Instrument retailer Sweetwater has been helping people make music since 1979, but something else it’s been doing since the early 80s has distinguished it from the pack: building its own software.
“Rather than utilizing software to define our business processes, we figure out the best business processes based on feedback from our customers, and build the right tools to reinforce and protect those processes at scale,” Jason Johnson, CIO, Sweetwater, tells RIS.
Sweetwater has grown from operating out of the back of a hand-me-down VW microbus to becoming the largest online retailer of musical instruments and pro audio equipment in the U.S. The retailer ships internationally (with some limitations due to manufacturer restrictions) and is headquartered in Fort Wayne, IN, where it also houses its one physical store. In 2020, Sweetwater served over 1.5 million unique customers with musical equipment purchases, up from just under 1 million in 2019.
Over the years, the retailer has learned there are a lot of advantages to investing in in-house tech that allows it to create personalized experiences for its customers. “The influx of customers and the process in which we serve them is the catalyst that helped propel us to cross $1 billion in revenue in 2020,” he notes.
Along with strong customer growth, Sweetwater added over 400 new jobs, increasing employee headcount by nearly 30% in 2020. A few weeks before the COVID-19 lockdown it opened a brand new 480,000-square-foot distribution center, which was expanded by an additional 50,000 square feet over the summer to house even more inventory.
In light of Sweetwater's recent success, RIS sits down with Johnson – who was just promoted to CIO this month and has been with the company for eight years – to get the nitty gritty details of how Sweetwater develops in-house tech to invoke its unique customer experience – what it calls the ‘Sweetwater Difference’ – in all areas of its business.
Sweetwater by the Numbers
- Founded 1979
- Served over 1.5 million unique customers in 2020, up from just under 1 million in 2019
- Crossed $1 billion in revenue in 2020
- Added over 400 new jobs in 2020, increasing employee headcount by nearly 30%
In-House Tech Advantages
Developing its own in-house tech may not be an easy solution, but it offers many advantages in the competitive retail industry.
In developing its own customer software, Sweetwater is able to lean on fewer vendors. It also utilizes open source tooling, so it is less expensive as compared to license solutions that leave a retailer with little control or customization.
“The competitive advantage to developing custom software is there is a faster turnaround in delivering new features and gaining feedback on them from users,” notes Johnson. “Overall, this provides us with more flexibility and allows us to better personalize our online experience for customers.”
Developing a robust team to manage such a feat has been crucial to Sweetwater’s success. The retailer forms small teams it calls “pods,” which evolve around major business units with Sweetwater.
“The pods are led by delivery managers, who are part product managers, part process engineers, and part project managers,” he says. “These delivery managers work with departments to deeply understand their challenges and opportunities and craft software solutions based on them. Those pods are staffed with a development team that can bring those solutions to life.
“We have found extreme success in teaming small groups of highly focused and passionate people, and keeping them focused on their areas of ownership. We give those pods a great amount of empowerment to solve their customers’ (the department) problems. The developers and delivery managers can often be found working in the department side-by-side with their teams to really quantify and figure things out."
Developing a Warehouse Management System
To support its new distribution center, Sweetwater built its warehouse management system from the ground up in 2019. After a review of third party systems and implementation timelines, the retailer felt it had a better understanding of its challenges and could advance the proposed timelines.
“For example, at the time, every vendor we talked to said it was impossible to implement something in less than a year,” Johnson reveals. “Our team did it from the ground up in just over six months, but it didn’t stop at implementation, and it never will.”
The same pod is changing and updating the warehouse management system every single day with tweaks, he tells RIS, as Sweetwater strives to scale and perfect the customer and employee experience.
The development process began with breaking down all the parts of the distribution center and each process. The team was mixed with line-level workers, IT, senior managers, and supervisors.
“No matter how hard you plan something of this scale, sometimes you get in and realize you just missed something,” he cautions. “With our custom LED driven picking cart we designed (starting with a custom designed metal car), we put a small holder on it for the user to store their handheld device. Within days of being in the new distribution center we realized that our associates were storing water bottles and other small personal effects on the cart. It had become their rolling desk, so we adapted and made it bigger with dividers so they can store more.”
Sweetwater also deployed with microservices and using Kubernetes, an open-source container-orchestration system for automating computer application deployment, scaling, and management. “This was our first real big project in production using that architecture, so the teams were dealing with understanding and scaling the tech while flushing out the processes,” he says.
Johnson notes that the distribution center using microservices is a shining star of how agile software development, small teams, and deploy anytime models can change a business for the better. “We were able to react in real-time to pandemic level sales, adding features ‘on the fly’ that the business desperately needed. At the end of the day our job is only as good as the product delivered to the customer in a timely fashion.”
DEVELOPING CRM IN-HOUSE
As previously mentioned, in-house tech is one of the secrets to Sweetwater’s rich, personalized customer experiences. When talking about its customer relationship management (CRM) application, Johnson says Sweetwater improved its customer experience by deeply integrating its processes into the software.
For example, when Sweetwater has an internal customer service case on a customer, every employee that touches the subsequent order to fix the problem – perhaps a damaged product or shipping error – gets a simple popup explaining that situation. This allows employees to be able to present their best self to that customer in that moment.
“The popups are simple,” he says, “but building our own tools and platforms allow features like that to flow in the employee’s experience while doing their job. It can speed them up and it can slow them down at just the right time so our customers can have the very best experience.”
While the benefits to developing in-house software are many, anything of this scale requires coordination among many people and teams at Sweetwater, he notes. The most challenging piece of that is always coordinating all the facts and ideas together to come up with a real solution to the problem.
We often say, ‘We can build anything. Do you know what you want?’” says Johnson. “That becomes the challenging part. We understand what we want the customer to feel when they interact with us, but how do we get that done? Our greatest asset is being able to shift. We have so many processes that look nothing like what we had on day one. They have grown and changed as we matured over the course of the last year.”
Johnson’s advice to retailers looking to develop software in-house is to follow the best practice of getting your development teams to embrace the mentality that they are "owners." "Owners know their business and embrace the good and the bad, and spend time and energy wisely," he says.
Additionally, retailers should focus on prioritization in the process of building in-house software, which helps break down complex problems and provides clarity in the face of uncertainty.
“Lastly, retailers should be bold – take risks and don’t be afraid to fail fast and pivot. Figure it out, ship it and iterate.”