Dick's Sporting Goods Bets on E-Commerce and Automation
Dick's Sporting Goods has been working on improving its technology and president Lauren Hobart said the company is "incredibly pleased" with how the retailer is doing from a digital standpoint.
Last year the company launched a new e-commerce platform, and, according to Hobart, the technology team has been working to make the retailer's website "incredibly resilient and stable," which Hobart said is "a gift that keeps on giving in terms of speed of the site experience."
Dick's online checkout has been improved and Hobart said the retailer has more runway to go to make the site an even better customer experience.
In its third quarter of 2018, e-commerce sales increased 16% and penetration was approximately 12% of total net sales, compared to approximately 10% during the third quarter of 2017.
Dick's is also working to deliver e-commerce orders within two business days to the majority of our shoppers. To achieve this, the company is investing significantly in its fulfillment and delivery capabilities including the creation of dedicated e-commerce fulfillment centers in New York and California.
"The state-of-the-art facility that we're building in New York will be highly efficient as we invest in robotics to drive automation and reduce labor costs," said Hobart. "We also recently enabled all of our store focused regional distribution centers to fulfill online customer orders. Additionally, we continue to leverage our proximity to our customers by shipping from all of our stores."
To deliver orders in two days, Dick's says it needs to make sure it has the right inventory in the right place around the country.
"We're leveraging our entire store network and we're building these mini fulfillment centers and larger fulfillment centers so that we can take the speed question sort of off the table," explained Hobart.
"With these fulfillment centers, we’re able to carry a larger assortment than what we carry in stores so it allows us to keep orders together," noted CFO Lee Belitsky. "They're more efficient than the stores, the automated facilities are more efficient and as labor costs go up that efficiency is going to be important to us and we expect to continue to have significant growth in our ec-commerce business over time."
Finding the balance is tricky. As ship from store orders grow, Dick's needs to also keep stores in stock for walk-in customers, hence why it is adding distribution centers.
Across the company, Dick's will have eliminated approximately $25 million of expenses by year-end, much of which has been reinvested in strategic growth drivers. It will continue to make investments in key growth areas, such as e-commerce, Team Sports HQ, and private brands. The company brought down its CapEx forecast from $225 million to $165 million.
"We remain focused on improving our core execution, delivering stronger merchandise assortments and presentations, and increasing our productivity," said Hobart. "We are confident that the continued execution of these strategies will lead to stronger results and drive competitive advantage in the marketplace."