Lamps Plus Automates Fulfillment, Expects Doubling of Online Orders

Like many retailers rooted in the bricks-and-mortar world, Lamps Plus Inc. was unprepared for the onslaught of online orders after launching its e-commerce site.

But more than 6 million consumers visited the site at in 2003, checking out small lamps to grand chandeliers from 10,000 SKUs. More importantly, 5 percent of them visited one of the 42 Lamps Plus stores in California, Arizona, Colorado, Nevada, Oregon and Texas.

E-commerce now accounts for 10 percent of the privately held specialty lighting retailer's estimated $150 million revenue. This year, the Chatsworth, CA, firm expects to double online orders.

Such anticipated growth spurred the company to hire order management firm Escalate Inc., Redwood Shores, CA, to automate its order fulfillment process.

“Their big challenge was handling the volume of e-commerce orders,” said Sally Sheward, vice president of marketing at Escalate. “When you start reaching those levels, you can't do things by the seat of your pants. You can't do this manually.”

Indeed, installing the Escalate Order Fulfillment application helped reduce and consolidate e-commerce order packages by 30 percent since testing began in November. Even shipping costs were cut roughly 20 percent.

Orders placed via, Amazon Marketplace or Web kiosks in company stores are converted into a single stream of fulfillment orders. The information is sent to the company's IBM A/S400 server. A pick ticket is generated and sent to the warehouse. The item is picked from the shelf.

Then, the product is packaged in the packing station. There, Escalate Order Fulfillment captures the packaging information and generates the shipment packing list.

After that, Escalate automatically helps Lamps Plus interface with United Parcel Service, downloading the delivery company's labels with two-dimensional barcodes called Maxicode.

Simultaneously, the tracking information is downloaded and attached to the shipment label on the package as well as automatically entered into the Lamps Plus order database.

The packer then confirms the shipment by hitting the “Click” button. At that point, the Escalate application sends a trigger to Lamps Plus' A/S400 system to invoice the customer.

By contrast, the earlier process was labor-intensive. The steps were similar until the order reached the A/S400 server. But beyond that, there was no automated interface to UPS. Lamps Plus packers at the warehouse had to enter packaging information manually. And tracking numbers were not attached to the order information.

If that were not enough, the Lamps Plus warehouse in Walnut, CA, was designed to ship bulk to stores. So the company was not set up to ship efficiently to individual customers.

All of these factors combined contributed to many errors.

“The order processing costs per order would have been too high without automation, and because we're an application service provider, they avoid upfront hardware and software costs,” said Wens Gerdyman, director of product marketing at Escalate.

Essentially, Escalate plugs into the retailer's legacy inventory management system, automating the creation of shipments, carrier labels, branding packing slips and integrating with parcel carriers.

The service goes live this month after a satisfactory test period.

“As our volumes increased, we realized [the old fulfillment process] was not something we could continue,” said Clark Linstone, chief financial officer at Lamps Plus. “We had to find a way to process order fulfillment automatically.”

Another decision taken last year to boost e-commerce was affiliate marketing. Lamps Plus Web links are available on the sites of designers and small builders.

“Our customer base is the homeowners, designers and custom home-builders,” Linstone said. “That is our market. So anything we can do to reach out to our customers we want to.”

Moreover, the retailer's Web kiosks in stores help drive online orders. Ads and freestanding inserts in newspapers as well as co-op mail with ADVO, television ads and billboards point to the Lamps Plus site.

Though the site is getting special attention in the fulfillment area, its pricing structure is in line with Lamps Plus stores. Prices range from $19.99 for a basic lamp to $10,000 for a grand chandelier.

The emphasis more than ever is on multichannel integration.

“We're also having people do their research online and then coming into our store,” Linstone said.

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