Ecommerce Marketing: A look at ERP & CRM

Integration

David Thomas2/18/14

Thomas 2 Thomas 2Table of ContentsThe strategic information and fi nancial data for this report is gathered from Sport Chalet’s annual 10k and quarterly 10q fi nancial reports hosted by Morning Star and Mergent business databases.Sport Chalet’s 10k and 10q reports contain detailed information about their strategies, plans and initiatives.

3 - Report Purpose

4 - Competitor Drilldown Sport Chalet

5 - Strategy Drilldown

7 - Campaign Drilldown

8 - Performance Timeline

10 - Sport Chalet Conclusion

11 - Recommendations

12 - Conclusion

Thomas 3Report Purpose

Analyze a successful online ecommerce marketing performance and online channels to suggest improvements and uncover potential .

Investigate, analyze and recommend new ecommerce engagement strategies and services.

Develop marketing priorities and identify key marketing channels to develop initiatives.

Provide insight into successful online marketing, engagement, merchandising and retention strategies.

Understand how a company with greater fi nancial resources leverages information systems for individualized marketing.

Thomas 4Competitor Drilldown: Sport ChaletSport Chalet (SPCHA) is a retailer of sporting goods providing an assortment of brand name sporting goods equipment, apparel, and footwear. As of Mar 31 2013, Sport Chalet operated 54 stores as well as an online store.

Online business is growing rapidly increasing 110%, 22% and 21% in fi scal years 2011 2012 and 2013 respectivly.

Online sales still accounted for less than 10% of SPCHA’s $360,645,000 in total sales in fi scal 2013.

SPCHA Growth StrategyNext Generation Store FormatOnline Store GrowthLeverage Technology and dataMobile and Digiltal LeadershipLocal Marketing ProgramsDevelop strategic partners

Potential Pit Falls.

Sport Chalet was late to the Ecommerce game. When they started making investments in

information systems in 2008 many of their competitors were already

established. Online sales account for less than

10% of SPCHA total sales.

Thomas 5

2,500,000 2,900,0002,000,000

3,400,000 4,100,0005,800,000

6,000,000 5,300,000

4,500,000

4,300,000

9,900,000

10,100,000

2013 2012 2011 2010 2009 2008

Tota

l Adv

ertis

ing

Cost

s

Vendor Reimbursements offset Advertising Costs

Vendor Reimbursements Net Advertising Expense

� On average 34% of advertising costs are paid for by vendors under cooperative marketing arrangements.

� Single vendor ERP integrate online and in-store shopping experience for customers PP&E turnover increase from 7.18 in 2007 to 17.89 in 2013.

� Action Pass Rewards Program continues to grow with over 2.1 million members.

� Spending shift from radio and TV ad spending to Online, Advertising expense down 40.6% since 2008

Strategy Drilldown

� Web purchases shipped from distro. centers or stores. Inventory turnover improved from 3.46 in 2007 to 2.58 in 2013.

� Solicit members’ feedback, purchases account for 53% of SPCHA sales.

� Leverage 16.7m investment in Single Vendor ERP system to understand individual shopping preferances based on product features.

� SEO initiatives to improve site accessibility.

29% 35% 31%

44%

29%

36%

Thomas 6

Advertising Expense decreased from 2.51% of sales to 1.66% of sales after investments in Information Systems.

In October 2006, SPCHA selected mySAP2005 ERP from SAP as the replacement system.

In 2006, 2007 and 2008 SPCHA invested 4,768,000, 5,291,000, 6,627,000 respectively in Information systems.

Single Vendor ERP Combined with Action Pass specific customer data reduced net advertising expense from 10.1m in 2008 to 6m in 2013.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2013 2012 2011 2010 2009 2008Pe

rcen

t of

Sal

es

Advertising Costs as a Percent of Sales

Strategy Drilldown Net Advertising Expense as a Percent of Sales

0.0

1,000,000.0

2,000,000.0

3,000,000.0

4,000,000.0

5,000,000.0

6,000,000.0

7,000,000.0

2013 2012 2011 2010 2009 2008 2007 2006 2005

Investments in Information Systems

Thomas 7Campaign Drilldown: Action Pass � In 2013 Action Pass had 2.1 million members up

from 1.4 million in 2011. � It is a CRM Program to develop marketing vehicles

targeted at specific customer segments. � Physically it is a credit card size piece of card stock

with a bar code. � Attaches purchasing data to customers contact info

to track purchasing behavior. � Members account for over half of SPCHA sales. � Form stronger relationships with customers. � The ability to custom produce embellished products

for individual customers at the highest level of quality.

� Combined with sophisticated ERP it can track puchasing data like size color preferences. SportChalet.com uses this data to customize shopping experiences for individual customers.

Action Pass allows SPCHA to optimize product assortment in

stores and online.

