Edition 71
Solving the Rapid Growth Problem at Vineyard Vines
by Maria Haggerty, CEO, Dotcom Distribution

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Solving the Rapid Growth Problem at Vineyard Vines

In online retail, growing too fast, too soon can create serious operational challenges, especially in the area of logistics and distribution. Without experienced logistics support, itís impossible for brands to maintain steep growth curves.

Thatís the lesson vineyard vines learned when its online apparel business experienced meteoric growth and expansion. But through a long-term collaboration with Dotcom Distribution, vineyard vines developed a scalable logistics and fulfillment model that preserves the flexibility the brand needs to deliver a truly unique customer experience.

Growing Pains at vineyard vines
Founded in 1998 by Shep and Ian Murray, vineyard vines is known for its Marthaís Vineyard-inspired apparel, whimsical neckties and smiling pink whale logo. In addition to its e-commerce and catalog businesses, vineyard vinesí products are sold in specialty and department stores around the world as well as the brandís freestanding stores.

Although vineyard vinesí footprint was considerably smaller in 2005, the company was expanding rapidly. The business had just moved from its 5,000 square foot, company-operated warehouse to a location with 25,000 square feet and was already outgrowing the space. Although Shep and Ian enjoyed the control of being directly involved in packing and shipping, they realized that vineyard vines needed a strategy to scale fulfillment to rapid growth.

vineyard vinesí problem was not unique. As the business experienced growth and expansion into new markets, the backend systems that had proved successful during the companyís early years had to change. But even though company executives recognized the need to scale the logistics and distribution functions, there were concerns that the brand would be unable to provide the consistent, high quality experience its customers had come to expect.

Premium packaging represents an important part of vineyard vinesí customer experience. Personalized messages, attractive boxes and secure shipping compartments give products an added high-quality appearance, which is essential to brands that offer a hint of luxury. When consumers spend more, they not only expect their products to be high-valueóthey also expect that the experience with the product will begin with the packaging itself.

The bottom line was that vineyard vines didnít want space or operational constraints to impact its growth or the experience the brand provided to customers. To get there, the company needed the help of an experienced third-party logistics and fulfillment partner capable of adapting vineyard vinesí fulfillment strategy and helping the business evolve from a wholesale-driven to retail-driven organization.

Overcoming Growth Challenges Through Collaboration
In 2006, vineyard vines approached Dotcom Distribution to help scale its logistics and fulfillment functions to the companyís near-term growth. Just as importantly, vineyard vines was looking for a true, long-term partnership that would empower the brand to accelerate its growth curve.

Over the past eight years, vineyard vines has developed a close working relationship with Dotcom Distributionóa collaboration that has allowed the brand to overcome operational and distribution challenges on several fronts:



1. Scalability
Scalability was the initial focus of the collaboration between vineyard vines and Dotcom Distribution. In many ways, vineyard vines had become a victim of its own success and needed to immediately address operational processes that were roadblocks to the brandís continued growth.

Dotcom Distribution set out to scale vineyard vinesí distribution capabilities in a way that accommodated the companyís culture, brand and service requirements. By aligning distribution with key aspects of the brand, vineyard vines could increase product selection while supporting growing sales volumes across a variety of channels.

One of the critical competencies Dotcom Distribution brought to the relationship was the ability to efficiently handle seasonal and non-seasonal increases in demand. Dotcom helped vineyard vines increase daily receiving capacity by a factor of five to 10, enabling the company to keep pace with consumer demand. In peak seasons, Dotcom helped vineyard vines scale logistics and fulfillment to accommodate times when customer orders could increase tenfold.

Dotcom also brought agility to the collaboration, satisfying vineyard vinesí need for operational flexibility. Through a combination of an agile workforce and logistics expertise, Dotcom Distribution has helped vineyard vines quickly respond to spikes in demand, even when it means implementing changes in packaging or other dimensions of the customer experience.

The ability to efficiently and rapidly manage variations in receiving, inventory management and order processing has proven effective for vineyard vines, allowing the brand to sell across multiple channels without wondering whether logistics and operations will fall behind consumer demand.

2. Presentation and Personalization
Branding and package presentation count at vineyard vines. From its early days, vineyard vinesí philosophy has been that the customer experience isnít complete until a perfect package arrives on the customerís doorstep. The brandís rapid growth presented a threat to that philosophy and introduced the very real possibility that the quest to scale fulfillment would have a negative impact on packaging.

Over the course of the collaboration, Dotcom Distribution has worked to ensure that vineyard vinesí presentation and personalization capabilities remain intact. Across a range of functionsófrom gift packaging to specialty packaging to apparel personalizationóDotcom Distribution has helped align fulfillment to customer expectations and the delivery of an exceptional customer experience.
While other online retailers opt for unattractive white plastic packaging to manage costs, vineyard vines boasts an attractive (yet cost-effective) package that prominently displays the companyís name and whale logo. As a result, vineyard vinesí packaging is as cheerful and whimsical as the logo itself.

The partnership between vineyard vines and Dotcom Distribution has also allowed the brand to execute a flexible packaging model. Although changes in packaging usually create more complexity and time constraints in the packing process, vineyard vines agile packaging model creates opportunities for fast and efficient adaptations, whether they are as small as new stickers or as large as an entirely new packaging program.

