What was the motivation to move towards a more digital business model?
“On the one hand, we wanted to sell online because the customers are increasingly getting used to doing everything online. In their private life, they are accustomed to services as offered by Amazon or Zalando, and therefore begin to wonder why in the B2B environment they should still do everything in an old-fashioned way. In addition to that, we wanted to improve our service. We had a strategic analysis performed by a company called Fenego, who made an overview of how to better translate our goals into a digital strategy. We want to sell the farmers what they need, but also offer technological support to help them improve. One example is to help livestock farmers monitor the growth of their animals online. Technological applications like this not only serve the farmer, but also help us to offer the farmer new options to optimise his business, such as advanced nutrition fitting his situation. The classic cross-selling has got a new component: the salesman used to speak to the farmer out on his land to talk about his needs, but it is now also driven by data gathered online. Online data has given us an alternative, additional source of information.”

So, the e-commerce system is also used within the organisation?
“The digitalisation of Schippers’ processes supports both the continuous improvement of the system, and the optimisation of support the company can offer to its customers. Customers can see their invoice history independent of the sales channel of their previous orders. They can easily place repeat orders or make a list of favourite products. They can also start a return procedure wherever they are. Also, the inbound personnel of Schippers can always access this in real time.
The 10 localised websites not only serve the customers buying online, but also support the inbound sales agents when assisting buyers over the phone or to make orders. As the inbound agents make such heavy use of the e-commerce systems, their feedback is of great value when improving the processes.”

Do you offer localised content?
“Yes, we have all our foreign websites in the appropriate languages, and I can tell you that translation is an undervalued challenge. We use translation agencies, and then have all content double checked by our local people. We are lucky to maintain good relationships with the team and clients in all countries, so we get enough feedback to find problems in the texts and to improve. Besides translations, the content is localised as well as the payment methods.”

How did you manage the transition to a functional, international e-commerce system?
“We have a PIM system (Product Information Management), where we manage our collections, which we share with the webshops. In the Netherlands, Germany and Belgium we have the same collection, which can be compared with a category structure. Products may differ, but the structure remains the same. In Canada, for instance, we have a smaller assortment, so we had to adapt the category structure. Our PIM shares product data and collections with touchpoints through websites, apps and catalogues. From the PIM, we have a special application to share information with the website and we also use it to make our catalogues.”

Catalogues? Do they still exist?
“Sure! They are an important marketing and information feature because people can easily start exploring with catalogues. In addition, with a web shop, you can’t make it clear that your company has a wide range of choices, whereas the thick catalogue always creates that idea. Another positive is that clients start looking online when they are already in an order process, whereas the catalogue is looked at during lunch or coffee, just to have a little browse. This has an inspirational value.”

With which platform do you realise international online sales?
“We use Intershop. It is an internationally powerful B2B platform that makes it easy to manage different situations in different countries, e.g. when it comes to pricing, VAT or shipping costs. We thought the risk of taking an open source platform was too big for us. Intershop makes each international step faster and easier, and we can open in new countries without any problems. We integrate our catalogue, Syncforce and all client data and prices (SAP) with the Intershop platform.”

How do you manage international differences?
“In each country, there is a marketing expert who also advises on the local assortment. The assortment differs per country, and the registration for products might also be different. On top of that, we see that the acceptance of internet as a B2B purchase channel varies from country to country. In Germany, internet usage is sometimes very low, so we suggest to our farmers to try ordering online, but we never push them to change their habits. For us, there is no difference in which channel they use.”

In which way do you use online marketing as a tool?
“We carefully weigh with which kind of customer we are interacting with. Smaller clients are often sensitive to promotions, special offers, that we can put online. They constantly weigh us against the competition. Larger companies have a different relationship with us: we talk about solving problems and we build a different kind of trust and long-term collaboration. The website becomes an ordering tool. We know that the farmers need time for their work, so we don’t want to steal it. We make appointments for real discussions about optimising operations, and shopping can easily be done via our online services, even after working hours if the client wishes. One of the most important questions was how can we better facilitate our customers by offering a 24/7 self-service portal. In order to accomplish the goal of showing the customer as much of the information possible relevant for the customer individually, we needed to make information from the SAP ERP system available in a ‘My Account’ section on the webshop. This was realised through a synaptic integration between Intershop and the SAP-system used by Schippers. We also make increasing use of social media; Facebook is regularly used by farmers and we have already accumulated 10 000 likes in about 10 months. We also get questions there from all over the world, which has already clearly increased.

