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November 21, 2017

Connected eCommerce eco-system
in Sports Industry

Author Matt
Category Blog | eCommerce |

Sports Charlet is an example of how a titan of the industry with all the knowledge and expertise could not sustain the drastic shift in the industry dynamics. Ecommerce for sporting goods retailers must formulate their ecommerce strategies to brace themselves for the ecommerce wave. In this article, we will look at the specific challenges faced by sporting goods retailers using the case of ‘Sports Chalet’. Also, how a connected eco-system can help overcome them.

The Background
The number of retailers who have shut shop in the latest sporting goods industry upheaval stands at 196. Many sporting behemoths with years of legacy and expertise perished. One such collateral is ‘Sports Chalet’.

Sports Chalet was a family owned business and specialized in outdoor sporting like scuba diving equipment, climbing gear and other team sports. The company maintained 47 physical locations and catered primarily to the  West Coast.

Sports Chalet took pride in their knowledgeable employee base who knew everything about the products they sold and in its heydays in 1998, its founder Norbert Olberz gave a stock of 1.5 million USD to 109 of their employees who were with the company for the past 10 years.

What went wrong?
Matt Powell industry analyst at NPD group quoted “If a retailer gets into a lot of debt, it means they are not spending money on stores, they are not spending money on systems or they are not even spending money on key things which are essential to take the business forward”. That is exactly what happened to Sports Chalet which wound up with a debt of more than 50 million USD had to wind up its operations and file for Chapter 11.

Upon observing the strategy of Sports Chalet, its operational was setup for failure. Some of the major flaws they had were.

  • Limited area of operations – They catered to a very limited set of audience and boxed in themselves mainly to the West Coast region.
  • Sports Chalet started as a traditional family business specializing in giving Skiing, Scuba Diving and mountaineering gear and they never evolved from their legacy. They were never able to get their online presence up and going.
  • Sports Chalet could not cultivate a proper communication with their followers and started losing turf to a large number of new entrants, who started offering the same niche products with better customer engagement. For a company that took pride in their knowledgeable staff base, lost the plot completely by missing the digital platform.
  • The tag line of Sports Chalet was “We will take you to the limit” became a parody of “We will take your credit card to the limit” in the words of author Mike Russell of KTAR news. This sentiment was echoed by most Sports Chalet patrons all over, and reflects a flawed pricing structure, which is a grave mistake in a highly agile and competitive industry.
  • With the changing times, where companies like Nike, Adidas and Under Armor had their exclusive outlets and niche brands like Lululemon and REI encroaching on the online turf. While ‘Sports Chalet’ did not offer any new approach like drop shipping, same day delivery and a friendly return policy.
  • Flawed Pricing strategies, no personalized and friendly customer service, limited geographical presence, bad logistics and inventory management, and finally failure to gauge the fast changing taste of the customers became the undoing of ‘Sports Chalet’.

How an ERP ecommerce integration could have solved these problems?
Sporting Goods retail ecommerce can be complex, like any other ecommerce retailing. It involves a myriad of complex roadblocks to navigate- Multiple systems, numerous channels, managing product catalogues, delivering to different shipping locations, managing customer data. To top it all, reaching customer expectations, building a great brand image and finally improving the sales performance, while maintaining a healthy balance sheet.

On paper these really look intimidating, but ask yourself a question, How are companies relatively new and small performing well where other are failing?

Having all the information in silos cannot support scalability. Sporting goods retailers must integrate their ERP and ecommerce store to communicate with each other. A seamless ERP ecommerce integration is the only way forward for sporting goods retailers who are planning to survive the growing competition.

An ERP ecommerce integration can get these things right:

  1. Additional push to acquire new customers
    An ERP ecommerce integration between a robust platform like Magento and Dynamics ERP (NAV, AX, GP or SAGE 100 and SAP B1), can help businesses in sporting goods retail in limiting their operational overheads. Maintaining the customer information in a single system and even limiting information management and processing can help achieve this.
    The exact reason why Sports Chalet failed, by restricting themselves to a fixed geographical area the ‘West Coast’ and this crippling disadvantage can be taken care with ERP ecommerce integration.Role of ERP Ecommerce Integration
    Customer data acquired through your ecommerce store is available in your backend ERP systems. This helps businesses compile and drill down the rich data repository to gain insights into your customers shopping preferences. This information can further help companies acquire new customers with similar tastes and preference and even help business in offering innovative products.

