUs: 875

Shipments: 50-100/week

Suppliers

Software: QuickBooks, Miva Merchant

Servers and workstations: Dell

Laser printers: HP

Shelving: Safco, Hirsh Industries

Baskets: Sterilite

Carts: Rubbermaid

Corrugated and packing/shipping supplies: Uline

Labels: UPS World Ship

Pick/Pack Method

The Woolly Sheep’s inventory shelves are organized by vendor, and the vendor number is part of each SKU. QuickBooks generates customer invoices, which double as pick sheets. These list the SKU so pickers know where to go. Orders are picked in the order received, dropped off in a shipping area with a packing list/invoice, sorted, packaged, and placed in a corner designated for UPS.
DD