Net Evolution

How Net Evolution helped video games supplier Red Ant improve productivity, profitability and customer service.

BACKGROUND

Red Ant is one of Australia's leading independent suppliers of electronic games and DVDs, carrying thousands of titles that are distributed through major Australian retailers such as Australia Post, Electronics Boutique, Dick Smith, Harvey Norman, JB Hi Fi, Kmart, Myer, Toys R Us and Office Works.

PROBLEM

The gaming market is highly competitive and the narrow margins demand a low headcount and high productivity. One particular aspect of Red Ant's operation was becoming increasingly difficult as the number of retailers and titles increased: Markdowns and Returns.

Handling Markdowns

In the DVD and gaming market, retailers can charge a premium when a title is new and there is a frenzied demand among an often obsessive clientele. However, as time passes, the title's appeal diminishes and retailers have to lower their price. This wasn't as easy as it sounds.

Before a retailer could offer a title at a reduced price, they had to submit a Markdown Application to Red Ant. These Markdown Applications had to be dealt with manually, tying up scarce resources and frustrating Red Ant's retailers.

Handling Returns

Similarly, if a retailer found themselves overstocked on a title or had damaged stock and wanted to return product, these too had to be handled manually. In a small operation, one entire person in Accounts was dedicated to handling Markdowns and Returns, helping neither productivity nor customer service.

SOLUTION

Net Evolution came to Red Ant's rescue with an automated Stock Management System. Built in ASP.NET and SQL Server, the system streamlined the entire process of Markdowns and Returns, freeing up an entire person, and pleasing customers as well.

Automated Markdowns

With this web-based system, Red Ant could now give their customers online access, allowing them to input their Markdown applications in a fraction of the time.

Establishing system rules

The real benefit of the system from Red Ant's point of view is that their responses to these requests can now be almost totally automated because it lets them establish eligibility "Rules" and calculate markdown rates automatically.

For example, the retailer can't mark down a title within a set number of days from its release. If they apply for a markdown on 9,000 units, they can't apply for a subsequent markdown of more than 9000 units. Or they can't mark down a title that is pending on another pending markdown request. In total, Red Ant established 9 eligibility rules which simply codified exactly what was being done by a warm body - just more quickly and at a much lower cost.

Customising rules

The system has almost unlimited flexibility, allowing Red Ant to customise its Rules on a retailer by retailer basis or an agent by agent basis, and to add, delete or modify the rules in response to changing business needs.

Automating returns

The new system had a similar streamlining effect on the Returns process. Retailers can now enter Returns online, and Packing Slips are automatically generated and delivered once the Return is approved. These are sent to the Retailer, making it easier for them and speeding the process of handling the Returns when they arrive in Red Ant's warehouse.

Integrating with Accounts

A further feature of the system is the integration with existing back-end Accounts functions. Previously, Markdowns and Returns were a huge headache for Accounting staff and almost always resulted in erroneous invoices and retailer dissatisfaction. With the new system, any Markdown or Return or is automatically reflected in Red Ant's invoices and credit notes.

Business Intelligence

With so many titles, so many retailers and so many markdowns and returns, it was always difficult for management to know the current state of the business. A massive advantage of the new system was the ability to produce immediate reports that showed the status by stock of Markdowns and Returns.

Increasing sales

Subscription and user information could be stored in the new system, allowing Red Ant to create highly targeted email campaigns. The system also makes it easy to publish their catalogue on their website and publish press releases, all helping to drive an increase in sales.

RESULT

Red Ant's new Stock Management System has made life simpler - and more profitable - for both supplier and retailers. For an initial investment of less than $30k, Red Ant was able to reduce its headcount in Accounting and streamline warehouse operations as well. More importantly, it helped make life easier for their retailers and resellers, giving their retailers further reasons to remain loyal to Red Ant.

"I believe that any IT investment needs to show a business benefit and this system produced a very clear ROI", says Red Ant IT Manager, Jim Kolymbis. "I can't praise Net Evolution enough for the functionality of the system or their professionalism".