Is it difficult to make customers trust online markets after years of ordering from a catalogue?
“The most important factor here is reassurance. If you send a good order confirmation, you already win a lot of trust.”

How do you deal with marketplaces like Amazon or Alibaba, which may compete with you on certain levels?
“They are active in certain overlapping sectors, yes. We don’t use marketplaces like Amazon and Alibaba for our sales. For the future, I could imagine it would be interesting to grant other, third-party suppliers access to our marketplace and client base. But we would then keep everything under our name and brand identity. However, we would not like to engage in drop-shipping models, because it distracts our clients from their work if they have to leave the stable for multiple deliveries. In our checkout process, you can always bundle your products to a single delivery. But if we can arrange it in a way that suits us, developing towards a marketplace model is surely an option.”

And other continents, such as China for instance?
“There are cultures where our products simply meet a much lesser demand. In China, livestock farming is not at a level that structural hygiene and an anti-antibiotics policy as advocated by us, are something people are looking out for. But who knows what the future brings. Martien Schippers always said the Netherlands is- as far as the farming industry is concerned- a good indicator of what will happen elsewhere in the future.”

The post “I could imagine opening up for third-party sellers” appeared first on Cross-Border Magazine.

Stephan Spijkers, Operations Director at Westwing

Who? He has worked for Westwing for 4 ½ years, practically from the beginning of the company in the Netherlands. He is responsible for the entire supply chain process, from ordering from the supplier to delivering to the client and everything in between, including transport, warehouses and last mile carriers. He also manages certain IT developments such as new features on the website, the app and the mobile site.

This article previously appeared in Cross-Border Magazine Nr.2, which you can download here.

Furniture and home decoration is one of the fastest growing categories in e-commerce, with around 30% of total sales in Europe, and one quarter of sales in the United States already happening online. Selling furniture online is a logistical challenge on its own, but combining it with a flash sales concept for sure ranks among the more complicated business models when it comes to operations. Nevertheless, furniture and lifestyle pure-player Westwing is pulling it off, having grown from a start-up in a German garage in 2011 to an international player active in 14 countries with over 26 million members. We met with Stephan Spijkers, the operations director for Westwing in the Netherlands, in Amsterdam, to discuss the operational challenges of the fast-growing, international home and living retailer.

A complex business model
The business model of Westwing is complex, describing itself as a ’shoppable magazine’. Westwing runs 1000 new products per day in a flash sale method with 30-70% reductions and without having any inventory. The continuity and amount of new daily products are a clear advantage of this idea. The ‘shoppable magazine’ is a hybrid of an inspiration source and a daily deal site, active in Europe and with a smaller focus on Russia and Brazil. The trade-off of the business model are the long delivery times and the dependence on the supplying manufacturers to keep their promises.

Just as many similarly operating websites, Westwing places an order with a contracted supplier once the flash sale is over. “One of our main challenges is how to get products to the client faster. As our business model has zero inventory, 24-hour delivery will not work for us, but if you look at where we have come from, we have already achieved a lot. One year ago, we communicated a 3-5 week delivery period and now 30% of our products can be delivered within 1-2 weeks. Improving delivery times without breaking any promises you make to the customer, is one of our major challenges,” explains Stephan Spijkers.

Start in-house, scale up with partners, refine in-house
Westwing started small, from a little office in Munich where all employees helped packing deliveries. When growth accelerated, a partner was docked with experience in the ecommerce sector. Through the facilities and services of the outsourcing partner, Westwing quickly scaled and ventured into many markets. “After a while, we refined our services by managing the processes with the suppliers ourselves, including purchase orders, invoicing, and communication. In Berlin, we have now gone back to doing a lot of things ourselves, such as the inbound operations, which form an important part of the business.”

Sourcing and selling
The local offices work on two fronts: they source products from local brands, and they serve the local customer buying from the website. At the moment, Westwing is most active in the countries where there is also an office, but they sell to most neighbouring countries as well. The local presence is important, because the differences in customer preference in this sector are very outspoken, even between culturally similar countries such as Germany and the Netherlands. However, some countries share offices and warehouses: the Benelux is managed from Amsterdam, and the Berlin warehouse not only serves these countries, but also the entire DACH region. “In each country that Westwing is active in, there is a staff of 110-120 people sourcing and buying products, presenting them on the website, telling stories, taking photographs and holding interviews for the magazine. There are also extra styling tips along with most sales”. The products sourced in one country can be offered on all 14 Westwing websites, depending on how many countries are interested. Spijkers: “Sharing these campaigns means that a very small manufacturer from the Netherlands gets the chance to launch his creations in France and Italy.”

