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Customer Snapshot

Boosting Book Sales
in the Digital Age

1 Million

Books provided for kids

in Canadian schools

A lot has changed in the retail book industry since 1997, when Indigo Books & Music Inc. opened its first superstore. To get the speed and flexibility needed to support its evolving strategy and product mix, Indigo kicked off a major supply chain redesign project, both in-store and online. With SAP EWM, Indigo’s supply chain can now handle double the sales volume at a much lower cost.

 

Company

Indigo Books and Music Inc.

Headquarters

Toronto, Canada

Customer Website

www.indigo.ca

Revenue

CAD 934 million (USD 909.7 million)

Number of Employees

6,500

Implementation Partners

SAP Consulting

Line of Business

Supply Chain

Industry

Retail

Featured Products

SAP Extended Warehouse Management (SAP EWM)

History

Created by booklovers, for booklovers

 

  • 1995Smith Books and Coles merged to form Chapters Inc. Chapters grows to become the largest book retailer in Canada, operating bookstores in all provinces.
  • 1996 Indigo Books & Music was born. Bringing Indigo to life was the culmination of a life-long passion for books and music created by booklovers, for booklovers.
  • 1997Indigo opened its first store, called Indigo Books Music & more, in Burlington, Ontario—instantly becoming a place that reflects the best of a small proprietor-run shop bundled with the selection of a true emporium.
  • 2000Indigo expanded to 14 locations across Canada and opens its online store, indigo.ca
  • 2001Chapters and Indigo officially merged to form the largest book retailer in Canada under the corporate name Indigo Books & Music Inc.
  • 2004Indigo established the Love of Reading Fund (now the Indigo Love of Reading Foundation), a charity dedicated to enhancing literacy and self-esteem in students, promoting learning opportunities—supporting teachers and students in schools across Canada with new books and resources.
  • 2005Indigo ranked as one of Canada's top 100 employers according to a MediaCorp survey published in Maclean's magazine.
  • 2008Indigo launched the Indigo Online Community, boasting membership of over 275,000 booklovers in the first year and winning gold at the Canadian Marketing Awards for Social Media.
  • 2009Indigo spun off its digital eReading division to form Kobo Inc., a global eReading company now operating in over 100 countries.
  • 2010Indigo expanded its IndigoKids departments in 30 locations continuing its strategy to position Indigo as the ultimate family-friendly destination and the largest specialty toy retailer in Canada.
  • 2011The Indigo Love of Reading Foundation granted another CAD 1.5 million (US$ 1.46 million) to high-needs elementary schools across Canada, bringing total donations through the Literacy Fund program to more than CAD 10.5 million (US$ 10.2million).

Business Model

Across Canada, and beyond

Headquartered in Toronto, Ontario, Indigo is Canada’s largest book, gift, and specialty toy retailer. Its more than 6,500 employees operate over 235 physical stores across the country, and its popular website offers millions of products including books, e-books, toys, stationery, home décor, gourmet confections, music CDs, DVDs, and more.

 

Indigo’s large retail stores average 24,000 square feet and are designed to be culture-seeking, inspiring destinations for browsing and community-building, while its smaller stores – conveniently situated in shopping centers, street-front stores, airports, and central business districts – provide a more targeted selection of goods.

Success Strategy

Digital world changes the game

As the world’s authors, publishers, book retailers, and electronics manufacturers jockey for space and attention in the digital world, Indigo remains focused on its core business.

 

Strategic initiatives to extend the Indigo brand and customer base included:

  • Adjusting physical stores to accommodate for fewer books
  • Diversifying non-book product offering
  • Expanding online presence to accommodate digital demand

 

By optimizing its core books business and diversifying its product set and stores, Indigo ensures a well-rounded strategy for the future.

The Challenge

Keeping inventory and delivery promises

Indigo’s supply chain was optimized for books, which made handling a new and diverse set of products difficult. Indigo also had data integrity issues and inventory wasn’t always accurate – serious problems for a business that promises next day shipping to customers.

