Winter, Spring, Summer, Fall

WinterSilks and Venus Swimwear Have Created a Working Solution to the Challenge of Running a Seasonal Business

By Alicia Orr Suman

Since its inception in 1985, Venus Swimwear has had a long history of growth, with annual sales increases averaging 15 percent to 25 percent. Today, the Jacksonville, FL-based company that was started by a college student and weightlifting enthusiast is the world's largest marketer of junior swimwear.

But as Venus grew, founder Daryle Scott realized he had one problem. "We had this business that was doing really well, but it's basically a February-through-June operation and is dead in the winter."

Venus Swimwear has always handled its own order-taking and fulfillment, and the seasonality was putting a dent in the company's back-end productivity. Scott's solution: Acquire another mail-order business with a seasonality cycle that would complement its own.

So in 1996, Scott began searching for acquisition candidates. It took a while to find the right fit. In 1999, Venus acquired the Wisconsin-based apparel catalog WinterSilks, whose core products are silk-knit long underwear and other cold-weather apparel. The purchase brought Venus Swimwear's business into the fall/winter market. Says Scott, "WinterSilks was a perfect fit—an almost completely opposite peak season."

To take advantage of joint fulfillment and order-taking efficiencies, WinterSilks' operations soon were moved to Jacksonville, and both divisions were run out of one warehouse. A core group of WinterSilks' staffers, including catalog planning, merchandising and circulation planning, remain in Madison, WI. "It's a very good group up there. We wanted to keep them, and they wanted to stay near their roots," explains Scott, who is now president and CEO of Venus Swimwear and managing partner of WinterSilks. Chris Vig is WinterSilks' president and CEO.

Today, the two divisions jointly bring in about $80 million in annual sales, with Venus being the larger income producer. Scott is pleased with how the two operations have come together, affording each the opportunity to grow in its own market while maintaining efficiencies on the back end.

The Fulfillment Fit

Both catalogs' orders are fulfilled from the 165,000-square-foot distribution center the company owns in Jacksonville. The warehouse operates 24/7, except Christmas.

While the company's primary business is mail-order, the warehouse also handles some retail and wholesale distribution. (WinterSilks has no wholesale business, while Venus does about 6 percent of its sales wholesale.)

All product fulfillment is handled from that one location. Scott says it wasn't difficult to set up the two businesses in one warehouse, because both Venus and WinterSilks products are apparel, and therefore shipments mostly go out in flat packages.

"Packaging and shipping are similar for the two divisions, so it wasn't a drastic change. It's not like we started shipping frozen foods or large car parts. Apparel is apparel is apparel," says Scott.

Other than needing more space and learning to accommodate large shipments arriving at one time from suppliers, he says it was a pretty seamless transition. Scott suggests, "Anyone merging operations has a distinct advantage if the product categories from the two companies are similar."

What did change with the addition of another catalog to fulfill was the level of detail the software system that runs the warehouse operation had to manage. "A very sophisticated warehouse management system (WMS) now handles the movement of product around the warehouse," says Scott. The WMS Venus/WinterSilks uses is a custom package written by The Phoenix Systems Group. (Phoenix is a company comprised of the head programmers from the former Nashbar.)

Since acquiring WinterSilks, the company has upgraded to what Scott describes as a new module of the same WMS by Phoenix for the cataloger's Quick Order Processor (QOP) software. Put into place in late 1999, the new WMS is an upgrade to QOP, which is the original system that dates back to 1986 and has been evolving ever since, says Scott. The cost to fulfill an order dropped 40 percent since the new system was implemented.

In terms of distribution center logistics, the company had to make a few changes to accommodate two separate "seasons" of merchandise. As Scott explains, there's an imaginary line down the warehouse floor that separates the two businesses. Based on the season, the line moves in one direction or the other to give either Venus or WinterSilks a bigger share of warehouse space.

The company has what Scott terms a "dynamic picking floor." One shelf may have swimwear tops today and swimwear bottoms next week.

Here's how the order-processing flow works: Goods (SKUs) are kept on the picking floor (floor 1), and reserve stock is kept on floor 2. Using state-of-the-art, handheld radio frequency scanners, warehouse staffers scan the box of goods and then scan the location and the barcodes on the boxes. Says Scott, "As a box of goods is moved to a shelf, we scan the barcode on the box and scan the shelf where it's placed. The computer then knows it's there, and it directs the pickers to that location for picking." Orders are released for picking by the computer in groups designed to be picked together.

Orders are pulled from the picking floor in batches of 20, taken to a packing station, sent by conveyor to the weighing station and then put onto an outbound truck. (The company mostly ships by UPS or U.S. Postal Service.) Orders received by 2 p.m. EST are shipped the same day. Picking bins are restocked from the upstairs reserve bins at night.

Using this system the company achieves an enviable 99.5-percent order fill rate.

Handling Orders Year-round

Venus always has operated its own call center. Its Jacksonville 100-seat center now is staffed year-round to handle orders and customer service for both catalogs.

