Dick’s Sporting Goods expects e-commerce to be a $1 billion business for the brand by 2017 and is investing in the technology and processes both to support that growth and establish its Web platforms as a core part of its overall omnichannel strategy.
Sensing the potential of the Internet early on, Dick’s launched dsports.com as a separate, siloed business in 1999 with several investors on board. But the retailer quickly realized that Internet retailing would be slow going for quite some time. “Even though we knew that this was going to be a long haul — there weren’t going to be any profits available in this side of the business for possibly 10 years — we knew it was a business that we needed to be in,” CEO Edward Stack said at a recent analyst event. “We knew it was going to be a significant aspect of the future of retailing.”
The retailer decided to shift gears and essentially handed its nascent web business over to GSI. Dick’s licensed its brand name to GSI in exchange for a web-share program tied to dsports.com. “This required no financial investment from us, no inventory investment and no meaningfully ongoing expense structure at all,” added Stack.
While that model worked beautifully in the early days of e-tail and reaped profits of $30 million over several years, the sporting goods company now is in the process of bringing its e-commerce in-house in the next four years, working with IBM WebShare to custom build a platform for a web business that’s expected to generate $1 billion in revenue by the end of 2017. The company is on track to upgrade its transportation management systems in 2014 and will implement an e-commerce fulfillment solution and expand one of its four distribution centers in 2015. Dick’s plans to open two new DCs in 2016 and 2017.
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Beyond the obvious financial rewards of closely controlling e-commerce, Dick’s stands to benefit in several other ways by bringing the web business in-house. “We will have the controls to differentiate our Dick’s Sporting Goods brands and online experiences, we will have easier access to our data and more easily use these cross channels to build more engaging customer experiences; and we will have control over development cycles, which will allow us to test and iterate at a significantly faster pace,” said Michele Willoughby, EVP of inventory, supply chain & e-commerce. Dick’s will add a greater assortment of styles, sizes, colors and brands online as it positions e-commerce as a core platform for the brand.
While Dicks’s rebuilds its e-commerce, omnichannel remains a top priority for the retailer, which is leveraging all marketing channels to drive foot traffic to its brick-and-mortar locations. Beyond fine-tuning its email campaigns, Dick’s has beefed up spending in paid and digital channels while incrementally improving the website to generate better SEO results, according to Willoughby.
The retailer also plans to fully exploit the symbiotic relationship between e-commerce and brick-and-mortar. “The synergistic channel between our store business and our e-com business generates opportunities to drive sales, expand our distribution network and increase margins while supporting omnichannel growth,” explained president and COO Joseph Schmidt. Already Dick’s has seen online shopping increase in a specific geographic location when a physical store opens in the area, and new stores help to further strengthen the ship-from-store program.
Given the trends in smartphone and tablet usage Dick’s sees significant opportunity for a tablet-optimized web experience. The retailer pilot-launched its tablet site in August with intuitive touchscreen usability, larger buttons and a streamlined interface that gets customers to products more quickly. “Mobile is the new face of engagement,” Willoughby added.
While web conversion rates consistently have grown in recent years, Dick’s sees room for improvement, especially in comparison to competitors. To better understand potential issues in this area, Dick’s relies on web analytics and data pulled from customer surveys to “identify conversion barriers,” Willoughby explained. Over the next two years, the retailer will redesign the site, improve the homepage, employ a new search engine, implement custom product builders and add individual brick-and-mortar store pages to help increase conversion.
“I’m confident that this performance tracking represents a big business opportunity and we’ve invested in dollars to drive it,” said John G. Duken, EVP of global merchandising.
Date: October 1, 2013