The Canadian Tire Experiment: An E-commerce Case Study

Introduction

Canadian Tire Corporation Limited has been operating an efficient retail logistics and supply chain since its founding in 1922, making it one of Canada’s most trusted and iconic Canadian retail brands. Canadian Tire manages a network of 1,700 retail locations across a large family of brands such as Canadian Tire, Mark's, FGL Sports, PartSource, and the Canadian operations of Party City, ranging in the automotive, sports, hardware, leisure and home goods industries.

“We set a service level of 99% shipped next-day, and I’m happy to say not only did we hit that, we constantly hit that. And on the cost side, I would say the rate shopping component has actually saved us about 25% on the freight expense…” -- Carmine Bosco, AVP Supply Chain at Canadian Tire.

Canadian Tire had been operating under a traditional ecommerce fulfillment model for nearly a century. With their executive team offering full support, this organization’s supply chain team decided to challenge their old way of doing things in order to find a better balance between service and cost. a better service with

The Experiment

Customers across the world are demanding better service. The true challenge, as noted by  Canadian Tire AVP of Supply, Carmine Bosco, is to find the perfect balance between offering a good service while maintaining costs. One way companies have found this balance is through optimizations in the logistics and supply chain. With the full support of their executive team, Canadian Tire decided to launch an experiment.

‍The Hypothesis:Applying an agile approach to ecommerce fulfillment, the team would be able to stand up a new solution quickly with incremental and tangible benefits, without any impact to costs or service quality.

‍Setting up the Experiment: Canadian Tire decided that there were four crucial factors that would dictate the success of the experiment. These four success factors were:

1. Executive Sponsorship - Fortunately, the Canadian Tire executive team was ready and willing to challenge the status quo for their logistics and supply chain organization
2. Controlled Environment - Canadian Tire already had warehouses. All they had to do was clear out space in these warehouses , then designate them specifically for ecommerce fulfillment.
3. A Test Subject (aka guinea pig) - One of the brands under the Canadian Tire family banner, Pro Hockey Life, had been operating a traditional ecommerce fulfillment model for a few years. Due to its success and growth, the Pro Hockey Life team was struggling to keep up with demands. Consequently, their service was suffering and their costs were getting higher. Carmine mentioned that during influxes of shopping like Black Friday and Cyber Monday holiday shopping, it would take several weeks to fill orders. Due to this, the Pro Hockey Life team happily volunteered to participate in the pilot.
4. “Slick” Technology - In order to influence the larger organization on how to build out ecommerce fulfillment operations, the logistics and supply chain team needed to implement a brand new technology not in a couple years or even months, rather in a couple weeks. This technology needed to be flexible, innovative, scalable, AND agile - or as Carmine put it, “slick.”

So Canadian Tire already had the executive sponsorship, the controlled environment, the guinea pig; and after scouring the web, they finally settled on the slickest technology on the market: ShipHero.

Why ShipHero

Canadian Tire had several key considerations for this experiment in order to declare it a success, and ShipHero checked all the boxes. These considerations were:

1. Quick Connection to the Website and to Couriers - With ShipHero’s easily integrated platform and dedicated team of experts, connection to Canadian Tire’s website was a matter of hours, not months or weeks. Also Canadian Tire uses various courier companies for printing labels, and again, ShipHero was able to integrate with these couriers within a few hours.
2. Easy Training and Implementation - ShipHero doesn’t require any special tools or gadgets to work. An iPad and bluetooth scanners; those are the only two devices that ShipHero employs and are two devices that everyone is comfortable with and uses regularly. So, Carmine and the Canadian Tire employees found the training to be fast and easy, meaning the system could launch even quicker.
3. Immediate Cost Savings - With ShipHero’s rate shopping capabilities, each and every shipment is rate shopped across your courier connections and the cheapest option is automatically selected. Due to its highly configurable order management rules, there’s no need to get IT folks involved to make these changes.

In addition to the above, the ShipHero website offers a plethora of useful information to maximize your ecommerce fulfillment experience, complete with explanatory how-to videos along with in-depth descriptions of the ShipHero processes. For all the above reasons, Canadian Tire chose ShipHero to launch their ecommerce fulfillment experiment. So, the teams got to work, rapidly standing up a warehouse and setting up ecommerce fulfillment operations, from racking to packing stations, networking / systems setup and team training.

The Launch

In just 4 months, the service launched and began shipping ecommerce orders for the first brand to come online, Pro Hockey Life. This was accomplished by working closely with the logistics and supply chain team, and by ShipHero’s agile, flexible, and scalable roll-out strategy that consisted of:

1. Defining an MVP - Using a phased rollout approach, a Minimum Viable Product (also known as MVP) was quickly developed for the warehouse launch.
2. Speed with SaaS - Without the constraints of a complicated software solution, ShipHero was configured within days.
3. Team Collaboration - Canadian Tire and ShipHero teams worked in unison to gather and satisfy the MVP requirements needed for launch.
4. Training & Launch - Through onsite workshops and meetings, ShipHero personnel conducted train-the-trainers sessions, as well as role-based training for the larger Canadian Tire team.

Now with the experiment underway, Canadian Tire just had to sit back and watch the results.

The Advantages of Scale

The ShipHero service also successfully started shipping ecommerce orders and because of the team’s due diligence with setting up the shipping rate shopping features of ShipHero, the Canadian Tire team saw an immediate ROI realized through the rate shopping tool.

So with the initial experiment a success, Canadian Tire wanted to go beyond the experiment. Another part of the Canadian Tire family with no ecommerce presence, Family National Sports, was able to simply move their inventory to the specified warehouse. Due to the SAAS model and flexible cloud capabilities, in a matter of weeks, National Sports launched their logistics and supply chain operations. Capacity for scale was proven, and Canadian Tire added more a few more of their retail banners.

With the successful launch of the D2C fulfillment warehouse now serving multiple brands, the next step in the experiment was unlocking retail in-store inventory, increasing available to sell inventory as well as new product offerings.

Unlocking Retail

Through ShipHero’s highly configurable order management rules, Canadian Tire was able to use their existing brick-and-mortar locations to fulfill ecommerce orders, instead of building new facilities. Through leveraging curbside pickup, buy online pickup in-store (BOPIS) capabilities, and other omni-channel logistics, Canadian Tire made smart fulfillment decisions, whether the order would come through the store or the DC.

“So what we did is we started thinking about: how could we unlock retail inventory? I mean, it’s sitting there. Why not? Could we put it on the web while we have the warehouse doing fulfillment. So we found with ShipHero it had order management rules that were robust enough to make decisions on where we should fulfill orders; whether it would be the store or the DC. And this is actually quite a powerful feature because it allows our supply chain to use as a lever, if one or the other: store or DC, and we’ve had several stores actually up and running get over capacity, so we could turn the lever and change and switch the nodes on where to fulfill orders.” -- Carmine Bosco, AVP of Supply Chain

Canadian Tire held all the levers to success in terms of logistics and supply chain, with a consistent goal of 99% of orders shipped next-day and a 25% reduction in freight expense. Life was good. And then, a pandemic hit.

Handling a Crisis

Canadian Tire was able to leverage their newfound capabilities from ShipHero to accommodate the ‘new normal’ of post-COVID retail shopping. In-store D2C fulfillment such as curbside pickup and contactless checkout has proven to be an extremely viable solution to the challenges presented by the COVID crisis.

Retail stores are not open for retail, but those that were able to adapt quickly are meeting the increased fulfillment demand of customers who are now buying at home. Our mission at ShipHero is to use agile problem-solving to make the most out of a challenging situation and keep our hard-working clients in business, no matter what.