Duck Head Label Profits from e-Business
Duck Head Apparel offers a glimpse into how one AS/400-based manufacturer has succeeded in making e-business payEstablished in 1865,
Duck Head Apparel Company (Winder, Ga.) is one of the original manufacturers of khaki-wear, yet it's quite possible that you may have never heard of the Duck Head label. They don't have a catalog and presently, most of the retailers who offer the Duck Head brand are located in the southeastern U.S. near the company's headquarters.
But thanks to an e-business initiative that has already resulted in significant payback for the company, don't be surprised if the Duck Head label starts showing up where you live. It already has on the company's official Web site, www.duckhead.com. And with an innovative online marketing campaign that offers young entrepreneurs the chance to win thousands of dollars, this clever duck just might find its place among the alligator crowd. If it does, it will be in part because of the extended reach made possible by the Web.
A Webbed ApproachMake no mistake about it. Having webbed feet makes it possible for ducks to swim faster and dive deeper. By accomplishing the Webbed feat of going online, Duck Head has not only increased sales, but has done so without taking the kind of risk that moving to a new location typically requires.
"Duck Head Apparel is an $80 million company," says Henry Greene, the company's CIO. "If we continue at the same growth rate then we'll have an annualized volume on our Web site of nearly $800,000 or $900,000 by the end of our fiscal year. For us, that's the equivalent of one Duck Head shop--whether it's our own retail store or a store in JC Penney. And, I'm probably underestimating where we're going to be."
Implementing an e-business solution was attractive to the company for several reasons: low overhead costs; the opportunity to extend the visibility of the Duck Head brand; and a means of both reaching new customers and adding 24x7 availability to existing customers.
The challenge was to ensure that whatever online ordering system put in place could be integrated tightly with the company's existing AS/400-based order management, manufacturing and distribution systems. The company's decision to pursue an online strategy also carried with it another critical requirement--that orders received electronically would not add any additional overhead to the company's operating expenses.
Migration to Net.CommerceWith an AS/400 playing a central role in the company's back-end operations, the goal was to take advantage of the investment that the company had already made in AS/400 tools, applications and know-how. Enter
IBM's Net.Commerce Web development tools, Net.Data for integrating the online order data with the back-end operations database and an AS/400e model S40 server.
The fact that the company was already running on an AS/400 contributed greatly to the decision to implement Net.Commerce, according to Greene. And the use of Net.Data allowed Greene's IT team to leverage its knowledge of DB2 and OS/400. The dependability of the AS/400e platform earned it the role of Web server.
The objective was simple--to make this investment pay for itself before making any further e-business expenditures. And in less than a year, the company achieved that objective.
"We paid for the initial investment we had made in hardware and software in eight months," explains Greene. "Since then, we've reinvested those e-business profits to make improvements to the site and to expand our e-business operations."
This approach--to fund further e-business development based on the profitability of the site--is one that has served Duck Head well. It's meant that the company hasn't always been at the head of the pack in terms of the most elaborate graphics or fastest processing speeds, but the revenues from its online operations continue to grow steadily and serve as a resource for ongoing development.
Moreover, this strategy has resulted in a healthy ROI throughout the implementation of Duck Head's e-business efforts. "We track the volume and dollar amounts of orders taken and merchandise shipped on a weekly, as well as a monthly basis," explains Greene. "We also track how much money we're spending on the site, and even with our most recent upgrades in hardware and software, we're still running a positive return on investment."
Duck Head Apparel started with just the basics, a corporate Web site and the ability to buy select merchandise online. But it wasn't long before the site was attracting 500 online visitors per week. Today, an AS/400e model 720 powers Duck Head's online store, and the site is attracting an average of 800 visitors per week. "And that's not measuring just hits on a page--that's actually how many people visited the site," says Greene. "We feel that's a much more realistic measure than the number of clicks per page."
Christmas Duck
With the holiday shopping season fast approaching, the company is anxious to make sure it's prepared to handle the predicted increase in online traffic. Like many other online retailers, Duck Head Apparel celebrated its first Christmas online last year. This year the company has geared up to deal with its online holiday shoppers with a site that offers an improved look and feel and faster response times. The new and improved Web site features photographs and lifestyle pictures in place of the flat, technical drawings it used previously, and the AS/400 model 720 promises to keep up with the higher volume of traffic they're anticipating. They've also added the ability to manage interactive e-mails.
While the company doesn't currently offer seamless integration between its online store and its retail operations, this is something that Greene recognizes as a "must-have" and it's on the list of planned improvements. But seamless integration is only part of what's ahead. The company has also begun to look at innovative ways to provide incentives for its online shoppers to visit its retail stores, and vice-versa. "We've got some new and exciting things planned to drive visitors to our Web site, and then after they get to our Web site to try to drive people back into our retail stores," says Greene.
One thing that hasn't changed is that all of the company's back-end processing operations, including manufacturing, distribution, and order management, are still being handled by their AS/400 model 620, something that makes Greene especially happy.
"Even if we were doing a billion dollars a year on this Web site, I'd still be running on an AS/400 because I wouldn't have to abandon any work that I've already done," offers Greene. "I might be running on multiple AS/400s, but there's no question that I'd stick with the AS/400 platform. It's secure, dependable, and overall, one of the most solid platforms available."