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Saturday, August 6, 2005
A sea of data
Marine Depot owner overhauls his software to see more liquid assets.
By JAN NORMAN
The Orange County Register
When the television show "CSI: Miami" in May 2004 needed several tons of white sand in a hurry, it turned to Marine Depotin Anaheim.
The Internet retailer of saltwater aquarium supplies could tell with a few computer clicks whether it could fill the order.
It found the sand in seconds, largely because of owner Ken Wong's insatiable desire to know the numbers that drive his business. Such data have helped Marine Depot become one of the nation's largest distributors of marine and reef aquarium products, with annual sales of $13 million.
But Wong isn't satisfied. He needed more data to grow the company to his goal of $150 million in annual sales. So a few months later he invested half a million dollars in integrated data software.
Marine Depot's investment shows the emphasis that high-growth entrepreneurial companies place on technology rather than jobs to achieve high growth in global markets.
Since the company's new system started running in November:
ââ"šÂ¬Ã‚¢ The percentage of customer orders shipped the same day they are received has increased from 75 percent to 90 percent.
ââ"šÂ¬Ã‚¢ The company's capacity to fill orders has more than doubled to 1,500 orders a day without an increase in warehouse staffing.
ââ"šÂ¬Ã‚¢ Sales are up 12 percent, and Wong estimates the system will enable Marine Depot to increase sales an additional 25 percent without adding workers.
His ambitions for Marine Depot date from its beginnings in 1998 in his apartment after he finished premed studies at UC Irvine. He built the company's first e-commerce Web site using off-the-shelf software.
While the Internet sector faltered and flopped, Marine Depot's sales of pumps, tanks and other products for saltwater aquariums soared.
The company moved from a Monterey Park apartment to a 1,000-square-foot Santa Ana shop, then to increasingly larger locations until it reached its current 16,000-square-foot Anaheim warehouse.
Wong dropped plans to attend medical school.
"I like aspects of this business that wouldn't go in medicine," Wong says. "My job is extremely varied. I can pick and choose what I want to do more of. I get to do some (computer) programming that drives different parts of the business."
As the company grew, Wong wanted more information about the business, such as which customers bought the most and whether Californians bought more than New Yorkers, and why.
"We use that information in marketing," Wong says. "I like to run the company with data."
Growing sales taxed the old data system, so Wong asked for advice from David Hurwitz, a fellow member of the Young Entrepreneurs Organization, a peer advisory group for entrepreneurs under 40 whose companies gross more than $1 million a year.
Hurwitz, chief executive of X Factor Consultingin Laguna Beach, had used Microsoft SQL Server database- management software to build his distribution company, which he later sold. He advised Marine Depot to set up a similar system that could grow with the retailer without expensive adjustments later.
"It must meet Ken's vision for what he wants to do several steps down the road," Hurwitz says. "This system has been used by Pepsi and General Mills, but the cost has come down so that you don't have to be a huge company to buy it."
Wong is relatively rare in his willingness to buy such advanced technology. Few small-business owners think of technology as an investment rather than an expense, says Donna Armstrong, general manager for Microsoft in Southern California.
"Most of the time it's those who want to grow the business who recognize the opportunity (technology offers) to make them more efficient and reach more customers," he says.
Marine Depot's new system linked all its data on customers, employees, finances and inventory of about 6,000 products. Wong now knows instantly how many guppies are in stock, their life expectancy, how quickly they're selling and when to reorder so the new ones arrive just as the last one from the previous order is sold. If sales rise unexpectedly, the software adjusts.
Because quick delivery is crucial to Marine Depot's success, the company had to completely rearrange its warehouse ââ"šÂ¬Ã¢â‚¬Å“ and did so in one weekend. Products that sell the most are now nearest the order-fulfillment desk, reducing by one-third the number of steps that warehouse workers walk in filling an order.
Each item and its shelf location are in the database, so an order filler with a hand-held computer can find the right product instantly. Fast, accurate orders mean satisfied customers who will buy from Marine Depot again, Wong says.
Not only has Wong been able to grow the current business with the same labor costs, he can expand Marine Depot into other aquarium product lines and start work on a sister company, Petstore.com, that will move him toward his vision of a global pet-supply company.
"I'm always visionary ââ"šÂ¬Ã¢â‚¬Å“ where I want to be in a year, five years and how to get there," Wong says. "This (data) system is a piece of accomplishing that vision."
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The system we put in place was Microsoft's Great Plains software coupled with a warehouse management software that made the whole thing a very custom software once in a package. We were actually a case study for some of the microsoft folks. Nothing like being poked and proded by Microsoft. Oh and yes a big data warehouse is now in the mix of things... nothing like 50 hard drives all running at the same time 