 

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Meeting the new growth challenges.

The supply chain redesign was the second-largest capital project in the company’s history and was essential to its success. The key objectives of the project were to:

  • Lower the unit cost for retail with best-in-class facilities and processes
  • Reduce shipping costs and costs of goods sold through the online channel via a new warehouse
  • Replace aging material handling equipment and warehouse management systems
  • Optimize the supply chain to support general merchandise growth

Enter SAP

The short list – and the ultimate decision

Indigo needed new warehouse management software that could handle its business requirements and fit well within its existing application architecture. After detailed business and technical requirements were ironed out, Indigo performed a careful evaluation of the top warehouse management systems for retail.

 

The SAP Extended Warehouse Management
(SAP EWM) solution landed on the short list,
scoring highest
for platform integration, vendor viability, and low total cost of ownership.

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Committing to goals and creating carefully laid plans.

Ultimately, Indigo selected SAP EWM because of
SAP’s commitment – as an integrator and partner –
to Indigo’s success.

The SAP Experience

Scaling for complexity

Due to the scale and complexity of the supply chain redesign, and unique needs of the company’s in-store and online channels, the project was divided into two phases.

 

Phase 1

First up was the online channel, supporting Indigo’s direct-to-consumer business. At go-live it included a completely new warehouse, running SAP EWM and basic material handling equipment.

 

Phase 2

The second phase supported Indigo’s physical “bricks and mortar” business. This channel required a more sophisticated material handling equipment solution – including put-to-light and conveyers, and special functionality for pick-to-store radio frequency screen flows, multiple-inners, and put-to-light integration.

Internal user testing and training was conducted by the SAP Services organization for greater self-sufficiency with post-implementation issue resolution and maintenance.

Running Better

Living up to the commitment

Indigo was pleased with the implementation support SAP Services provided over the lifespan of the project. SAP lived up to its commitment to be a long-term partner and put Indigo’s success first. Whenever Indigo encountered technical challenges or complexities, SAP was able to leverage its worldwide expertise to solve the issues.

Benefits

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With phase one completion, Indigo was able to up the stock keeping unit (SKU) count in its warehouse, reducing its reliance on wholesalers and improving margins. The company could also handle significantly higher daily pick volumes during peak periods allowing it to lean into marketing and discounts much more than it could before, to drive higher sales and grow the business.

  • Increased SKU count in the warehouse by over 50%
  • Handled 100% greater sales volume on Cyber Monday over prior peak sales day
  • 1.5 to 2 times faster peak processing rates for outbound and inbound deliveries
  • Lower shipping costs and unit-picking costs in the warehouse
  • Improved consolidation and increased savings for the online supply chain


Completion of phase two enabled Indigo to pick more units at a lower cost. In a time of transformation, driving those savings to the bottom line is key for the health of the business.

  • Increased number of units picked per week by 35%, while at the same time reducing picking costs by more than 10%
  • Gained deeper insight into inventory and improved confidence in data accuracy
  • More capital available, enabling the flow of goods
  • More time for customer-facing initiatives that grow the business


With about 70 million packages going through its warehouse every year, reducing the cost of processing each package by only a few cents helps Indigo save millions of dollars.

Lessons Learned

Confidence-building transformations

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Accurate Data Builds Confidence.

By transforming its supply chain, Indigo has found innovative ways to drive costs down, increase margins, and improve the customer experience both in-store and online.

Today

Best-in-class

With SAP EWM in place for its online and in-store operations, Indigo feels its supply chain is now best-in-class and fully capable of supporting its business both effectively and efficiently. The upgrade to its warehouse systems and processes is not only saving the company time and money, but also delivering the speed and flexibility needed to handle an evolving merchandise mix.

Journey Ahead

Key growth factors for the future

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Focused on the Future.

Better, faster inventory replenishment means fewer books are needed on Indigo’s store floors – freeing up space and turning gift, lifestyle, kids, and paper merchandise into key growth categories for the company.

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