A New Business Model for a Wal-Mart Supplier

CIO — An old adage tells us that the best things come in small packages, but an e-commerce partnership between Stork Craft Manufacturing and Wal-Mart Canada has proven a big deal.

The collaboration revolved around a website that Stork Craft, which makes baby furniture, designed for Wal-Mart Canada customers. The site increased sales and reduced order fulfillment from up to four weeks to as little as two days compared to store or catalogue purchases.

The proud mother of this endeavor is Irene Jeremic, Stork Craft corporate executive advisor and CIO. Her goal: to boost revenue by making Wal-Mart Canada competitive on the Web and cater to its online customers. "It's not often that you have a business-to-business partner trying to cater to the general public," she notes. "The fact that Wal-Mart was open to this was perhaps the biggest factor in getting the site to work."

Stork Craft had a retail and distribution partnership with Wal-Mart in the United States and Canada since 2005, and the two companies partnered to build an e-commerce site for U.S. customers in 2006. As a result, Stork Craft grew so quickly that it was able to acquire three competitors within 18 months: Ragazzi Fine Furniture, Canwood Furniture and Status Office Furniture.

By early 2008, Stork Craft was eager to develop a similar partnership with Wal-Mart in Canada. "Anytime there's a supplier whose brand is becoming more widespread, it's beneficial for them to figure out a way to sell products online, says Steve Rowen, managing partner with RSR Research.

The only problem: Customers could browse but not purchase anything through Wal-Mart Canada's website. So Jeremic assembled a team of Stork Craft and Wal-Mart developers to pilot a new site. Stork Craft's executive team and representatives from Wal-Mart Canada's buying office conceptualized the project. Wal-Mart then defined regulatory, legal and functional requirements. Finally, Stork Craft's IT department built the technology platform, a system composed of a website on which Wal-Mart Canada customers can shop, a management console and a payment and administration unit.

The two companies also devised a strategy to eliminate the inefficiencies inherent in the traditional model of furniture sales—where the consumer contacts the retailer for service.

Instead, Stork Craft agreed to ship items directly to Wal-Mart Canada customers and to provide direct-sale support—handling customer returns and post-sale inquiries. Jeremic says that by providing an alternative to in-store purchasing, Stork Craft was able to trim delivery time by up to 85 percent. And because Stork Craft has better control over how deliveries are handled, consumers experience fewer slip ups and they're happier.

The cobranded site went live in April 2008, enabling Wal-Mart Canada shoppers to purchase as many as 200 different cribs, dressing tables and toddler beds. Since then, Jeremic says, nearly 350,000 customers have visited the site. She declines to divulge sales figures, but cites "great value" to both Stork Craft and Wal-Mart Canada, which gets a cut of the sales.

Matt Villano is a freelance writer based in California.