Woot
Web Retailer Handles 1,000 Percent Order Volume Spikes with Powerful ERP Solution
In the crowded world of e-commerce, Woot provides a highly differentiated online-shopping experience by offering rock-bottom prices on a single item each day. Steadily rising traffic to its main Web sites led executives to evaluate the scalability of its Sage Pro enterprise resource planning system. Because the Sage system lacked the ability to individually process large numbers of transactions, the company batched thousands of customer purchases as a single sales order, hindering efficient fulfilment and delivery. Woot implemented Microsoft Dynamics NAV. The company uses the solution to automate business processes and access powerful analysis and reporting tools. Now, Woot benefits from faster order processing, increased visibility into transaction data, and a system that supports rapid growth.
Situation
Especially in today’s economy, traditional business wisdom suggests that if you refer to your customers as “suckers,” announce your intent to “make every effort to ensure that they feel disappointed and betrayed,” and constantly run out of inventory, good things will not happen. But, good things are happening at Woot, where this contrarian approach not only has customers coming back for more, it actually has them competing for a chance to purchase a mystery bag that might contain a 60-inch plasma TV—or a can of tuna.
Woot has combined elements of social networking, online auctions, snake-oil hucksterism, and finely tuned viral marketing to create a sensation in online retailing. The company, which maintains several offbeat and highly successful e-commerce destinations, including woot.com, wine.woot.com, shirt.woot.com, and sellout.woot.com, has found a large and growing audience for its stripped-down, tell-it-like-it-is approach.
Instead of bombarding prospective customers with row after row of product images across dozens of categories, Woot bases its sites on the premise of “one day, one deal.” Each day, the company’s flagship site, woot.com, features consumer electronics gadgets on sale for up to 50 percent of the retail price. And, rather than predictably over-the-top sales copy, Woot sites make a point to communicate the good, bad, and ugly about each featured product.
Although jaw-dropping discounts and stark product descriptions have certainly generated buzz, the speed and uncertainty of the buying process is what continues to drive interest and traffic to Woot sites. For example, to signal the start of what is known as a “Woot-Off,” orange lights flash all around the main page. Typically, Woot reveals a new product every day at midnight. But in the case of a Woot-Off, which occurs roughly once a month, the new item becomes available immediately after the sellout of the previous deal. During a Woot-Off, the quantity in inventory of a featured item may be limited to one. But because shoppers are not aware of the remaining quantity, each shopper has to think and act fast to earn the bragging rights associated with being the first “sucker.” Another trademark component of Woot’s impulse-oriented model is the three-inch-wide, “I want one!” button located next to the featured item. As the item on sale nears zero availability—commencing “urgent mode”—this button bounces around the page to alert shoppers to take action or miss what could be the deal of a lifetime.
During each “urgent mode” and Woot-Off scenario, the transaction volume on the company’s sites can spike from around 7,000 to more than 70,000 over the course of a two-day period. For its Sage Pro system to handle this kind of volume, the company resorted to consolidating the entire quantity of products sold in a given period into a single sales order. “The need to batch orders created all sorts of challenges for us,” says Derek Chapin, CFO for Woot. “It prevented us from automating our order processing and really limited our ability to efficiently drill down into account information.”
For years, the company engaged in continuous and costly development projects to work around the limitations of its former system. But as Woot became more popular, traffic to the company’s sites dramatically increased, especially during Woot-Offs. So, too, did the number of orders. “We eventually reached a point where the old system simply couldn’t scale to pace our growth rate,” says Chapin. “The Woot concept had clearly caught fire, and we recognized the opportunity to take our operations to the next level.”
The company immediately began searching for a new enterprise resource planning (ERP) system to replace its Sage Pro system. Says Chapin, “End-to-end functionality and ease of use were important considerations, but the main driver was the need for a system that could efficiently handle massive spikes in transaction volume.”
Solution
After a thorough market search, Woot opted to implement Microsoft Dynamics® NAV. Working with Microsoft® Gold Certified Partner SimCrest, Woot implemented the Financial Management and Supply Chain Management modules, with the goal of deploying additional functionality in a series of subsequent phases.
