Advanced Inventory Reduction Model

TODAY’S ISSUES Form factor changes Speed to market High load-in quantities at launch Competitive pressure on color & style Poor sell-through Speed out of market Green Initiative

PROFIT -vs- DISCOUNTS$29.99

EXISTING SUPPLY CHANNEL

iFROGZCHINA

D.C. 1

iFROGZUSA D.C. 2

BEST BUY STORES

NEW MODEL

iFROGZCHINA

BEST BUY STORES

STORE P.O. FLOW CONCEPT

• Reduce speed to market• Lower inventory in channel by 20%• Store ownership• Online order process• Regional allocation

REGIONALSTORE MODEL

STORE P.O.

AIR FREIGHT

AN ORDER IS PLACED FOR:6 Red Luxe Originals6 Aqua Luxe Originals

FULFILLMENT-A

Best Buy Packaged Standard Colors are selected (inners of 6)

Standard and Regional/Seasonal Colorsare shipped to distribution center

or direct to store

2-3 DAYS 3-4 DAYS

2-3 DAYS

Regional or Seasonal Bulk Colors

Distribution Center Best Buy Stores

Bulkpackaginginto retail

Labeled Boxed

Red/AquaBundled

FULFILLMENT-B

REGIONALALLOCATION

SWIMSUITSIN ALASKA

SNOWBOOTSIN FLORIDA

ONE SIZEFITS ALL–vs-

LOST REVENUE/GROSSPROFIT IN STORES

• Overstock• Discounted items• Lost margin by region• “Dog is born barking.”

REGIONAL SKUs

iFROGZ DC MODELOLD WAY

• 10k BLUE• 10k RED• 10K SILVER• 5K CLEAR• 5K TEAL• 5K PRINT

• 25k BLUE• 25k RED• 25k SILVER• 25k PINK

Cost of “old way” also includes duties and taxes and distribution center handling.

-vs-

KEY PERFORMANCE INDICATORS

• In Stock Levels• Fill Rates• Inventory Levels• Turns

GREEN INITIATIVE

PRODUCT COSTS, FUEL, DISPOSAL, PACKAGING, DECOMPOSE TIMESAVINGS =

iFROGZCHINA

D.C. 1

iFROGZUSA D.C. 2

BEST BUY STORES

HIGHER PERFORMING STORES

• Product to store quicker

• DSD Model

• New colors to high performing stores first

• Move proven model to lower performing stores