Learning Express CEO Discusses E-Commerce

“Currently we have four strategically placed stores across the country fulfilling all of [our] Web orders.” — Sharon DiMinico, Learning Express

Sharon DiMinico is the CEO and founder of Learning Express, the largest specialty toy retailer in the country. She opened the first store in Acton, Mass., in 1987 and has since expanded the store through franchising to more than 100 locations. She recently shared details of her successful business model with TDmonthly Magazine. (Click here to read last month’s portion of this IV-part interview.)

TDmonthly: When you ship products ordered online, do you ship them from a central warehouse that holds mass quantities of product purchased at discount, or from the closest store to the location of the online customer?

DiMinico: E-Commerce is very complicated in a franchise system because everyone has a protected territory. Most of our storeowners understand the importance a Web site is to our brand, so they don’t object. The reality is that less than $10,000 was sold within protected territories in 2005. Most of our store’s customers use it as a shopping guide but go to the local store to avoid paying freight. Currently we have four strategically placed stores across the country fulfilling all of the Web orders.

TDmonthly: Were these stores created specifically for this purpose? Do these stores have brick-and-mortar operations as well?

DiMinico: They all have brick-and-mortar locations. When we went online four to five years ago, we had 17 stores fulfilling the orders, and we maintained the system at a cost of about 100K a year. Early in the year we were considering making it an informational site only, but four stores came forward, (New England, Pennsylvania, Nebraska and Illinois) and asked if they could continue selling online, manage the product mix and cover all the expenses. It was a huge commitment both financially and time away from their stores so we are re-evaluating it yet again.

TDmonthly: Have your storeowners had problems deciding what and how much to add to their inventories?

DiMinico: Every year our owners are better equipped and better organized and place Web and 4th-quarter orders at our convention. We have a custom Open-to-Buy for our owners to use which has been very helpful.

TDmonthly: Can you go into more detail on how your Open-to-Buy inventory system works?

DiMinico: We created a six-month inventory plan in Excel with pre-set formulas. Stores are only required to supply four pieces of information:

Current Month Ending Inventory at Cost
Desired Year (or month -June) Ending Inventory Value at Cost
Current Open Order Value at Cost
Year to Date Sales

TDmonthly: Would you be able to go into just a little detail on how your stores share best-selling information with one another via the Intranet?

DiMinico: Store sales are e-mailed to us monthly. On the front page of our Intranet, stores can select sales results by "Item #," "Units Sold," "Gross Margin Dollar," "Gross Margin Percent" or "Category." We also write articles on best merchandising practices to optimize sales of an item or trends we see appearing in various markets. We also have an all-store e-mail system where stores report on their newest best-selling products.