Rigorous Evaluation Process
Because the company needed assurance that the new solution provided maximum throughput capacity, Woot required substantial proof-of-concept and testing as part of its evaluation process. This convinced the company that the solution could absolutely meet its demanding requirements. “As we kept growing, we realized that, in order to deliver the kind of shopping experience our customers expect, we needed an ERP system that was not only powerful, but extremely flexible,” Chapin says. “That’s exactly why we chose Microsoft Dynamics NAV.”
Streamlined Order Processing
The native sales order–processing functionality in Microsoft Dynamics NAV lets Woot streamline the flow of information from the moment the system generates a sales order through the completion of the invoicing and shipping processes. Without the need to parse batched orders to access individual customer account information, Woot saves considerable time on invoicing, billing, and customer service tasks.
In addition, Woot takes advantage of the Job Queue feature in Microsoft Dynamics NAV to apply rule-driven schedules to the completion of order-processing tasks. For example, the company can use this tool to calibrate the system based on periods of peak order activity.
“The Job Queue feature operates as a kind of background task manager,” explains the Lead Developer on the Woot project. “By making it possible to define and control how and when certain jobs are completed, it optimizes the system’s capacity so that Woot is able to eliminate throughput bottlenecks. This is especially crucial during Woot-Offs and other events that generate huge surges in the transaction volume.”
Built-In Analysis and Reporting
Woot uses Business Analytics in Microsoft Dynamics NAV to track and drill down into key performance indicators, such as revenue by segment and inventory turns. Offering an easy-to-use interface and familiar data formats, these tools simplify the process of analyzing order information, financial data, and sales trends.
By eliminating the need for IT staff to develop custom scripts and complex SQL queries to extract information for reporting purposes, Woot has freed up its managers to tailor reporting to fit the company’s immediate priorities. “We use standard reporting functions in the system to get a real-time read on the demand for a given product or the success of a Woot-Off,” says Chapin. “And, we also use the reporting tools to monitor things like inventory aging and valuation.” To expand its analysis and reporting capabilities, Woot plans to deploy Microsoft SQL Server Reporting Services for Microsoft Dynamics NAV.
Benefits
With a highly scalable solution, Woot is now capable of processing a sizable number of transactions with ease, even as order volumes grow. By enabling fully automated processing of individual sales orders, the solution has helped Woot practically eliminate manual data entry and avoid bottlenecks to achieve faster order fulfillment. The company also takes advantage of the built-in analysis and reporting tools to improve supply-chain management and hone its strategic planning efforts—the key to driving successful Woot-Offs and avoiding getting flamed in Woot-sponsored blogs and forums.
- Saves 40 Hours a Month
Now that Woot has fully automated its sales order processing, the company no longer relies on staff members to manually create sales order and invoice documents. Because orders are tracked individually in the system, and all the necessary documentation is automatically generated, the company saves 40 hours each month. Now, employees devote the time that they save each day to assisting with business analysis tasks. “With Microsoft Dynamics NAV, our order processing is much more systematic and efficient,” says Chapin. “And, we don’t have to spend valuable time worrying about an invoice that was never applied or a payment that was never posted because it’s all tracked and completely visible in our system.”
- Improves Strategic Planning
For Woot, the ability to combine real-time visibility into its operations with powerful analysis and reporting capabilities enables better-informed decision making around which products to sell and when to hold Woot-Offs to maximize sales. The company’s ability to quickly view consolidated information about every aspect of its operations multiplies the efficiencies gained from not having to batch orders. “Because all of our critical business information is instantly accessible in Microsoft Dynamics NAV, we can make decisions based on a single version of the truth,” says Chapin. “With the built-in analysis capabilities, we have a much clearer picture of what our customers want to buy and how we can best plan for spikes in demand.” This kind of insight is critical in helping the company ensure an authentic Woot shopping experience while boosting revenue potential from increased sales volume.
- Supports Aggressive Growth Model
Relying on the proven scalability and flexibility of Microsoft Dynamics NAV, Woot executives are confidently pursuing aggressive growth goals. By taking advantage of the Job Queue feature to synchronize task management with fluctuations in transaction volume, the company avoids the risks associated with bottlenecks during periods of peak site activity. Shortly after deploying the solution, Woot held one of its famous Woot-Offs, netting 70,000 customer orders over a two-day period. “It was amazing to be able pull all of those orders down and run them through the system as individual orders without a single problem,” says Chapin. “And, we’re completely confident that we can achieve the same results when we hit our target of 100,000 orders.”