Cross-border platform
Brands can thus use Westwing to sell into new markets and to test demand in these markets, which makes it, alongside Amazon and other market-places, an interesting cross-border platform. The operations director explains: “Westwing understands online marketing. This is particularly interesting for manufacturers from the home and living sector that have little online experience. We offer a marketing platform, millions of relevant newsletters and a good logistics system, while creating an individual, beautiful brand representation on our site. Even if that means we must change product descriptions or send our photographer there to shoot the right images. Our suppliers don’t have to do too much; we can facilitate everything from presentation to logistics.” Selling furniture online is often perceived as a challenge to traditional players, Westwing did it from scratch: “The most special thing about our work is that we ship large furniture all across Europe on a daily basis, without the customers even noticing. When they order something, they often don’t even know that these products come from all over Europe. Maybe we should communicate that more. For us, these are normal daily operations,” says Spijkers.

The delivery must match the brand experience
One of the goals is to find ways to make the delivery experience match the overall inspirational tone of voice the company which is presented on its site and throughout the shopping journey. All parcels are therefore re-packaged in branded, turquoise Westwing boxes with a special filling. Products are divided into two categories, packages and ‘2-man handling’ goods, which includes furniture like sofas or beds. Both categories are handled by separate, specialised last mile carriers. The quality of the delivery is an essential part of the branding and customer retention process: “You don’t want your €1500 sofa to be delivered by a shady operator in an old minivan,” illustrates Stephan Spijkers. Returns are free at Westwing, even if it’s a box-spring bed or a couch. Items are stored at the warehouse. “Either we run a new campaign with this same brand, or we sell it off to third parties.”

Logistic challenges
“Making delivery faster” maybe sounds like an easy job to accomplish, but if you look at the way a parcel has travelled before arriving to the customer, the scope of the challenge becomes evident. Spijkers: “Suppliers from the Netherlands deliver products to the Berlin warehouse and from there they either go to Dutch or German customers or to other warehouses in Europe. On a micro level, it seems more logical to send one pallet directly from the supplier to an Italian warehouse and another one to France. On a macro level, it works best for us to gather everything in Berlin, where we can make bulk deliveries, sending a full truck to the Italian warehouse.”

However, Dutch and Belgian clients ordering from Dutch brands also receive their parcels from Berlin. In order to improve the turnover time, Westwing has now outsourced part of its fulfilment of smaller packages. “We want to serve our Dutch clients quicker and also improve the export options for our Dutch suppliers, which is why we selected a local partner,” says Spijkers, adding: “It was vital for us improve delivery times, especially for smaller products, because that’s what the clients desire. Working with a local partner is faster for Dutch clients, but also useful for foreign deliveries.”

Drop-shipping- a holy grail of the future?
Drop-shipping seems like a quick-win solution when it comes to improving delivery times, but it makes it complicated to safeguard quality. Westwing has started pilots with certain suppliers, helping them with the packaging, IT solutions and offering them the same contracts with the parcel carrier that Westwing has negotiated. A complete transition seems far away, though Spijkers acknowledges the rise of this trend: “if you look at the US furniture industry, they are already ahead of us. There, 70-80% of furniture and home décor is drop-shipped directly to the consumer. We lower the barrier by offering suppliers a drop-ship starter pack, providing the boxes and we help with an IT integration. But there are limits to where this approach takes us. In the US, you see that drop-shipping starts as soon as the products are sourced from the factory. They come in dropshipment-ready packaging, directly from China or Indonesia. That is the future, but it still seems far ahead.”

No special offers for Christmas
Although home and living items seem like perfect gifts, Westwing does not massively scale up its offerings for the festive season. “We believe in presenting our selection beautifully, not by filling up the website. Why add more just because we can?” says Spijkers. Logistically, however, there is a lot of coordination required during the holiday season: clients order more and a whole group of new clients come in. This peak must be anticipated and communicated not only with the brands supplying the products, but also with the logistics partners. “We have to coordinate how much extra capacity we expect for this season, and how we can improve delivery times further for the Christmas time.”

The future
In Germany, Westwing is experimenting with pop-up stores and has launched an “on stock” online shop called ‘Westwing Now’. “Faster delivery is going to be an important component of such a shop’s success. However, Westwing has proven that brand experience and the product itself can be more important than the delivery time. Otherwise, we wouldn’t have become this successful.” 

The post Westwing: The 14-country, zero-inventory challenge appeared first on Cross-Border Magazine.