  2. Making informed Sales
    This factor was another are where ‘Sports Chalet’ failed to take advantage. A brand, with knowledgeable staff, took a steep fall. With online retailers and big brand specialty stores like Nike, Adidas and Puma encroaching onto their turf, the last thing they needed was miscommunication between their brand and their customers. If only Sports Chalet would have tried expanding their footprint, the story would definitely been different.Role of ERP Ecommerce Integration
    An ERP ecommerce integration in place can help any Sporting retailers overcome this problem efficiently. The key again is customer data. It needs to sync between ecommerce store and the backend ERP systems. This updated data enables your staff with all the required information to make an informed sale, having the customers previous order history, buying pattern and preferences on the fingertips of your staff only helps them to better cross sell or upsell products. It also helps your staff to offer your customers a personalized advice based on their sporting interests.

    This is a great advantage for sporting retailers to better their brand image, engage customers better and even churn their inventory quickly.

  3. Offer better discounts and promotions
    This was one of the key reasons for customers abandoning ‘Sports Chalet’, not having a pocket friendly pricing policy. Retailers in a cut-throat industry like sporting goods cannot expect customers to shop with them with steep prices and bad discount structure. Sports Chalet never paid heed to this aspect and finally the erosion of its once loyal customer base set in. An ERP ecommerce integration is the right fix to this solution.Role of ERP Ecommerce Integration
    Not all customers are the same and that is a thumb rule. So why apply the same set of pricing structure to all the customers? Integrating ecommerce ERP and POS systems helps in defining different tiers and associating a certain amount pertaining to that tier. This helps in giving customers automatic discounts on their purchases once the tier parameters are met. Even if the customer shops on a physical store location a POS integration can also help in giving special discounts based on the shopped amount. It is a great way to maintain customer loyalty, enable repeat business, which can eventually increase revenues.
  4. Offer more shipping options
    In today’s world of express shipping and Amazon Prime, sporting goods retailers survive in a highly dynamic world. They must offer flexible shipping options. The word ‘Last Mile delivery’ holds lot of importance in the complete order fulfillment cycle. Brands like DHL and Amazon are pushing the limits further with robotics and drone delivery systems. Adopting an ERP ecommerce system is just the right push in the right direction.Role of ERP Ecommerce Integration
    ERP ecommerce makes the popular option of ‘Drop shipping’ easier. This allows retailers to ship products quickly with the help of third party suppliers. When a customer places orders with an ecommerce store, the customer order and shipment details are transferred to the supplier in real time. This allows the suppliers to process orders quickly and ship to the customer. Sporting retailers can cut costs by maintaining less inventory just by maintaining this eco-system. An ERP ecommerce integration solution allows more room for sporting retailers to try the state of art shipping options like same day delivery and split shipment options.
  5. Optimizing Inventory management
    The main emphasis of sporting goods retailers is achieving a perfect balance between their physical stores location and their online presence; like selling on third party marketplaces like Amazon and eBay and their own ecommerce store. Relying completely on only the physical or the online stores can lead to a fiasco a la ‘Sports Authority’ and ‘Sports Chalet’. But to achieve this finesse, a uniform inventory information reflecting across all the platforms is very important, and an ERP ecommerce integration is the right push in the right direction.Role of ERP Ecommerce Integration
    In majority of the cases, product information is maintained in the ERP systems of an organization and these products have to be manually entered back into the ecommerce store. This is prone to manual errors and wastage of time. An ERP ecommerce integration would help the sporting goods retailer in streamlining their inventory in an organized manner. For additional information, do read our blog.

Take the scenario where a customer searches, selects and orders your baseball pitcher glove from eBay the order gets confirmed, later to the horror of the customer he would get a mail saying the product is actually out of stock due to which his baseball training would go for a toss.

About i95Dev
We are Magento Solution Partner with a deep experience in handling varied ecommerce industry challenges. We help our customers build a connected ecommerce eco-system. Our experience also extends to Microsoft ERP products like Dynamics GP, NAV and AX in addition to SAP B1 and SAGE 100. Contact us for information on how we can help you n

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