2013

2012

2011

20102009

2008

0%

10%

20%

30%

40%

50%

60%

HardlinesApparel

Footwear

51%

28%

21%

55%

25%

20%

53%

26%

21%

53%

26%

21%

53%

27%

21%

52%

28%

20%

Perc

ent o

f Tot

al S

ales

Sales by Product Type

2013 2012 2011 2010 2009 2008

Thomas 8Web Performance Timeline2008-2014

2008 $ 6,627,000(Information Systems investment)

Completly rolled out “Action Pass”Directly market to each memberDropped GSI Commerce, Inc. (“GSI”) which was used from 1999 until December 2008.

2009 $ 1,475,000Launches completely redesigned sportchalet.com Initiatives focused website visits.Legacy ERP system replaced effective March 31, 2008

2010 $281,000MarketLive – for the ECommerce platform and website hosting. Sapient Interactive – For site design, build and technical integration. Shopatron – ERP integrated order managementBaazarvoice – for customer ratings and reviews. Experian Cheetah Mail – for email campaign management.

2.01 1.762.68

-0.57

-8.05

2.18

-10

-8

-6

-4

-2

0

2

4

2013 2012 2011 2010 2009 2008

EBITDA Margin %

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

20000000

2013 2012 2011 2010 2009 2008

Investments in Information Systems and E Commerce

New Stores & Ecommerce InformationSystems

Investments in Information systems & New stores and E Commerce

Thomas 9Web Performance Timeline2008-2014

2011 $ 1,485,000110% increase in online salesFully analyze buying patterns.IT investments enhance understanding of how each item we sell performs in every store, by size and by color.

2012 $ 1,859,00022.0% Increase in Online SalesBrand Shops - Present the technology and design efforts of premium gear companies. Recommendation Engine - Recommend merch using customers’ profiles. Ratings and Reviews - Syndication of reviews from partner sitesSearch Engine Optimization - improving accessibility of the siteDrop Shipping - allow access to expanded inventoriesSocial Media - FB 30,359 likes, Twitter 4915 followersSite Optimization / Personalization - dynamic merchandising tool

2013 $1,228,000Online sales were up 21%.Online, in-store and mobile are now fully integrated.32.4% online sales increase 2nd Quarter3rd quarter saw online sales up 22% from Thanksgiving to Christmas.Online and mobile sales increased 22% and 296%, respectively.

2014

Thomas 10Sport Chalet: Conclusion

� Sport Chalet Online Sales have seen serious growth because of strategic investments in information technology.

� Integrated ERP increased Inventory turnover.

StrengthsData Management and analysis.Pinpoint Marketing.Diverse product & service selection.Inventory management.

WeaknessesCustomers are becoming data, adding alterior motives to shopping experience.Employees are brand ambassadors. SPCHA cut 1.9 m in labor 1.6m of that came from health coverage.Late to the internet game.

Opportunities Branding should be explored further.Local marketing eff orts, events and sponsorships. Latest fashion trends and styles.

ThreatsOnline retail environment is highly competitive.Online business is dependent on third-party partners.Weather online sales of winter related merchandise decreased 18.7%

� Action Pass CRM program is growing rapidly, 2.1m members in 2013 from 1.4m members in 2011.

� Investments in IT resulted in decreases in advertising costs.

Thomas 11Recommendations

Strategic ERP integration investments have potential for high returns.

Integrate CRM program attached to shopping patterns and preferences.

Leverage social media and email for low cost A/B testing of content.

Partnering with vendors or clients to off set advertising costs.

Add IP or Login information to customize site and merchandising for individualized shopping experience.

Study shopping patterns and uncover trends to make site-wide improvements, then analyze risk/return profi le of each improvement to ensure that juice is worth squeeze. Example: Will the cost of original videos of popular items generate more sales? Generating an accurate lead funnel, looking at competitor’s similar initiatives, and analyzing customer shopping patterns (click rate, time on site, search queries etc.) will tell.

Thomas 12 Thomas 12Conclusion

Increasing Lead Quality From studying SPCHA’s web strategy we can see there is an opportunity to increase lead quality by analyzing customer behavior.

Lower customer aquisition costs, and increase customer retention by prioritizing their story.

Track customer spending to make targeted marketing profi les based on buying patterns and product interest.

Business have the potential to optimize their marketing budget by studying customer behavior.

Analysis of customer data is a very eff ective way to understand customer needs.

A Good TheoryWhen you boil it down, marketing investments are like any other investment. You should consider yourself a fund manager and each channel should be treated like a portfolio. -- you have to create a portfolio with diff erent types investments, risk profi les, and maturities to develop a well-rounded and successful marketing strategy. Jon Miller --Inc.com

Thomas 13

More detailed information is available in this folder which contains Notes from my research as well as a link to all the SPCHA 10k’s

https://drive.google.com/?usp=chrome_app#folders/0B3u_HGFbfMiCQVlmRkFtR0t0ZW8

Links