Automating the Vendor Direct to Consumer order cycle Scott Bolduc

Automating the Vendor Direct to Consumer order cycle Scott Bolduc – Director of Supply Chain Strategy

SPS commerce (NASDAQ: SPSC) SPS Commerce makes it easy for retailers, suppliers & 3PLs to work together and maximize productivity. Trusted by more than 80,000 organizations worldwide SPS Commerce’s platform is pre-wired to thousands of the world’s biggest retailers and vendors, so you get connected to your trading partners with blazing speed. organic growth rate SPS Commerce is the only EDI & vendor enablement provider that gives you the full-service team and expert support you need to streamline manual processes and enhance collaboration. 2017 SPS Commerce 2

Omnichannel defined A consistent consumer shopping experience, regardless of where the consumer chooses to engage a retailer (or supplier).

On time retailer Complete vendor Damage-free Complete & accurate documentation The perfect order ‒ 2009 2017 SPS Commerce 4

Multi-Channel Transformation 2010 - 2013 –more suppliers are becoming retailers –and retailers are becoming suppliers . 2017 SPS Commerce 5

Retail Industry Transformation E-Commerce Impact New Distribution Challenges 2017 SPS Commerce Cloud Computing Adoption M-Commerce Empowerment Ship-to-Consumer Ship-to-DC Ship-to-Store Cross-Dock Import VMI 6

Product Information Social validation Consumer vendor Inventory information Competitive pricing retailer Convenient fulfillment Convenient returns The omnichannel perfect order 2014 2017 SPS Commerce 3PL 7

65 % 82 % Expect more product variety Expect to buy online and return in-store Consumers are driving change Source: 2017 Annual SPS Commerce Retail Benchmark Survey

The rise of the omni-channel consumer 300 B ecommerce sales 1.4 T web-influenced sales

“ Designers and merchants think about collections. Consumers think about items. ” – Andy Dunn (CEO, Bonobos)

retail information engines were built to fit a store, not a customer 2017SPS Commerce 11

A new architecture is required 2017 SPS Commerce 12

2017 SPS Commerce 13

Assortment 2017 SPS Commerce 14

Item Management and Setup It’s important and complicated As much as 30 of the item data in retail catalogs is incorrect, leading to: % ? Product rollout delays Invoice issues Consumer frustration Lost sales Stocking problems Shipping delays Warehousing challenges 15

Managing item data is complex Bad data means missing consumer expectations Marketplaces have evolved from hundreds of products in store to thousands of products online Suppliers have a bigger opportunity to market their products, but they have to provide more item detail 16

More robust item data is key to Boosting sales Differentiating yourself from the competition Enhancing collaboration with trading partners Meeting demands of a faster, more nimble supply chain 17

How many attributes? SPS Commerce 18

How many attributes? UPC Size Color Care Instructions Fabric 12 Price Item Description Customizable Gender SPS Commerce 19

How many attributes? SPS Commerce 20

How many attributes? Item Description Width Circumference Weight Color Media Orientation Shaft Height Material Sole Closure Gender 27 Lining Warranty Heel Height Media Name Size Price Country Of Origin SPS Commerce Care Instructions Brand Waterproof 21

How many attributes? SPS Commerce 22

How many attributes? Leg Height Fabric Care Instructions Inside Seating Depth Seat Height 42 Color Fabric Origin Dimensions Product Origin Fabric Construction Size Item Description Removable Legs Clearance Seat Cushion Description SPS Commerce Consumer Description UPC Construction Details Fabric Content Price Arm Height Leg Finish Back Cushion Description 23

How many attributes? SPS Commerce 24

How many attributes? Frames Per Second Item Description LCD Screen Features Megapixels (Total) Color Orientation Sensor ISO Equivalent HD Movie Mode Lens Focal Length(s) Consumer Item Depth SPS Commerce Lens Interface Warranty Description Image Resolution White Balance Shipping Consumer Item Height Shutter Speeds External Flash Mount Aperture Range Features/Benefits Warranty Self-Timer Face Detection 70 Wireless Consumer Item Width Burst Mode Focus Range Flash Modes Batteries Tripod Mount Movie Mode Image Storage Type ISO Equivalent Flash Range MSRP Software Compatible Memory Formats Megapixels (Effective) Viewfinder UPC Consumer Item Weight LCD Screen Size 25

How many attributes? SPS Commerce 26

How many attributes? Sabbath Mode Freezer Capacity Display Type Auto Closing Door Hinge Depth incl. Door Temperature Controls No. of Shelves Ice & Water Dispenser Contour Door Bulb Qty Linear Compressor Child Lock Multi-Air Flow Cooling Light Total Capacity Manufacturer Name Features/Benefits Installation Clearance Ice Bin Care Instructions Media Name Warranty Surface Folding Shelf Ice Storage Capacity Height to Top of Hinge SPS Commerce Handles Model No. Warranty Description Shelf Hinge Country of Origin Ice Storage Capacity MSRP SmartDiagnosis Crisper Bins Door Type Door Edge CEE Tier Rating Brand Door Alarm 84 Freezer Light Shelf Material Total Capacity Ice System Energy Rating Daily Ice Production Voltage Fresh Air Filter Dispenser Type Temperature Sensors Size Door Insulation Item Description Dual Ice Makers Width Toe Grille Width (Door Open) UPC Color Weight Water Filtration System Depth with Handles Refrigerator Capacity No. of Door Shelves/Bins Depth without Door Keywords Consumer Description Handle 27

