Learning Ecom Ropes

It’s a brand with a history. Nearly 135 years old,
Duck Head’s claim to fame way back in the
forties was that it clothed the American soldiers during the first world war in its khakis trousers. Which is why its advertisement slogan reads: we were Khakis before you were born (unless you’re 134 years old). Today, more than five million khaki pants and shorts are sold every year under the Duck Head brand. Besides khakis, it makes knit and woven sports shirts in house. The rest of its merchandise is licensed out to different manufacturers. Duck Head was recently spun off as a separate company by Delta Woodside Industries, which acquired the label a decade ago in 1989.

With over 700 in-store shops and 31 of its own retail outlets, the Duck Head brand competes with other brands sold in retail department stores such as Dockers, Izod and Chaps. It also competes with niche brand clothing stores such as The Gap. But in all this, the conservative Duck Head has remained a Southeastern brand. In 1997, however, the company began to seriously consider the pitfalls of remaining a regional brand in the era of national and global competition. One of the options was to open their own retail outlets to build the brand image and extend the market. However, considering the large network of retailers who could be affected going national with its own chain of retail stores includes the cost involved in such a exercise, the decision was dropped. Instead they chose the web as their direct strategy.

But what would the web actually do for the company and the brand? They began with identifying the opportunities. Says Duck Head’s Henry Greene, Manager of Information Technology, “We saw four business opportunities. The ability to go national and even international; the ability to service customers who preferred to shop after office hours or who wanted to save time looking for what they wanted on the Internet; the ability to get closer to customers and reinforce brand identification and loyalty; to take advantage of a new sales channel. We need to take advantage of every channel if we have to survive.” With of this, they put out their web objectives. But in all of this, they were clear that their web initiatives would play a complementary role to the retailers. The idea was to compete in the Internet space with online stores and drive more traffic to the retail stores.

What’s more, Duck Head’s e-business initiative was seen from the very beginning as strategic to Duck Head’s present and future business. And from the CEO, to the chief financial officer including the chief operating officer all were involved along with the MIS chief. Ownership of the site was clearly stated-execution to the management information systems group, product selection for the online store was given to a retail planner attached to the chief operating officer’s office, and content was handed over to customer service which ensured that every email of the web site came to the customer service group.

They began with hosting the company web site-more as an advertisement than for ecommerce. The investment was a nominal $20,000 (Rs8.6 lakh). The company’s ecommerce initiatives began only after a year of running the advertised web site. With just six weeks to make the transition, Duck Head’s MIS team started out with first bringing the web site within the company’s fold. They then engaged IBM Global services to implement and customize their ecommerce solution. Explains Greene, “We have an AS/400 as our platform and it has been a very wise decision for us. Also, IBM has been very valuable to us in bringing up the site in terms of software, hardware and integration skills. More importantly, AS/400 met the management’s five-point agenda: leverage the existing investment and skill-set on AS/400, high level of security, high availability, ability to scale in and low cost of ownership.”The goal for the online store was: easy and quick to get online, buy and get out. It was easier said than done, primarily for two very compelling problems: merchandising and fulfillment. Just how do you sell apparel via screen? There are limitations to photo images. For one, fine patterns are difficult to display. Worse, customers cannot touch the garment. These obvious technological challenges were resolved by Duck Head by preparing itself for high returns since customers cannot try anything on. The fulfillment posed a challenge of another kind-it meant restructuring the warehouses to be able to ship in single pieces the same day as opposed to shipping in bulk.

Only after trial tests proved that they had the merchandising and fulfillment aspects in order, the company did invite customers to the site. The company refrained from advertising the site as an online store for nearly two months, double checking everything to ensure that everything worked and customers didn’t get disappointed. Duck Head online store went live in August 1998, starting with about 75 products in the online store, which were also used to promote best sellers in the retail stores. This was followed by a publicity blitz-from web URLs on all garment tags, postcard size advertisements in shopping bags, banners on Yahoo! to banners in places such as golf course where the brand would be recognized, to popularize the web site. In addition, $10 million were set aside for the ad spend to promote the brand.

All of the above was attempted to ensure that the investment resulted in a fair return. With a total investment less than $50,000 (Rs21.5 lakh) in building the web infrastructure, Duck Head is confident that its investment will pay back in a year if not less. What’s more, it was only after initial sales indicated a positive return on investment did they move on to other areas. Now they are actively working on establishing an electronic business-to-business relationship with its retailers. The goal: to allow quicker, more frequent replacement of items in high demand. This way, Duck Head would have the flexibility to capitalize on the opportunity to replenish popular items which they would otherwise miss out on if they were to buy a particular item, say shorts, at the beginning of the season.

On the anvil are plans to enable small speciality stores, which make up 20% of Duck Head’s current business, to buy directly online rather than through wholesalers. The long-term goals of Duck Head’s business-to-business initiatives: make the process better, reduce costs, and increase flexibility of the order and replenishment cycle; and increase the understanding of what people buy in time to produce it so that it impacts the market. With meticulous planning and clearly defined and measurable objectives, Duck Head has proved how the web can be made into a truly strategic tool.

LATHA KUTTAPPAN-CHANDRADEEP
in North Carolina.

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