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Dick’s Sporting Goods plans to double e-commerce revenue by 2017

April 15, 2015 02:35 PM
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Dick’s Sporting Goods hopes to bring all aspects of its e-commerce operations in-house as it moves toward its goal of doubling e-commerce revenues by fiscal 2017.

The company is targeting e-commerce revenues of up to $1.2 billion, CEO Ed Stack told analysts on the sporting goods retailer’s most recent analyst meeting call. Dick’s, No. 70 in the just-released Internet Retailer 2015 Top 500 Guide, reports online sales growth of 27.9% year over year in fiscal 2014, to $628 million from $491 million in 2013. E-commerce represented 23% of overall net sales growth of $601.3 million in 2014, the company said, while accounting for 9.2% of overall sales.

“The power of our omnichannel model has proven e-commerce sales in a new market typically double when we open up a new store,” chief financial officer Andre Hawaux says.

Right now, eBay Inc. handles several aspects of Dick’s e-commerce business, including technology, fulfillment, customer service, web store maintenance and payment processing. By 2017, all of that will be brought in-house, something Stack says will help the retailer continue its rapid online growth.

“We will have the controls to differentiate our online experiences,” he says. “We will have easier access to our data, and we will be able to use it to build more engaging cross-channel customer experiences. We will have control over the development cycles. We’ll also be able to keep our ideas and processes proprietary and further build out our competitive advantage.”

Dick’s offers four times the products and sizes online as it does in stores. Stack says the retailer plans to grow online sales by increasing products available for buy online, pickup in store and by improving its e-commerce and mobile commerce platforms to better reach customers.

“We’ve improved our capabilities in regionalization and testing, allowing us to customize home pages to local markets,” Stack says. “This also allows us to test different pages and see and measure those results.”

Dick’s also plans to improve site search functionality after identifying that feature as being particularly important when it comes to growing the bottom line.

“Customers who engage in search on our site convert at a much higher rate,” Stack says. “We’ve launched a new platform for on-site search and will continue to roll out search enhancements this year.”

While Dick’s executives remain optimistic about the long-term returns the company’s e-commerce investments will provide, analysts expressed skepticism. Of particular concern is the ability of Dick’s e-commerce site to deliver returns on such a significant investment.

“The planned insourcing of the Dick’s e-commerce site is on schedule, and is expected to be a meaningful margin driver for fiscal 2017,” Matt Nemur, senior analyst with Wells Fargo, says. “We continue to have longer term concerns with DKS, including declining store productivity, the e-commerce investment cycle and a shift to this lower margin channel.”

 

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