As he moves to double his online product selection, Online Stores Inc. CEO Kevin Hickey has another top priority these days: faster, more efficient shipping from more locations.
Today it takes up to six business days for Online Stores, which operates such varied niche websites as EnglishTeaStore.com, OnlineStores.com, United-States-Flag.com, DesignerGifts.com, DesignerBaby.com, DiscountSafetyGear.com and ConstructionGear.com, to pick, pack and ship an order to the West Coast or certain Western states from its warehouse in southwestern Pennsylvania with standard ground shipping. Orders shipped to Pennsylvania and Ohio only take about a day, and most orders shipped to the rest of the country exclusive of the West take between two and five business days to reach the customer.
But Online Stores, which grew web sales about 5% in 2014 to around $31.7 million, is under pressure to pick up the pace. The company’s new plan is to shave a day or more off its current shipping schedule and deliver most orders to the Eastern U.S., the Midwest and parts of the West in about two days.
At the same time Online Stores is doubling the company’s inventory to as many as 80,000 SKUs. Online Stores plans to increase the number of SKUs it holds in its warehouse from 30,000 to 40,000 and add nearly 40,000 new SKUs through an aggressive drop-shipping program.
The company’s first goal is better and faster picking, packing and shipping. In addition to expanding the size of its warehouse, Online Stores is using a new internally designed warehouse management system to better sync up and accelerate order processing. Online Stores also is in negotiations with several unidentified third-party logistics providers to rent new warehouse space in Nevada and Georgia, aiming to store as many as 10,000 SKUs at those locations, and use the logistics provider to fulfill orders. “Better shipping is absolutely critical for us because consumers expect more free, reduced and faster shipping,” Hickey says. “We have to match the level of service we provide to their expectations.” The e-retailer currently offers free shipping on orders of $75 and up.
Online Stores is seeking to satisfy business as well as consumer customers. While some of the company’s sites sell items like flags and tea or tea pots to consumers, two of its e-commerce sites sell safety googles and plastic hard hats that companies often buy for employees. Hickey says his top goal across the portfolio is delivering products faster and doing a better job of letting business customers in particular know when their order has been shipped, its tracking status and expected delivery dates. It currently takes between five and seven business days for a drop-shipped order placed on an Online Stores site to be sent from the manufacturer or distributor to the customer—longer if an item is out of stock, Hickey says. But Online Stores is working with its various suppliers to improve the data feeds that track product availability, order processing and shipping. Online Stores now can better track drop-shipping information and automatically send customers of emails notifying them when the product has shipped, where the order is and when it will arrive.
“Expectations for faster shipping and more information surrounding the shipment are accelerating,” Hickey says. “We are making an investment here because we need to keep up.”
Online Stores is investing heavily in beefing up shipping, order processing and adding more inventory. This year the retailer will spend about $3 million on shipping and fulfillment compared to about $2 million in previous years.
The goal, Hickey says, is to ship 97% of orders on time and error-free. “We are almost there now and that’s as good as I think we can get in this lifetime,” Hickey says. “But customers are sending us a pretty clear message: ‘get us the order fast and on time.’”
Online Stores is No. 457 in the Internet Retailer 2015 Top 500 Guide.
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