While not Silicon Valley, the Boston metro area has been an impressive incubator of enterprise application start-ups. TradeStone Software, a provider of merchandise lifecycle management (MLM) solutions, is one success story. Headquartered in Gloucester, Massachusetts, with offices in Atlanta, Bangalore, Boston, Hong Kong, and London, TradeStone is a relatively young company (celebrating its 10th anniversary next year). Its founders have a wealth of experience in the retail sector. After spending 30 years helping to shape best practices for the industry and establish standards that improve quality, performance, and efficiency, TradeStone CEO and founder Sue Welch, along with her team, continues to be passionate about defining and building software that enables retailers to inspire and build brands that their customers appreciate.
This powerhouse team includes the addition of two key hires to the Executive Management team: Chris Morrison, senior vice president (SVP) of sales and marketing, ran retail strategy and sales at Oracle and has made a major impact in delivering sales and developing new markets, and Cari Bunch, SVP of product and services, formerly a partner at Kurt Salmon Associates (KSA), has been building out the company’s current infrastructure. See the Backgrounder that follows this article for an overview of the TradeStone MLM suite and its market.
TradeStone Software had a productive showing at Retail’s BIG Show 2012, organized by the National Retail Federation (NRF). The company introduced Bamboo Rose, a global e-market community for retailers and suppliers who want to exchange ideas and product information before they buy. Built using TradeStone Software’s MLM technology, the marketplace allows retailers to better prepare for each season, while suppliers can market their goods.
This major recent innovation is a vetted (by invitation only, for now) cloud marketplace for retailer and supplier collaboration. Bamboo Rose solves several retail buying issues related to the time-consuming organization, review, and sampling of thousands of items viewed online and during on-site market trips. Sellers can create showrooms where retailers can shop the market virtually to make their own catalogs, request samples, and create buying trips.
Bamboo Rose, whose name symbolizes “luck” and “love” respectively, allows merchants to do the following:
- Publish wish lists of products they are looking for, visible to a vetted list of suppliers
- Shop suppliers’ showrooms online and order samples from them
- Plan and organize buying trips
- Shop trade fairs in person, capturing their interests via only a smartphone (or other mobile device), and have all of their information available instantaneously at the office
Bamboo Rose works with the TradeStone system, or other systems, to convert the shopping experience into an enterprise buying transaction via a simple click. Retailers pay a monthly membership fee and suppliers pay an annual membership fee and usage fees. Since it is a software as a service (SaaS), there are no hosting or deployment costs.
The application is offered through true multi-tenant cloud computing (whereas other TradeStone MLM solutions can be hosted, if required) and as a mobile app. The community is made up of screened buyers and sellers, currently limited to retailers that are TradeStone customers and to invited suppliers. This represents more than $260 billion in retail sales being serviced by approximately 20,000 suppliers.
Also at NRF 2012
At NRF 2012, TradeStone also hosted a session with ones of its customers, Family Dollar, and Citi Investment Research, entitled “Retail on the Offense: Driving Growth on Main Street and Wall Street.” The speakers discussed the importance of having the right technology in place to implement quickly (Family Dollar went live in 100 days with TradeStone) and begin to see results. They also spoke on the key trends and strategies to help maximize profits and mitigate sourcing costs, as well as how Family Dollar spurred growth in a down market thanks, in part, to TradeStone and support from executive management.
More customer testimonials can be found on TradeStone’s YouTube channel.
Changing Competitive Landscape
Once fierce competitors, former Eqos (now part of Trace One) and Arigo (former Rockport Trading Systems, and Sue Welch’s former venture) are no longer relevant. Their strength remains in the sourcing and order management space, but they are on older technologies (not service-oriented architecture [SOA]–enabled) and have a narrower functional footprint.
Another group of competitors is largely computer-aided design (CAD)– or product data management (PDM)–based, and they typically lack strong collaboration capabilities. In fact, many TradeStone customers are replacing legacy solutions from Island Pacific, Gerber WebPDM, Lectra, etc.
Thus, TradeStone now finds itself going head to head in most deals with PTC FlexPLM and has reportedly won the last six major deals when the focus was on retail finished goods. PTC claims that the fashion sector has been its fastest growing business, and many observers agree that FlexPLM is a top player in this vertical (along with TradeStone, and New Generation Computing [NGC] and Centric Software close behind, depending on the particular retail sector). When it comes to items and parts that require more engineering (e.g., footwear, sports equipment, etc.), PTC wins owing to its CAD and engineering heritage. Rather than compete with many more competitors in the footwear space, TradeStone should focus on apparel or other areas with less competition.
TradeStone in the Future
While TradeStone is currently using Adobe Illustrator as a CAD and viewing tool, it is contemplating partnering with another PLM provider and other vendors of popular CAD products. The importance of integrating CAD and engineering tools within PLM has become apparent—even in the apparel space, as PTC’s success shows. But achieving engineering savvy may be difficult for TradeStone as its traditional expertise is in finished goods and artwork.
