A CASE STUDY: HOW A HUMBLE FOOTWEAR BRAND MOVED FROM VENICE BEACH TO NORDSTROM
Jerusalem Sandals, a collaboration between Palestinians and Israelis, aims to bring the biblical era to the modern world. Kfir Matalon and his wife, Angela Matalon, founded Jerusalem Sandals in the spring of 2010, first selling their wares on the boardwalk of Venice Beach, which attracts visitors from many countries and cultures. Selling 17 pairs in four hours, they knew immediately that they had something special. From its humble beginnings, Jerusalem Sandals moved quickly into the e-commerce market.
“We had all these channels we kept adding,” said Kfir Matalon, president of Jerusalem Sandals. “Our first sales channel was Nordstrom, and we had to start doing drop shipping and electronic data interchange (EDI). Then we added Amazon, a website, wholesale orders.”
Jerusalem Sandals needed a way to navigate sales channels and inventory management that was reliable, saved time and money, and could help the company meet its growing customer demands.
Problem Analysis
Dropshipping involves managing direct-to-consumer shipments from suppliers, whereas a storefront holds its own stock. Companies that dropship have to navigate inventory and production orders differently. They must proactively manage orders, sale numbers and production cycles in communication with suppliers to avoid overproduction and underproduction of various products, styles and colors.
While EDI can help companies scale by streamlining transactions, it’s not easy for them to navigate. Multiple communication languages, complex B2B networks and the need for transparent, real-time transactions require companies to be vigilant about their EDI communications. With growing costs and higher volumes of EDI transactions, companies cannot afford errors and missing fields. It’s crucial for them to implement and integrate EDI carefully into their business processes.
Wholesale ordering and e-commerce have unique challenges when compared to drop- shipping. Online customers expect e-commerce orders to be completed promptly upon purchase. As such, the inventory available for shipping has to meet customer demand. It’s important for e-commerce organizations to proactively produce and store products that are selling well and reduce production orders for those that aren’t.
However, it’s not easy to predict what will sell. Companies have to run projections, analyzing trends to estimate the next season’s production needs. Companies have to be proactive and make good inventory management and production decisions. Otherwise, sales and earnings can suffer.
Wholesale ordering requires companies to manage manufacturers, wholesale retailers and fuel-price volatility. The current market features tight margins for wholesalers, who have to cultivate and maintain these relationships to succeed. Wholesale distributor businesses need to be proactive with managing orders to avoid delays that can slow supply chain processes. Furthermore, these companies have to try to implement value-added services to improve those B2B relationships and convince retailers to keep coming back for more.
Quickly growing fashion companies often jump into the aforementioned sales channels early on, trying to maximize early growth and gain a market foothold. However, this approach can lead to several major pitfalls. For example, EDI infrastructure is difficult to build and optimize. Companies who don’t streamline EDI and integrate it into their business processes have to rely heavily on paper and manual efforts. When dealing with high volumes and numbers of transactions, the chances of human error is high, and this can be very costly to the company.
Another issue is that dropshipping and e-commerce require active oversight and clear communication with suppliers. As companies place production orders with suppliers, they have to be aware of how well products are selling in different stores and optimize warehouse space and inventory to match consumer demand. Incorrect projections of consumer demand or insufficient proactivity can lead to overproduction and underproduction of different products, which eat away at a company’s potential earnings.
Wholesale distribution has tough margins in today’s market. Without an effectively managed supply chain that minimizes order and shipment delays or other value-added services, companies can get left behind by end-retailers. Navigating these challenges without a system that integrates all sales channels is difficult for apparel companies of all sizes. Enterprise Resource Planning (ERP) systems can provide companies with infrastructure that enables them to tackle these issues and optimize their business processes.
Challenges
Like many startup fashion companies, Jerusalem Sandals first managed its logistics using Excel sheets. As it grew — adding dropshipping, EDI, e-commerce and wholesale orders — the company found that it was quickly running into roadblocks in its work.
Jerusalem Sandals faced challenges familiar to many burgeoning fashion companies: inventory handling, human error and seeing which products were selling in which stores.
“Sometimes you write ‘11’ but can’t read the handwriting later, and you think it says ‘14.’ That’s a huge difference and can result in shipping the wrong style or quantity,” Kfir explained. “Everyone makes mistakes.”
The company first heard about ERPs from a startup company, who showed Jerusalem Sandals how it would connect its different channels together. Kfir Matalon hoped it would save them time and money.
“We started implementing, and it was a mess,” he said. “There were so many bugs, so many issues, so much work. We put all our information on the cloud and then they went out of business, so all that information we had on there was now gone. So we set out to find an ERP that was great and, most importantly, that we could trust to be there.”
When Jerusalem Sandals met AIMS360, it was looking for a proven ERP who could help them bring its information into the cloud, navigate its inventory between sales channels, and better tailor its production to the sales in each channel.
Continued Growth with Technology
AIMS360’s fashion ERP software enabled Jerusalem Sandals to integrate its multiple sales channels into its management processes. Through this, most of its manual processes were eliminated. It also helped the company group its inventory into batches.
“It’s very straightforward, there’s a flow. It’s easy to learn,” Kfir said. “There’s a comfort knowing this company won’t disappear on me.”
Furthermore, ERP software helps Jerusalem Sandals be proactive in how it approaches upcoming sales cycles.
“I look at what the end-consumer is buying,” Kfir explained. “I mainly used the reports to place production orders, as you can see right away what’s selling.”
Armed with information on how each style and color is selling, the company places specific production orders to appropriately replenish their stock. Jerusalem Sandals has been able to continue growing and supplying each of its sales channels with the appropriate inventory.
“We really enjoy where we’re standing in inventory, how we’re receiving all the information from all of our channels,” Kfir said.
Looking Forward
What started out as a small sandals stand at Venice Beach has transformed into a thriving apparel brand. With AIMS360’s ERP support, Jerusalem Sandals continues to grow its brand, increasing its social media presence and sales efforts.
“I’m amazed,” Kfir said. “Sometimes I get letters talking about how much [the customers] love the sandals, or it’s the only thing they wear. Everyone loves sandals, it’s like a vacation for your feet.”
Sometimes, he looks back at where Jerusalem Sandals began.
“[The sandals] promoted themselves,” Kfir said. “It was just the right place at the right time.”
