Pear's Gourmet: Helping a Local Favorite Go Global
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How does a local business reach consumers worldwide? For specialty food retailer Pear's Gourmet, e-commerce was the clear answer. But the company knew it needed much more than a catalog and a Web site. Find out how they did it, and saw online sales surge from zero to $550,000 in the initial quarter.
How does a local business reach consumers worldwide? For specialty food retailer Pear's Gourmet, e-commerce was the clear answer. But the company knew it needed much more than a catalog and a Web site. To keep its customers happy and its business running efficiently, it needed fully integrated back-end systems that could handle the new volume of orders quickly and easily. IBM was able to help Pear's implement the right solution-one that achieved ROI in a year, and allowed them to seize a unique opportunity to sell their products directly to consumers globally.
From Traveling Salesmen to Online Commerce
Founded in 1915, Pear's has always been one of Omaha, Nebraska's best-kept secrets. The company sold its premium coffees and roasted nuts through a team of sales representatives calling on local mom-and-pop grocers. Orders would come in over the phone or in the mail, and employees would ship them out, package by package. From order-taking to fulfillment, the company struggled with labor-intensive manual processes.
But as chain stores forced smaller companies out of business, Pear's distribution channels started to disappear. As sales dropped, it appeared that a local institution was about to disappear.
Fortunately, a new leadership team, including current owner James Simon, saw the potential in the brand and stepped in to revive it. They set out to transform Pear's into a high-end retailer with global appeal. In Simon's words, "There was no direct-to-consumer business at all. And so we created one literally out of thin air, thinking that we had a very good line of gift boxes and tins and other gourmet consumables that would lend themselves very well to a direct-to-consumer business."
The Internet was the obvious answer. It had the global reach and the speed required to serve this larger audience. But with a staff of only 50, the company needed powerful, automated back-end systems to handle purchasing, tracking and fulfillment-so that it could scale to new levels of demand without bloating its payroll.
The site also had to uphold the company's standards for customer service. "Ultimately," says Simon, "we wanted a high level of interactivity. We wanted to be able to let customers track their orders and get order confirmations. We wanted to let customers customize their gifts, and all those things."
Building End-to-End Efficiency
To get the power they needed-at a price they could afford-Pear's turned to IBM, and IBM Premier Business Partner eOneGroup. Their eOneCommerce solution allowed Pear's to create a dynamic online store, capable of handling tens of thousands of transactions during spikes in sales. It uses IBM e-server xSeries 360 Express servers and IBM WebSphere Application-Express server software. And it's based around Linux and open standards, to allow for easy scalability and integration.
And back-end integration is one of the key benefits of the e-commerce solution. When an order comes in, the system automatically checks inventory, authorizes the credit-card transaction, notifies accounting and order fulfillment and prints a shipping label. This replaces several manual processes-eliminating errors, speeding orders and boosting efficiency. As Simon puts it, "You're talking about half a dozen steps just to fulfill a single order. And so if you can only imagine, if you had 10,000 orders...it would have been an impossibility. So we eliminated dozens of steps into a single process, which obviously saved us a lot of money."
Aside from the productivity gains, the end-to-end integration and automation also gives the company the visibility it needs to make smarter business decisions. In Simon's words, "another thing that's been absolutely huge for us is the ability for it to tie into our accounting system. So the fact that everything that's ordered on the Web automatically feeds into inventory and our accounting system means...we can see everything on a real-time basis.
"It used to be...well, you've got to wait until the end of the week and perhaps the end of the month to see where your inventory levels are, to see where actual sales are. Credit versus debit. And now I can tell you exactly as of right now where we are."
This kind of visibility is more than just an accounting trick. It gives Simon the insights he needs to continually optimize his operations. "The key to any successful business," he says, "is your ability to harness the data and understand what your customer is doing and understand how your customer wants to engage in business with you. And the fact that I can understand by the second what our customers are reacting to, gives me the flexibility to improve what I'm doing every day and understand what my customers want. How do you measure the value of that? That's your whole business right there."
Putting It to the Test
The system handled $550,000 in sales in its first quarter. But the real power of a business solution isn't just measured in dollars and cents, but in the opportunities it lets a company seize.
Just weeks after launching the site, Pear's was approached by a nationally syndicated television talk show. The host wanted to feature the company's products as audience gifts on the program's holiday episode. It turned out to be a publicity bonanza-and a huge challenge to the new e-commerce and back-end systems.
Tens of thousands of orders poured into the online store. The TV show's site went down. But, as Simon recalls, "Our Web site was a champ. It hung in there terrifically. It was obviously a huge first test. It was great."
But the e-commerce system did more than handle the increased demand-it's what made all the new sales possible in the first place. In Simon's words, "if we didn't have this application in place, we would have had to have said, ‘Thanks but no thanks. Can't do it.'"
Working with IBM
Pear's is still a company of about 50 employees, with approximately $15 million in sales. Is that a difficult match for a company like IBM? Simon understands why mid-sized businesses might be wary of dealing with a big supplier. He says, "I think most small to medium-sized businesses see IBM and think that it's probably too expensive or they're not interested in working with companies my size. You know, ‘they're so big they can't possibly service or support what I'm doing.' And I can't emphasize enough that it's exactly the opposite of what we found. We found a very comfortable price that we could work within for a small company that's on a very tight budget. And support it as well."
On the other hand, IBM's size has benefits all its own. In his words, "We found a level of support and service we can grow into. There's plenty of flexibility...You know, we're not going to grow out of IBM next year." For a company that's gone from the horse-and-buggy era to e-commerce and national TV exposure, finding room to grow might be the one challenge that Pear's will be facing for a long time to come.
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