For now, TradeStone remains reserved about developing clienteling (consumer purchase history and profile) capabilities, as some research indicates that only seven percent of consumers are willing to provide their contact info, such as ZIP code or e-mail address, at the point of sale (POS)—i.e., everyone is paranoid about their privacy being compromised. TradeStone may choose to further build assortment planning capabilities and alliances with accounting and enterprise resource planning (ERP) vendors. More likely, TradeStone will focus on incorporating a plethora of analysis and social tools into the Bamboo Rose marketplace (e.g., peer review, social listening, social analytics, matchmaking recommendations, etc.)—a private marketplace such as this one stands to benefit from social technologies.
BACKGROUNDER: TradeStone Software
Value prop: TradeStone Software helps retailers, brand manufacturers, and suppliers increase market share and improve margins through its ability to more effectively inspire brands and bring them into their stores.
Customers: American Eagle Outfitters, Belk, Alliance Boots, Family Dollar, Groupe Dynamite, Guitar Center, Kohl’s, Le Château, Macy’s, N Brown Group, Pacific Sunwear of California, Shoprite, Urban Outfitters, and Wilkinson.
The ever-changing landscape in today’s softlines retail world includes the following:
- A hard commitment to quantities, components, and flows is required by retailers, even while consumers have only a soft commitment (brand loyalty) to products
- A changing relationship with suppliers due to aggregation and positioning of raw materials
- Designs being delivered at the last possible minute
- Mid-season intelligence that drives the creation of new styles or variations
- A focus on risk management and ensuring profitability, as supplier financing looks to retailers’ balance sheet and visibility
- Postponement strategies that impact color, size, geography, and silhouette at the last possible moment
- Last-minute in-season changes to products driven by sales and predictive analysis
- The ability to dynamically re-sort new products and variations within original commitment quantities in assortments
- Embedded safety and government regulations and requirements and increased activity by governing bodies
TradeStone’s award-winning MLM platform unifies the design, sourcing, ordering, and delivery of private-label and branded goods. Many fashion, apparel, footwear, and accessories retailers have benefited from leveraging a “single version of the truth” via the TradeStone MLM suite. The vendor offers a merchandizing system of record (purchase transactions, with the ability to feed into back office accounting and payment systems), global trade management (GTM), and product design system of record, all in one suite for private-label retailers, brand manufacturers, and their suppliers.
Figure 1. TradeStone’s “one version of the truth”
Solution Footprint Expansion
TradeStone MLM suite brand awareness and market share continues to increase. Originating from the realm of sourcing and order management, the MLM footprint today features the following five solution sets:
- Product lifecycle management (PLM) for Retail—enables private-label and branded merchandise development, from inspiration through design to specification and testing
- Collaborative Sourcing—simplifies and manages the complexities of sourcing from requests for quote (RFQs) to supplier selection and negotiation
- Order Management—supporting domestic and international ordering, shortens the order placement and collaborative confirmation processes
- Supplier Community Management—increases visibility and collaboration with trading partners for improved performance and relationship quality
- GTM—integrates packing lists, invoices, and trace-and-track data and compliance information to provide a holistic view of production and delivery processes
A major functional enhancement involves a new Production Forecasting and Materials Management module, which, together with current contract management capabilities, can help retailers handle the risks of sudden material shortages and price hikes (e.g., the cotton crisis of 2010/11). Production forecasting also gives retailers an accurate view of their capacity availability in a format that manages projections, reserved capacity, and factory competencies. This gives them the confidence that their goods will be shipped on time and allows them to respond quickly to trends and changes in the market.
TradeStone also offers strong “what-if” scenario capabilities for evaluating total cost of sourcing (TCS) and/or total landed cost (TLC) among the available alternatives of supply, shipping, etc.
Figure 2. TradeStone MLM platform and its applications layers
TradeStone remains profitable with zero venture capital (VC) funding and an impressive double-digit growth rate:
- 48 large retail customers (the vendor expects 60 by the end of 2012), which translates into more than US$200 billion in merchandise managed, over 250 unique brands supported, and over 15,000 suppliers connected
- 110 employees, with 20 open positions currently, in professional services, marketing, sales, product development, and engineering, among others
- A new Boston (North End) office opening (with a little housewarming party) is slated for spring 2012
Historically, TradeStone’s sweet spot customers have been retailers with more than US$1 billion in revenue. But now TradeStone is moving downstream to deal with brand companies in the US$200 million to US$500 million range, as well as retailers in the under US$1 billion market.
Geographic market: Expansion in the Middle East, Australia, and South Africa, and making a push into Central and South America.
A sampling of new customer wins:
- Ascena Retail Group, which consists of Dress Barn, Tween Brands, Justice, and Maurices
- Spencer Gifts
- Family Dollar
- Pep Stores, in South Africa
- Hudson’s Bay Trading Company, including Lord & Taylor
- Landmark Group, a renowned retail conglomerate in the Middle East
- Hot Topic
Implementation partnerships: IBM, Kurt Salmon, SD Retail Consulting, Logica in France, and Tradestream in South Africa.
Independent software vendor (ISV) partnerships: A number of new alliances are soon to be announced, including for business intelligence (BI), assortment planning, and price optimization.
References and Recommended Reading
TEC Vendor Note: Lectra, A Focused PLM Player. July 27, 2010.
Product Note: NGC’s Fashion PLM and Sourcing Solutions. January 8, 2010.
The Two Driving Forces behind Fashion Products. November 5, 2009.
Managing Trees versus Managing Grass. October 2, 2009.