FANBUZZ INC. WORKS HARD for its money. No mere fulfillment house, the company provides a range of turnkey solutions that cover everything from scoop to nuts. FanBuzz takes and processes orders, warehouses merchandise, ships it, and designs and builds customized e-commerce stores. These attributes separate wheat from chaff in the fulfillment business, a field crowded with outsourcers, warehousers, Web managers, and other Internet-based business specialists, but populated with only a handful of generalists equipped to do it all.
Other entrees in FanBuzz’s lengthy menu of services include private-label e-commerce technology, a 24-hour call center, product fulfillment, and the recently inaugurated CustomFan™ garment decoration solution, which makes it possible for sports fans to custom-design their own team-licensed apparel with a mouse-click. This first-anywhere program is currently supported by more than 170 colleges and universities across the country. All functions are performed in-house at the company’s recently built fulfillment operation in Hermitage, PA. Fanbuzz’s decision to locate in western Pennsylvania has extended its reach both east and west. Using ground delivery, the company can now connect with more than 60% of the U.S. population within 48 hours.
Recently acquired by ValueVision Media (owner and operator of ShopNBC, a major national shopping network), FanBuzz will soon celebrate its sixth birthday. Co-founded by Scott Killian and Tim Brule, and first headquartered in the attic and basement of Killian’s house, FanBuzz was originally designed to earn its owners a couple of extra bucks on the weekends. Killian was in sales at the time; Brule was doing post-graduate work in mathematics. Both were avid hockey fans, but neither could have guessed the extent to which the game would fatten their bank accounts down the road. Today the National Hockey League (NHL) is one of FanBuzz’s most successful partnerships, but it is only one partnership among many.
The idea behind FanBuzz was to fill a much-needed niche in the still-evolving universe of e-commerce. In theory, the company’s client base would consist of leading media, sports, and entertainment brands. Big players like these pilot top-flight Web sites, but relatively few want to log the extra miles required to launch and operate their own online store. FanBuzz would make that journey for them.
Theory became fact almost overnight, and the company now pumps out a daily average of 2,000 orders consisting of sports- and media-branded jerseys, coffee mugs, bobble-heads, hats, and other popular merchandise. With the Christmas rush in full swing, the total balloons to more than 5,000 orders a day. FanBuzz’s annual revenue, combined with that of its parent company ShopNBC, currently totals about $600 million — not too shabby for a basement-born corporate upstart. Operations & Fulfillment recently spoke with product distribution manager Michael S. Kovach to learn how the company achieved and maintains this remarkable level of success.
Which big firms did you first partner with, and how did you bring them to the table?
The very first was The Sporting News Online. We began working with ESPN shortly after that, and forged many additional relationships down the road. The hook was our turnkey approach to selling online. The companies we were working with wanted to promote fan gear on the Net, but they didn’t want to peddle the stuff themselves. That was our job, and the difference between us and a third-party fulfillment house was that we were willing and able to do everything. This “whole enchilada” approach was borderline revolutionary, and it quickly won us many friends.
What value-added services do you offer?
Value-added service is what FanBuzz is about. Our goal is to forge good relationships with our partners and customers. The turnkey solution we offer takes into account all aspects of e-tailing. We build the Web-based store, manage it, and provide customer service in the form of a 24-hour telephone support center. We work very closely with our partners. The store we designed for NHL, for example, is identical to the start page of the NHL Web site. We sell more jerseys than just about everything else, and we recently introduced a new service whereby a customer uses his own name, chooses a number, and creates a garment to his or her own specs.
What unique attributes of your operation contribute to its efficiency?
Every function in the shop, from order-picking to quality-checking at each station, is Web-based. The whole back-end interface is also tied to the Web, along with receiving. Errors are substantially reduced. Web-basing makes quality checks at various stations possible, which in turn makes mistakes far less likely. The company employs many other streamlining measures. We generate bar codes internally, for example, rather than rely on the ones provided by the manufacturers. This impacts efficiency, but very minimally, and the huge dividends we earn in picking and shipping accuracy more than justify the extra step. Almost always, the customer gets what he wants with no hassles, and that gives him a good reason to come back for more. Customers are what this industry — what all industries — are all about, bottom line. They’re the reason we exist in the first place, so your first obligation is to make them happy.
Describe your distribution channels and the methods and technologies you use to tie them all together.
We work with a network of drop-shippers composed of manufacturers and vendors. Everything is integrated through our technology department, every aspect of which is homemade. We have no commercial WMS. We built our own from scratch. This has made the system very flexible, because it has literally grown with the company. In the early days we didn’t do enough volume to justify the installation of a fancy WMS. Our warehouse was a 3,000-sq.-ft. office, and we used the “root around” method to find stuff. The WMS we currently use evolved very slowly, and over time we integrated it with customer service, merchandising, marketing, product fulfillment, and accounting. It’s really more of an organism than a software system.
Are bottlenecks a problem? How do you cope with them when they occur?
Bottlenecks have moved down the line as the operation has grown. We’ve been dealing with them on a case-by-case basis, until quite recently by throwing bodies at them. The last bottleneck is the shipping station. Right now we’re working on a system that will merge the shipping label with the packing slip, and that should send this final bottleneck to the dustbin of history.
D. Douglas Graham is a freelance writer based in St. Louis, MO. He can be reached by e-mail at firstname.lastname@example.org.
PRODUCT DISTRIBUTION MANAGER MICHAEL S. KOVACH runs a highly automated operation. FanBuzz’s picking process is entirely Web-based, and picking instructions are transmitted digitally. The picker scans the bin location and SKU label to intercept mistakes long before they become customer service issues. Stock-pickers work with an Apple iBook wireless laptop and a Symbol bar code scanner, both tied into the company’s in-house warehouse management system. Packing stations form an assembly line that includes a final quality check and a shipping step. When fully staffed, the line is manned by eight individuals, four on each side. Material handling equipment consists of three Crown wire-guided, man-up stock pickers and a Hytrol semi-automatic conveyor system, designed and built by KMH Systems of Cincinnati, OH. Picks are dropped on the conveyor and forwarded to workers who hand-assemble and quality check the merchandise with Symbol bar code readers.
Headquarters: Minneapolis, MN
Other locations: Hermitage, PA
Annual sales FY 2001: $600 million (combined with those of parent company ShopNBC)
Total employees: Combined total for both facilities usually less than 200
Size of PA fulfillment operation: 35,000 sq. ft. (includes warehouse, production, and call center)
Shipments: 2,000 orders per day, off-season; 5,000 at Christmas. The vast majority of all outbound packages weigh less than two lbs.
Hourly pick rate: 400 items, 300 orders
Racks are 220 ft. long and 22 ft. high, and workers are expected to be productive along the entire transit.
In assembly and quality checking, one person manages the box and passes it along to another in the shipping department.
The layout is designed to minimize foot time and maximize efficiency.