Item inventory management 01: Warehouse Inventory 02: Store Inventory 03: Supplier Inventory – Timely data feeds – Accurate available/on-hand Inventory – Dates of future Inventory 28

Open architecture, interchange with other item sources, services Fulfillment Assortment Analytics Sourcing Extensible item information Digital asset support Support for XML Integrate with existing systems 2017 SPS Commerce 29

Value of Assortment Gives suppliers the power to sell more products 01: Manage an array of product data and provide it to all retailers 02: Easily upload data, digital assets, warranty guides & PDFs 03: Normalize and validate item information 04: Flexibly support XML-based sources of information, as well as online, spreadsheet, EDI 832 uploads 30

Impact of streamlined item management 01: 02: 03: 04: 05: Higher consumer satisfaction Strengthened brand loyalty Fewer lost sales More repeat business The infrastructure to win in the new omnichannel world 31

Order Management 2017 SPS Commerce 32

E-Commerce – DC/Store Consumer Merchandising Department DC/Warehouse Vendors Flow 1. 2. 3. 4. 5. 6. 7. Merchandising approves and sends order to vendor Vendor acknowledges/requests change to order Supplier packs contents of shipment Supplier labels shipment Supplier ships package(s) Buying organization receives shipment at DC/Store Buying organization breaks apart shipment and ships items to individual consumers 33

E-Commerce – Ship To Consumer Orders DC/Warehouse Consumer Vendors Flow 1. 2. 3. 4. 5. Consumer places order with E-tailer E-tailer places order with vendor Vendor ships to store for customer pick up or directly consumers home Vendor provides E-tailer ongoing order/shipment information E-tailer provides consumer ongoing order/shipment information 34

Purchase Orders Many smaller orders Multiple Ship To addresses Customer Order with multiple Supplier Products Customization Personalization Shipping and handling fees 35

Order Confirmation and Correction Receipt of orders Validation of inventory available Corrections/error notification Customer notification 36

PO Change/Cancelation Purchase Order correction Purchase Order cancellation Cancellation confirmation Customer notification 37

Shipment/ Delivery/Customer Billing Management 2017 SPS Commerce 38

Purchase Order Tracking Shipment Confirmation Many small packages Branding Customer notification Transportation Customer Billing Shipment status Shipment Confirmation Customer notification Pickup Confirmation Proof of Delivery 39

The Branded Experience Branded Shipping Labels Branded Packing Slips Marketing Private Labels, Packing Slips, Holiday Messages, Gift Cards, Related Products Literature Carrier Labels 40

Supplier Invoice Management 2017 SPS Commerce 41

Billing and Payment Invoice Many small invoices Remittance Many small invoices/documents reported on the voucher Debit/Credit Adjustments Rebates 42

Order Cancels/Returns Management 2017 SPS Commerce 43

Customer Order Cancelation Cancelation Reason Remorse Backorder Substitutions Cancelation Management Open Order Shipped Order 44

Returns Process Physical Returns Undeliverable/Refused delivery – Supplier Alert Customer Returns o Retail Store o Retailer DC o 3rd Party Return Center – Receipt Alert o Supplier – Supplier Alert Returns from Retailer/3rd Party Return Center to Supplier 45

Communication of Return Methods Return instructions Return verbiage/Reasons Return address 46

Fulfillment EDI Document Flow Available Inventory (846) Retailer/Etailer EDI Purchase order (850) EDI Purchase order acknowledgement (855) EDI Purchase order change (860) EDI Purchase order change Ack (865) EDI Bar code label/branded documentation Advance ship notice (856) Shipment Status (214/240) Invoice (810) Return Merchandise Authorization and Notification (180) Credit (812) EDI EDI EDI EDI EDI Vendor/Carriers/3 PL partners

Value of fulfillment 01: 02: 03: 04: 05: Respond rapidly to customer demand Increase sales, margins and turns Operational efficiency with accurate orders & proactive risk management Better planning & decision making with prioritized workflows Compliance visibility and automation 06: Reduced IT and transaction costs 07: Investment in Direct to Consumer can be testing the Market 48

Trading Partner Onboarding 2017 SPS Commerce 49

Implementing Partnerships 01: B2C Capable Partners 02: Implementing Electronic Trading 03: Alternatives to limited Electronic Trading 04: On-going Management of trading success 50

B2C Capable Partners Who’s capable of fulfilling orders? Are they electronically capable? What are their capabilities? How do you get these answers? One-on-one meetings between partners Conferences Business social networks 51

Implementing Electronic Partners Implementing your partners Steps o Setup o Testing One – one Service providers 52

Limited Technology What happens if they can’t do it (or all of it) Eliminate the partnership Create a portal Exemptions SaaS providers 53

Performance Analytics 2017 SPS Commerce 54

On-Going Order/Data Management How to manage and monitor data success Management by fire In-house systems ORDERS NOT SHIP SaaS providers o Visibility reporting o Order performance reporting ON-TIME SHIPMENTS 55

Questions Scott Bolduc [email protected] 2017 SPS Commerce 56