The number of telephone representatives still fluctuates somewhat, but not nearly as much as it used to, says Scott. For instance, he says, "During the month of August, we have a lull. Conversely, there's an overlap in volume in January as swimwear gets an early start from resort-season purchases."

Other surges occur around key holidays and events, including Christmas, spring break and Fourth of July, and sometimes significant weather changes such as sudden cold snaps.

To maximize call-center productivity, all operators take orders for both catalog divisions. As calls come in, telephones display for the operator from which division the customer is calling. Operators then answer calls appropriately. This requires additional training on products, sizes, fit, etc., so the operators can support both divisions.

Web customer service is handled by a separate employee group. The Web sites have live chat online that specially trained Web customer service representatives handle, in addition to answering e-mail inquiries.

Interestingly, the same sort of inquiries come via the Internet as on the phone. Says Scott, "People want to know, 'Should I get a small- or a medium-sized bathing suit bottom?' The rep can help them with exact size specifications."

Reps are kept up-to-date on any product changes. A new Venus catalog launches this fall featuring just sportswear, including jeans and "fun" apparel, says Scott. "We're now training all of the operators to handle these new product orders and questions."

The Internet's Promise

Scott has a firm belief that the Internet is a great sales medium but is not representative of a separate business opportunity. "The Internet is a wonderful tool. But it's nothing more than that right now. It's another way [for customers] to order."

Web ordering is fully integrated with other back-end operations at the company. "It's really no different from a phone order on the back end," says Scott, noting that once a Web order is placed no manual intervention is needed.

For WinterSilks and Venus, online sales represent a small percentage of new business, but the vast majority of those Web sales are a direct result of the print catalogs.

No special incentives are given to push business to the Web sites. In fact he think it's plain nonsense for catalogers to offer free shipping or other incentives to spur Web orders. He voices his opinion strongly, noting, "There's no way in the world it's 10 bucks cheaper to ship a Web order." At his company, he says, "A Web order saves us about a buck an order, including the 3 to 4 cents a minute we spend for the phone time, the phone rep's salary and the call-center overhead. I see no rationale behind that [free shipping on Web orders]."

He continues, "We want a customer to pay what's fair, whichever way they order. It's their choice, for their convenience. We'll take the order whether it's on the phone, on the Web or in the mail. We're not artificially trying to sway the customer. Sure, we put the Web address in every single place you see the phone number. But it's to give the customer a choice."

The company also is exploring other ways to use the Internet. Customers placing phone orders are asked for their e-mail addresses. WinterSilks and Venus are experimenting with various forms of e-mail communications to customers. Says Scott, "We may send them ads via e-mail to alert them of new merchandise, such as the new swimsuit we had for Fourth of July. Or if a cold front is coming through, we may send a special WinterSilks offer, or may send holiday notices." But he's quick to note, "Any special that we offer in one medium is honored in all of the others."

Marketing to Two Unique Audiences

While the back-end operations have been completely meshed together, marketing functions for Venus Swimwear and WinterSilks remain totally separate.

This is because of the vastly different audiences each catalog serves. Scott describes the Venus customer as in her upper 20s, fashion-conscious and reasonably fit. The customer base follows logical geographic concentrations—along the coasts, in the South and Great Lakes region.

WinterSilks has a totally different audience. An equal number of male and female customers are on its file, and its buyers are more concentrated in the colder regions such as the Northeast and Chicago. Their average age is much older—in their early 50s.

Catalog mailings and all other prospecting for both divisions are handled independently. Effective targeting of rental lists is the key to the company's catalog marketing efforts. According to Scott, list data and selectivity make it possible for a wide variety of rental lists to work for the two catalogs. "We attempt through extensive history to target the right names on the lists we choose to rent," he says.

To attract catalog requests, the company runs ads for Venus Swimwear in Cosmo, Glamour and Shape magazines, and for WinterSilks in The New Yorker and the New York Times Sunday Magazine.

Customer relationship management (CRM) is something Scott says the company has always been involved in as part of its efforts to listen to customers and give them what they want. "We already target e-mail ads based on prior purchases, and this year, we'll mail our new Fall book based on prior order history," he notes. "All of this sounds simple, but shockingly few companies actually follow through [with CRM initiatives]."

Analyzing housefile demographics also was instrumental in the decision to launch an offshoot catalog in 2000. Venus Edge, aimed at teenaged customers, sells products similar to the Venus Swimwear catalog but with some differences in colors and patterns as well as the addition of youth-oriented accessories.

Other new marketing initiatives involve product-line extensions of existing catalogs. WinterSilks added sportswear and is testing new winter product lines such as leather jackets.

Plans for the future may include one day launching additional catalog brands, such as a swimwear catalog targeted to older women. But Scott asserts that it wouldn't be under the same name as Venus. "We could totally destroy the label by trying to be all things to all people."

With the company now busy selling swimsuits to sweaters all seasons of the year, Scott expects to continue growing 15 percent to 20 percent a year per division. "We don't see a top in sight for either business.