GSI Commerce Hits a Grand Slam for Dick's Sporting Goods

Partnership Offers Comprehensive E-Commerce Solution

The Challenge
Super Bowl Sunday, 1999. To Dick's Sporting Goods the day wasn't simply the celebration of the biggest event on the annual sports calendar, it was "e-day" - the day on which Dick's, one of the largest sporting goods retailers in the country, would make its entrance into the world of online retailing. For two years, Dick's ran its own Web site and learned a great deal about the new and evolving retail channel. After those two years, Dick's decided that its best strategy was to divide and conquer. The company would concentrate its efforts on growing its store base and would find a partner with e-commerce expertise to grow and run its e-commerce business. Dick's turned to GSI Commerce to be that expert partner.

Dick's Sporting Goods is a Pittsburgh-based, $2.1 billion full-line sporting goods retailer, which operates 234 stores in 33 states. The retailer offers customers a broad assortment of brand name sporting goods equipment, apparel and footwear for sports, fitness and outdoor enthusiasts.

Within the year of the initial launch of its e-commerce site, Dick's determined that while its online business accounted for a small percentage of its overall sales, the operation of the Web store required a disproportionate amount of the chain's resources.

"At the sales volume our e-commerce was running at we could not generate an acceptable ROI," says Jeff Hennion, senior vice president of marketing for Dick's. "Even though we had an expectation of our e-commerce business growing, we could not project an adequate rate of return for the operation."


From a customer and brand perspective, Dick's recognized that an online presence was important and even necessary to the overall growth of the business. During the late 1990s, many retailers invested heavily in e-commerce sites, pouring millions of dollars into site development and hiring large staffs to run their e-commerce businesses. This was often done under the assumption that a Web site would not only provide a competitive advantage, but also open the door to hordes of online shoppers. Dick's understood that online shopping had gained a foothold and would grow. Today, online sales of sporting goods are expected to grow at a compounded annual growth rate of 15.4 percent through 2010, according to Forrester Research. Although e-commerce is a growing opportunity, when it is compared to a retailer's overall core business, it generates a relatively small portion of sales. And it is because of that reason that many retailers can't justify making a large investment in e-commerce.

In its first e-commerce venture, Dick's handled some of the Web functions in-house and outsourced various site operations to third parties, including site design and the fulfillment of customer orders.

Dick's organization had developed a solid core competency of successfully operating a retail, brick-and-mortar, sporting goods business. What the retailer quickly learned was an e-commerce operation required a different structure and operating model. In late 2000, Dick's began to look for alternative ways to run its Web business - one that would not require a large commitment of capital and resources, but would provide a high-quality online shopping experience for its customers.


The GSI Commerce Solution

"Essentially, we chose GSI Commerce because we thought the GSI Commerce solution made the best economic sense, and it offered us what we were looking for in terms of integrating our company's brand with a Web presence for our customers," says Hennion.


As an alternative to operating its Web business in-house, GSI Commerce proposed a solution that would run all aspects of Dick's e-commerce business. The one-stop solution provided Dick's with a comprehensive e-commerce site without Dick's having to invest significant time, funds or human resources in the business' operations.

"GSI Commerce also accommodated us with a very fast implementation," says Hennion.


In April 2001, the Dick's Sporting Goods e-commerce site was launched on the GSI Commerce platform, which included integration with the GSI Commerce fulfillment center and customer care center infrastructure. As part of the solution, GSI Commerce provided Dick's with site design and development, e-commerce technology, managed hosting, order fulfillment, customer service, order management, online merchandising, e-mail marketing and content development.

While GSI Commerce handles all aspects of the Dick's Sporting Goods e-commerce site, GSI Commerce works closely with Dick's to coordinate online and offline marketing. For example, GSI Commerce works to integrate the products offered on the Web store with those offered in Dick's weekly newspaper circular.

GSI Commerce also coordinates its marketing calendar with Dick's to ensure that customers receive a consistent message regardless of the channel they shop. For example, Dick's runs an annual "Golf-a-Thon" promotion in its stores. Simultaneously, the Web store features golf products and sends marketing e-mails to customers promoting golf-related merchandise. Customers can also order gift cards through the Web, which can be used online or in-store.

Shoppers on Dick's Web store now find a richer shopping experience. For example, a fan can customize an authentic or a replica jersey from their favorite professional team with their name and number preference placed on the shirt. Baseball fans can have gloves personalized with their name and number, select the type of glove webbing and back style as well as the color of the leather shell and lacing. Louisville Slugger bats can be personalized with a fan's name - branded in the identical fashion reserved solely for major leaguers. Golf balls as well as a variety of sports apparel items also can be personalized through the online store.


The Results
Dick's e-commerce business has grown significantly since it launched on the GSI Commerce platform in 2001; but true to forecast, the online business still remains a relatively small percent of Dick's overall business.

"Sales have grown with our online operation as our brick and mortar presence has grown over time," says Hennion noting that the retailer had 100 stores at the time it began partnering with GSI Commerce and has grow to 234 stores today. "The main benefit we derive from this partnership is that we can focus our resources on the portion of our business that is generating the most revenue. At the same time, we can partner with GSI Commerce to run our e-commerce business. They've proven they can be successful for us on the Web."



What's Next?
Future plans for Dick's e-commerce business will likely include a number of multichannel shopping initiatives.

"We're exploring now with GSI Commerce a number of new, multichannel opportunities that will contribute to the continued growth of the business," says Hennion.





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