When Shawn McGhee bought Memphis-based pet food retailer Hollywood Feed, the company had three store locations. Since then, he’s added 23 new locations across several states, including Tennessee, Mississippi, Alabama, Arkansas, and now, Texas. Additionally, there are plans to open an estimated 12 new stores in Texas this year alone. To keep pace with this growth and to maintain high levels of efficiency, McGhee looked for a voice warehouse solution that would keep his warehouse operating smoothly. It wasn’t until he found a cloud-based solution that he was able to bring voice to Hollywood Feed.
Voice in the cloud has been a huge driver of success for the small pet-food retailer. In the words of McGhee, “It allows small businesses to take away one of the competitive advantages that all the big guys have.” Here are a few of the ways the cloud is helping small retailers like McGhee take on larger competitors.
On-premise warehouse solutions involve a costly implementation that can run well into the six figures. That was McGhee’s experience as he shopped around for a voice solution for Hollywood Feed. “Few suppliers wanted to talk to us unless we were spending $250,000 or more,” he says. The reception from Voxware was quite different. A successful partnership between the retailer and the Hamilton, N.J.-based voice-recognition systems provider followed.
Even though Hollywood Feed is growing 40 percent to 50 percent year over year, it was exceedingly difficult to make the business case for a capital investment of that magnitude, even with a sound case for the technology. However, because the cloud lends itself to a subscription-pricing model, McGhee didn’t have to make the same kind of upfront investment required of on-premise solutions.
Additionally, the cloud’s subscription model makes it easy for retailers to move away from a CAPEX financial structure and toward an OPEX structure for warehouse management. By fixing operating expenses at a lower level over the course of a year, warehouse managers are better able to plan their budgets over the long term and to accommodate occasional market fluctuations.
Most retailers pride themselves on core competencies like quality merchandise or outstanding customer service. While implementing seamless technology to support the overall customer experience is hugely important, the IT department is rarely the largest department at young retailers.
That’s what the situation looked like for Hollywood Feed. In fact, the small company didn’t even have an IT department when the decision was made to implement voice. “We just had one individual who was familiar with our ERP,” remembers McGhee. Implementing a cloud-based system proved easier than they could have imagined. The whole integration took only 11 days, and was the easiest implementation McGhee had ever overseen—even easier than some basic Windows implementations.
Not only do retailers enjoy a low-tech burden during installation, they also enjoy a lower ongoing impact on IT resources. Voice in the cloud comes pre-loaded with all of the tech infrastructure that retailers need—so they don’t need to build out or purchase their own. Cloud service providers handle all of the software’s maintenance—so retailers like McGhee don’t need to dedicate or hire IT staff of their own. This fact is huge for small businesses. In McGhee’s words, “any dollar that I have to spend on infrastructure detracts from my ability to grow my retail operation.”
Flexible and Configurable
The worst part about many intensive implementations is that by the time the technology is set up, business needs have changed or shifted just enough to make the setup outdated. Cloud-based voice software lifts that burden for many retailers. It’s easily customizable, which makes it easy for retailers to incorporate specialized pick sequences. Additionally, retailers who process food or other variable weight items that are sold by the pound can build systems that make shipping easy.
Moreover, the configurability of cloud-based voice solutions is designed for retailers who may lack IT departments. No coding is necessary to configure the software to meet retailers’ needs. Because the system is so easy to configure, retailers can realize an especially fast time to value. With a cloud installation, there’s little disruption to other warehouse operations.
The Cloud Grows With You
One of the biggest challenges for retailers like Hollywood Feed is planning for future growth. When McGhee bought Hollywood Feed in 2006, the company had three physical locations. Now, they have 26 and are growing. McGhee looks forward to continued growth, but the changing face of retail means that planning is never completely certain.
Most on-premise enterprise solutions expect that retailers have a crystal ball, but cloud providers think differently. With the cloud, it’s much easier for both the provider and the retailer to add more service as the business grows. McGhee puts it this way, “It’s much easier and much faster for me to be able to add resources for the next five stores versus having to buy blocks in an enterprise product where I’m buying for the future.”
As the retailer grows, so, too, does the cloud provider. Updating software and hardware is an expensive and time-consuming process with on-premise solutions, but it’s all included with the cloud. Software updates are downloaded automatically over a broadband connection and hardware updates are pre-scheduled and occur at no cost to the retailer.
Big Benefits for Small Business
Thanks to the cloud, McGhee and Hollywood Feed were able to reach an ROI in less than 60 days of using voice. The company saw productivity increase by 33 percent over their old paper-based picking system. Shortly after implementing voice, McGhee increased his warehouse square footage from 36,000 square feet to 77,000 square feet to accommodate fast growth and increased order volume. Voice technology optimized distribution during this growth so well that McGhee didn’t need to add any new employees to his workforce. When Hollywood Feed’s growth continued at such a fast pace that McGhee eventually did need to add new staff to his warehouse, bringing them up to speed was easy. Adding new users to the cloud is a fast and painless process, and new hires were ready to go much faster than with competing technologies. And without the cloud, none of this would have been possible.