Multiple personalities are no longer a bad thing, at least in retail. It’s now taken for granted that if you plan to sell products and services, you must set up a variety of channels through which potential customers can gain access to your offerings. What’s different about the second generation of multichannel retail merchants, though, is that they can afford to build things from the ground up. They’re not stuck with unwieldy legacy systems, antiquated procedures, or iron-clad business models; they can rewrite the rules as they go along, and in doing so, make the total break with tradition that, ironically, the dot-coms of yesteryear failed to achieve.
One multichannel innovator to watch is Eziba.com Inc., a purveyor of handcrafted goods that started out as a pure-play in 1999 but quickly added catalog and retail businesses. Operations & Fulfillment spoke with Dean Frost, Eziba’s vice president of operations, about the company’s evolving strategic goals and successful fulfillment outsourcing.
Do you consider yourself fortunate in not having to deal with the outdated processes that bog down traditional retailers?
We have an extreme advantage in starting multichannel retailing from scratch — we’re not “deconditioning” anyone. I spent 12 years at L.L. Bean, and it was hard to convert people who were used to ordering from the catalog or visiting the store. Our catalog still represents 40%-45% of our business, but over 50% of our sales are coming over the Web. We’ve added a retail store in the last six to seven months. We have a partnership with ABC Carpet & Home. It’s a store-in-a-store concept, with a revenue-share arrangement. We have 800 square feet in the first floor of their Manhattan store. We get their customers, but hire our own staff and sell merchandise through their stores. We’re opening two more with them.
Why did you decide to outsource Eziba’s fulfillment operation?
Outsourcing was by far the most economical way to start. But it’s certainly not a long-term strategy for us, particularly on the call center side, to outsource all of it.
What influenced your choice of third-party service provider?
We switched third-party providers just over a year ago — we went with ClientLogic in July 2001. One reason for our choice was that the call center and fulfillment center are together. That’s very important to us. The reps are right next to the warehouse. If they get customer inquiries (and we get lots because all our products are handmade), they can actually get their hands on the product in minutes. That’s extremely important to our customers. They want to know: Are there color variations? Are there odors in the product?
ClientLogic also displayed all kinds of systems flexibility. We used our order processing system on the order-taking side, and ClientLogic’s on the order management side, and were able to integrate them pretty easily. Coupled with our Oracle back end, we’ve actually got three systems talking to each other every day. A lot of providers are pretty rigid about not wanting to open up that can of worms.
We started strictly as an e-commerce site in November of 1999 and built our site from scratch; we have a tech staff of 10 people. We also built our own order entry system. We didn’t want to throw that out, because we liked the idea that every order flowed through our system and then to ClientLogic’s, and they were very open to that. But they have their own order entry and order management systems, of which we’re not using the order entry part at all.
Are your various channels fully integrated?
Not completely. We’re using ABC’s retail system, but we also have an outlet store next to our headquarters, so we’re acquiring our own POS system because of projected retail expansion in the next year or two. But the Web and catalog are totally integrated because of our own design of the front-end system. One of the main things we go for is that we do everything via the Web, and we have some outstanding reports that our in-house people have created that allow us to see inventory in any of our locations in real time. We’re not a $100 million business that’s trying to convert and integrate and consolidate information. We’re building it as we go.
Does ClientLogic handle your entire fulfillment operation?
Yes. They receive, pick/pack, keep track of inventory, and do gift wrapping. They receive the orders at 3 a.m. and at noon. The noon orders get out by 3 p.m., so it’s same-day shipping on a portion of our orders. We pay ClientLogic on a cost-per-unit basis, so that gives us some predictability about what our costs are going to be. The call center reps are dedicated — we pay a little bit more for that — but the fulfillment people aren’t. They fulfill orders for other clients out of the same facility.
What about returns?
ClientLogic handles all of our returns in the Delaware facility. Our return rate is little bit below the industry average, below 10%.
Have you had to pay special attention to packaging because of your unusual merchandise?
We used to use bubble wrap, but dropped it about a year ago. Now we use a Kraft paper product from Geämi. It’s much more appealing to the eye and biodegradable. We use it for protection, and our damage rate is very low, although we ship a lot of fragile, breakable products. We ship UPS mostly, and some items go through Parcel Direct.
What is the key to managing external service providers effectively?
You have to treat them like they’re your own staff. Some people shy away from this approach, because it feels like you’re delegating something really important and you’ll lose control.
But you do want to control interactions with customers.
ClientLogic took 150,000 to 200,000 calls this year. We eventually want to handle more of the calls ourselves. We took about 10% of our calls ourselves last December at our own corporate headquarters. We worked it out with ClientLogic — we can route any percentage of the calls we want to our own mini call center. Last year, we had as many as five people taking calls, and we’ll have a few more doing so this year. The idea is to keep getting as close as we can to our customers.
Company: Privately owned; named for the Persian word for “beautiful” (ziba); goal is to offer unique, handmade objects from artisans around the world
Headquarters: North Adams, MA
Other locations: New York City
Number of employees: About 50
Retail channels: Web site; paper catalog with circulation of seven million (11 catalogs mailed in 2001); two brick-and-mortar stores, located in the ABC Carpet & Home stores in midtown Manhattan and in Hackensack, NJ; one outlet store in North Adams, MA
Distribution facility: Dover, DE
Third-party fulfillment services provider: ClientLogic, Nashville, TN
Warehouse size: 50,000 sq. ft. of ClientLogic’s 400,000-sq.-ft. facility
Shipment volume: 400 to 4,000 packages a day, depending on season
Contact info: Eziba — (888) 404-5108
ClientLogic — (877) 935-6442