Olympia Sports teams with DYMO Endicia and USPS for fast delivery of out-of-stock inventory

By George Linkletter, OutputLinks

Olympia Sports, a well-known retailer of sporting goods and athletic apparel, is a successful multi-channel marketer, utilizing several channels to attract customers to its chain of more than 185 stores in New England, New York and Pennsylvania. 

The firm advertises on the New England Sports Network, the cable channel that broadcasts the Boston Red Sox and other professional teams.  It prints five to six multi-page circulars per year, distributing them via daily and weekly newspapers.  It mails a 10 to 16-page seasonal magazine/catalog to its best customers up to six times per year as part of its successful Edge loyalty program.  It also distributes post cards with discount coupons, birthday cards with special savings offers, and it maintains an online presence.

Those marketing dollars are well spent when they motivate consumers to travel to a retail outlet to make a purchase.  But the ROI evaporates when the consumer arrives at a store only to find the desired item not in stock.

“The hard and soft costs associated with out-of-inventory transactions are just huge,” says Paul Fitzpatrick, Director of Operations and Distribution for the 35-year-old retailer.

“On the one hand, we don’t want our in-store customers to just walk away without the product they came to get.  They may become frustrated with the inconvenience and go to a competitor.  And if they can find the item they want, there’s a good chance we’ve lost that customer, or at the very least we’ve dropped down in the rankings when it comes to future purchases.

“We also don’t want a lot of manual work at the store-level, either by calling around to nearby stores to try to locate a specific item, in recording the address and shipping information of the customer, and in arranging for shipment.  All of these tasks take time and attention away from our other in-store customers and are rife for error.  We needed a much better way to satisfy our customers and improve our sales.”

Instant view of total inventory

The first step was to implement an integrated ‘inventory locater’ system that monitored the location of every item in stock in the retailer’s central distribution site as well as every retail location.  This instant and universal view of the availability of the entire inventory also separated out those unique products, such as ice hockey sticks and free weights that could not be cost-effectively shipped directly to consumers.

The new inventory locater system solved a big part of the out-of-stock problem.  But it did not eliminate the tedious task of capturing customer address data and preparing individual shipping labels.  These are notoriously time-consuming and prone to error.  And it did not address the very substantial accounts payable costs.

Since every shipment was unique, each required manual reconciliation and very often adjustments – for shipments that were undeliverable, refused, or sent to wrong addressees -- to assure that all shipping costs were legitimate. 

If just a small percent of the shipments were in error that meant dozens of shipments each week had to be manually reconciled, along with the hundreds of pages of paper invoices for all the other shipments that were correctly delivered.

“We had to hire a fulltime person just to handle the problem shipments and the resulting and extensive back-and-forth discussions with the freight company,” recalls Fitzpatrick.  “We were spending far too many hours on just wasted effort.”

“We approached the USPS to serve as our shipping partner for three key reasons,” explained Fitzpatrick.  “They deliver to post office boxes, they deliver on Saturdays, and no one is better at reaching every household in America.”

Automated labels and link to USPS

The firm next partnered with DYMO Endicia and installed the firm’s automated Label Server and Application Programming Interface (API) solution.  Fitzpatrick says the alliance with the USPS and DYMO Endicia was “a home run.”

API enables Olympia to embed USPS postage labels into its point-of-sale application at each store, eliminating the need for either additional software or separate accounts for multiple locations to print the USPS shipping labels.

Now, personnel at each retail location can search for and locate any item in inventory, enter the customer’s address information, which is instantly verified, and arrange for a quick delivery of the item from either the distribution center or another store.  (The system automatically searches the warehouse stock first, to reduce double shipments and the risk of subsequent out-of-stock situations at other stores.  If unavailable at the distribution center, it then employs geo-coding, to locate the item at the closest nearby stores to reduce shipping time.)

A shipping label is automatically generated at the site where the item is located, and an alert is sent to the USPS, indicating that a shipment is ready for free carrier pick-up during the next day’s regular delivery of mail.  It also specifies the total number of packages to be picked up and their combined weight.

Fitzpatrick estimates a hard-dollar savings of nearly 50 percent due to the lower shipping costs of USPS vs. the previous carrier.  Also impressive are the internal savings due to the vastly simplified accounts receivable process.  All 185 stores now share a single postage account and the tedious and costly reconciliation process has been eliminated.

Fewer errors, happier customers

But the savings in ‘soft costs’ related to improved customer relations may be just as important.  First, there are no more address/shipping errors or illegible handwriting, so errors in shipping are virtually eliminated.  There are also no fulfillment errors, since the system prompts employees and clearly verifies the desired item at several steps in the ‘pick-and-pack’ process via barcode scanning.

Second, customers are impressed that they can get what they want, even if a slight delay is involved.  “It takes a good deal of trust on the part of a consumer to pay for an item at a bricks-and-mortar retailer, and then wait for it to arrive,” says Fitzpatrick.  “It is critical that we meet their expectations – and our new system is virtually flawless.” 

“We’ve had instances where a customer has come in on a Thursday to buy soccer cleats for a child, only to find the right size or style is out-of-stock.  But our system located a pair at another site, shipped them on Friday, and they arrived on Saturday in time for a game on Sunday.” 

“In other situations, we’ve had customers who were just thrilled that they received the item they wanted just 48 hours after ordering it – without any extra effort on their part.”

The only downside, and it is clearly a minor one, is that using the system is an indication that an item was out-of-stock.  But it is virtually impossible to keep every item in a retail store in stock 24/7.  And the system corrects the shortcoming by giving customers instant access to every item in stock throughout the entire retail chain.

“Overall the program has been very well received,” says Fitzpatrick, who once served as retail store manager and is a 22-year veteran with the retailer.  “The new solution is clearly a win/win for all involved.”

“Olympia Sports’ success with DYMO Endicia’s shipping software and tools is clearly helping the company boost customer satisfaction while streamlining internal processing and lowering costs,” said Amine Khechfe, General Manager of DYMO Endicia.

Comments?  Contact georgelinkletter@charter.net.