Is Dick’s making the right move by bringing its software development in-house?
Paul Gaffney, chief technology officer at Dick’s Sporting Goods, is leading an effort to bring the chain’s software development in-house rather than rely on third-party tech vendors, according to a Wall Street Journal report. The goal of the program is to give Dick’s the ability to create and control solutions that meet its specific business needs and, in turn, place it in a position of competitive advantage over rival retailers.
Mr. Gaffney, who led a similar effort at Home Depot before joining Dick’s, began by having his team tackle the retailer’s inventory management system. The goal of the program, which is about halfway to completion, is to create a system that would earn at least 10-times in annual revenue the cost of the eight-person team that developed it.
Before the end of the year, Mr. Gaffney and team are planning a complete overhaul of Dick’s e-commerce platforms, including how products are displayed online and how search, checkout and shipping estimates work.
The changes to Dick’s systems is reportedly enabling the retailer to be more responsive to its customers and internal stakeholders, as well. In speaking with the Journal, Mr. Gaffney pointed to Dick’s ability to list new merchandise online within 30-minutes of breaking news such as a team winning a championship. Previously, the same task took up to five days to complete.
Dick’s, similar to other retailers, has placed greater emphasis on e-commerce operations as more consumers go online to research products and make purchases. On the company’s fourth quarter earnings call earlier this month, CEO Ed Stack said that online now represents 23 percent of Dick’s total sales, up from 19 percent a year ago.
Lauren Hobart, president of Dick’s, said the company is building two new e-commerce fulfillment centers to open in the third quarter. The new facilities located in California and New York will enable Dick’s to deliver the majority of online orders within two days.
“Our technology investments extend beyond just improving our website. We will continue to increase our investments in technology, talent and capabilities to make the shopping experience easier and more convenient for all athletes (customers) regardless of when, where, or how they shop with us,” said Ms. Hobart (via Seeking Alpha).
Dick’s is also heavily focused on providing technology to its teammates (associates) to improve productivity, as well.
“We recently delivered an application, which we’ve named merch search, to all Dick’s stores nationwide,” said Ms. Hobart. “This app provides real-time product information including detailed product descriptions, inventory availability, and alternative product recommendations so that our teammates can guide athletes through their shopping experience.”
- Dick’s Tech Chief Goes All Out on In-House Software – The Wall Street Journal
- Dick’s Sporting Goods, Inc. CEO Ed Stack on Q4 2018 Results (Earnings Call Transcript) – Seeking Alpha
DISCUSSION QUESTIONS: Do you approve of the decision by Dick’s to bring its software development in-house rather than rely on solutions from third-party vendors? What do you see as the pros and cons to be considered by retailers considering a similar move?