Similar fulfillment needs were key to party products marketer Birthday Express' decision to buy young girls' apparel marketer Storybook Heirlooms from New York-based Delia's Corp., a Birthday Express executive said.
Jan Jewel, co-CEO of Birthday Express, an online/offline cataloger of children's party products, said her firm negotiated with other companies in its sector during the past six months, but Storybook — an online/offline cataloger offering apparel and accessories for girls age 2 to 12 — made the most sense because it fit Birthday Express' fulfillment model.
Birthday Express has fulfillment centers near its headquarters in Kirkland, WA, and Greensboro, NC.
Inventory is being relocated from Storybook's Hayward, CA, warehouse to Birthday Express' Greensboro center since most of the apparel retailer's orders come from east of the Mississippi River.
The Greensboro center was built to accommodate Birthday Express' array of products, which include small items such as balloon packages and drink cups that can entail laborious picking and packing. The firm uses digital picking carts that help plant workers locate items for packaging.
However, the company, which designs many of its own products, also offers items such as costumes that come in kits and are less labor intensive to pick and pack.
Jewel said the flexible nature in which the center was set up will ease the transition to fulfilling Storybook orders, which can entail small items such as shoes and larger items such as dresses.
Jewel said only minimal changes will have to be made to its warehouse and order processing software to incorporate Storybook's retail. However, she would not disclose her firm's estimated cost for the transition.
“We will have to get hangers and racks since we're dealing with more clothing items,” she said. “I'm sure there will be some unexpected challenges, but we are not expecting a whole lot of them.”
Jewel said Storybook gets most of its sales via catalogs, while Birthday Express gets most of its orders online. All orders will be routed through the same processing software systems.
“We'd like to see more Storybook orders online and less in the catalogs,” she said. “With catalogs, you have to pay someone to answer the phone, for instance, to enter orders into the database. With the Internet, the customers put the order in all by themselves.”
Birthday Express' Kirkland facility includes a call center and will handle customer rep work for Storybook orders.
Jewel said that, although her company plans to keep the Storybook brand intact, there will be some convergence between the two brands. She said some of Storybook's girls' clothes will be offered at www.birthdayexpress.com, while some of her company's party products may appear at www.storybookonline.com.
Jewel added that her firm plans to do cross-promotions inside the packaging of orders but did not offer any examples.
The Storybook purchase diversifies Birthday Express' children's gift offering as it positions itself against its bigger competitors, iParty and Party City. Birthday Express reported $13.1 million two years ago when it filed for an initial public offering. It also showed a profit of $1.2 million that year.
While it has not released financial results since withdrawing its IPO registration in 1999, Jewel said the company has increased its revenue and has boosted its work force from 222 to more than 300. She said her company's start as a cataloger has helped it do well as it has evolved into an e-commerce business.
Jewel and her husband, Mike Jewel, originally planned to start Birthday Express as a Web-only business in 1994. But they decided to start offline and learn more about traditional direct marketing fundamentals such as fulfillment before making their first online sale in 1996.
“After some market research, we could see that an [Internet-only] business could go in the tank quick,” she said. “It looks like we were probably right.”