More and more online retailers are recognizing that packaging is the last chance to make a meaningful impact on the customer experience, but itís the first thing customers see when they receive their merchandise. One of the reasons the partnership between vineyard vines and Dotcom Distribution works is a shared belief that packaging provides an opportunity to reinforce important dimensions of the brand and make a lasting impression on customers.

3. Multichannel Capabilities
A clear, multichannel vision presented additional challenges to vineyard vinesí logistics and fulfillment operation. From the outset of the collaboration, operations needed to adapt to the simultaneous expansion of the brandís eCommerce program and brick-and-mortar presence. For Dotcom Distribution, this meant helping vineyard vines develop backend capacity for rising online sales, additional stores and other multichannel goals.



Seasonal apparel comprises a large portion of vineyard vinesí business and introduces time-sensitive requirements when new inventory or product lines are launched at various points in the calendar year. To address these requirements, Dotcom Distribution helped vineyard vines develop a ďone-stop shopĒ for all of the brandís multichannel fulfillment needs.

Combined with improvements in flexibility and agility, single-point fulfillment enables vineyard vines to ship most wholesale orders within 48 hours and eCommerce or catalog orders same day. Additionally, collaborative efforts around multichannel fulfillment have reduced the brandís time-to-market for freestanding retail stores and the continuous flow of fresh product deliveries.

Most importantly, the improvement and expansion of multichannel fulfillment capabilities allows vineyard vines to provide fast shipping to online customers and maintain an efficient supply chain for brick-and-mortarópreserving the companyís commitment to exceptional service and a first-class customer experience.

Reverse Logistics and the Customer Experience
Like most online retailers, vineyard vinesí logistics concerns extend beyond the delivery of orders and inventory to customers and stores. Reverse logistics is an important function that impacts the brandís ability to satisfy customer expectations.

Given the brandís commitment to excellence in shipping and package presentation, itís not surprising that reverse logistics plays a critical role at vineyard vines and is a factor in the companyís ongoing collaboration with Dotcom Distribution.

As a result of the partnership, the returns process at vineyard vines has been designed to address two key elements:

ē Customer Experience: Returns must be promptly verified and processed, with credits issued or exchange orders processed in a manner that aligns with brand expectations. Dotcom Distribution and vineyard vines developed a strategy that parallels its fulfillment capabilities, rapidly scaling returns processing to seasonal and non-seasonal spikes. This allows vineyard vines to avoid increased customer service costs, chargebacks and lost customers.

ē Inventory Categorization and Availability: The backend of rapid returns processing is inventory categorization and availability, i.e. an efficient process for determining when returned products are available for resale. The reverse logistics strategy developed by vineyard vines and Dotcom Distribution quickly restores unused merchandise to available inventory in a way that accommodates seasonal windows for apparel. If the inventory is not immediately resalable, it is quickly refurbished (i.e. poly bagged, re-ticketed or steamed) and returned to inventory to improve incremental sales.

Other supporting services like the inclusion of prepaid return labels in outbound packages and allowing customers to return merchandise purchased in-store to the eCommerce warehouse further contribute to vineyard vinesí multichannel objectives and its ability to deliver a seamless, high quality customer experience.



The Benefits of Collaboration
The long-term collaboration between vineyard vines and Dotcom Distribution has helped the brand achieve significant growth across all channels. During the first year of the relationship, vineyard vines doubled its business. Currently, the brand has 45 freestanding stores and relationships with more than 600 specialty and department stores around the world. Additionally, vineyard vinesí eCommerce sales continue to grow by more than 50 percent each year.

The primary goal at vineyard vines has always been to exceed customer expectations. So across the board, all of the companyís key metrics revolve around moving product to the customer as quickly and accurately as possible. For direct-to-consumer orders, Dotcom Distribution has helped vineyard vines establish a same-day shipping standard for more than 99 percent of all orders received before 2:30 p.m. For wholesale orders, the standard is to ship to retailers by the end of the next day.

Internally, one of the primary beneficiaries of the collaboration has been vineyard vinesí operations department. Prior to the relationship with Dotcom Distribution, the brand managed warehouse and fulfillment in-house. When the brand transitioned to a third-party approach, operations continued to maintain responsibility for warehouse and fulfillment functions.

However, by eliminating the need to focus on granular details of fulfillment, the operations team gained bandwidth to collaborate with design, marketing, sales and other departmentsóresulting in better packaging, streamlined processes and faster time-to-market.

The long-term nature of the collaboration between vineyard vines and Dotcom Distribution has been an important factor in the brandís success. By consistently working together to overcome critical logistics and fulfillment challenges, vineyard vines and Dotcom Distribution have given the brand the freedom and capacity to aggressively pursue new growth opportunities.
RLM
Maria is one of the original founders of Dotcom Distribution, and has played an integral role in developing and defining all aspects of the fulfillment operation, including sales,marketing, operations, finance and IT. Maria keeps her eye on the big picture, while at the same time making sure all of the details are cared for by Dotcomís world class management team.

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