Fanatics see a big fulfillment center expansion on the horizon

April 17, 2013 10:31 AM

Licensed sports apparel and gear web retailer Fanatics Inc. needs more fulfillment space, a goal the company plans to meet by opening two more e-commerce distribution centers: one this year and another in 2014 or 2015.

Fanatics, No. 46 in the 2012 Internet Retailer Top 500 already operates a pair of fulfillment centers near Jacksonville and Chicago, and in a few months will open a third 500,000-square-foot warehouse near Columbus, OH, and a warehouse of similar size on the West Coast in 2014 or 2015. That bigger national fulfillment network will make it possible for Fanatics to offer shoppers cheaper and faster shipping and to add more licensed apparel and gear to its product inventory, says Fanatics president Jamie Davis.

Over the course of a decade Fanatics has grown its inventory from a few thousand licensed products to more than 1 million items, including hats, shirts and related gear for more than 200 teams, Davis says. “Now we are after the local fan,” Davis says. “We want the guy that wants that licensed gear right after a big event and right now, without leaving the couch.”

Fanatics, which increased web sales 45.5% to $764 million in 2012 from $525 million in 2011, began operating an e-commerce site from the back of its single store in Jacksonville, FL, in 1993, fulfilling web orders from inventory on its store shelves and then dropping off packages for shipping at a nearby United Parcel Service location.

Adding fulfillment space over the next 12 months eventually will enable Fanatics to reduce the amount of time it takes to ship parcels from an average of three days to two or less, reduce the higher costs of shipping by air versus other forms of ground transportation and diversify its pick, pack and ship operation in other ways, Davis says. “We will incur some upfront costs now to add to our fulfillment space, but eventually this will help us save money by using more ground shipping and reduce the amount of time it takes us to ship orders,” he says. “But the biggest gain we anticipate is attracting and retaining more local and regional shoppers by getting them the licensed sports apparel they want now with better and less expensive shipping.”

Building out its fulfillment center network comes about a year after Fanatics made its largest-ever acquisition. In June 2012 Fanatics completed its purchase of Dreams, which operates and other branded sports merchandise e-commerce sites, in a deal valued at $183 million. Fanatics is owned and operated by Kynetic LLC, headed up by Michael Rubin who founded GSI Commerce Inc., which eBay Inc. acquired in 2011.




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