IT Investments Key

IDC: "e-tailers" must invest now or pay later; apparently agrees

Tempe, AZ  December 20, 2001  With online sales set to grow by almost 50 percent this holiday season compared with last year, one consultancy warns that "e-tailiers" must take steps to ensure they can get all those games and toys out to anxious parents in time for wrapping this year.

Technology research firm IDC has projected that U.S. holiday sales over the Internet will increase by 46 percent this year over 2000, and will hit $26 billion in 2002, a 49 percent increase over 2001.

However, IDC warns that e-tailers must be prepared to make the information technology (IT) investments necessary to keep up with this burgeoning growth. "Although consumers are spending more of their holiday budgets online, e-shopping and consumer e-commerce in general will be constrained by supply, as reduced IT investments resulting from the economic slowdown limit some e-retailers' ability to meet the demand," IDC writes.

Carol Glasheen, IDC's vice president of global market models and demand-side research, added, "Although e-shopping is expected to increase at a level in 2002 comparable to that in 2001, the opportunity for retailers to take advantage of this opportunity is threatened by reduced IT spending."

Retailers skimping on IT investments now will be out of the online holiday market altogether next year, IDC predicts. According to IDC, the lost revenue associated with the decreased investment will be approximately $4 billion in 2002.

At least one toy company appears to have taken IDC's message to heart. KB Toys reported this week that it has deployed a supply chain execution system at a 440,000 square foot distribution center for its online sales division,, to ensure that customers receive the correct orders on time.

Earlier this year, the privately held company, the nation's largest combined mall-based and online specialty toy retailer, acquired select inventory and assets from eToys and leased its Blairs, Va., distribution center as part of a program to grow its online division, which includes both and brought in a new management team and hired more than 600 employees as part of its effort to bring the center into its supply chain system. But the company also decided to invest in a supply chain execution system that could handle its peak season requirements.

The new system would also have to interface with the company's material handling equipment systems and work with its order management system. Rapid implementation, in less than ten weeks, was also critical in order to have the system up and running before the onslaught of holiday orders.

Ultimately, the toy company selected Manhattan Associates' PkMS solution. "Given that the facility is highly automated and the fact that we had a limited time frame to implement, PkMS was the obvious solution," said Bob Hassen, vice president of distribution at "I've worked with Manhattan Associates in the past and knew first-hand that it could successfully meet our system requirements and tight deadlines."

Indeed, Alison Castle, senior director of project management for, said that the project came in on time and 10 percent under budget. "This was the result of careful planning, close partnerships and Manhattan Associates' comprehensive understanding of the industry and of this company's needs," Castle said.