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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Handling 2-man delivery across borders

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Julien Callede, Co-founder, Made.com, and now independent advisor and consultant, speaks to Emma Herrod about how the company developed its logistics operations as the company grew and expanded internationally.

 

Made.com is an online furniture brand with a mission to make good quality, good design furniture affordable for everyone. When the company launched in 2010, its site offered just two items with pre-sales having to reach a certain level before they could be manufactured. Since then, the company has continued to offer a curated product range which has expanded from tables, coffee tables and beds from different designers to 10,000+ items that include storage solutions, lighting and soft furnishings. Now shoppers can choose from more than 5,000 skus at any one time with new ones added to the product catalogue each week.

 

As Made.com Co-founder Julien Callede explains, it has made sense to sell larger items of furniture online over the years and deliver them direct to customers. Even though people say that they want to sit on a sofa before they buy it, upholstery and larger items are a big part of the company sales. As well as operating online, Made.com runs three brick and mortar showrooms in the UK as well as one in Paris, one in Berlin and a last one in Amsterdam. The first opened in London in 2012 with others opening later in West Yorkshire and Birmingham. The website shows which items are located in each showroom so that shoppers don’t have a wasted visit.

 

As Callede explains, in the early days, the company had to work out how to source, manufacture and ship furniture from different suppliers and countries across Europe and the Far East and how to handle warehousing and deliveries. When the company started it struggled to find a logistics partner which specialised in furniture and was also willing to work with a start-up with no background. “Some said no,” says Callede.

 

Made.com started working with a 3PL which specialised in white goods and has continued to work with them since day one. The retailer has also helped the 3PL to grow its business, taking on some of the warehouse rental risk as the furniture business outgrew its warehousing space. The 3PL handles goods in, warehousing and the despatch of products to customers as well as running the larger warehouse space.

 

Made.com has been able to future proof its operations and logistics to some extent by having Callede, as one of the founders, directly involved in building and scaling them for the first seven years. With an overall view of the business, an understanding of the customer, the business, technology and where the business would be in 6 months, a year or 3 years’ time, he could ensure that everything was set up in a way which was scalable for future needs.

 

However, as he explains, scaling warehouse space is going to be an issue for any business since no-one wants to pay for warehouse space that is not being utilised. On the other hand, they don’t want a lack of space to restrict the business. Callede concedes that Made.com did have 2 days where goods-in were having to be processed outside with goods turned around and despatched straight out to customers.

 

While shared warehouse space does offer a solution, Callede explains that every few years the business still had to look for extra space. It’s important therefore, he points out, to have a close relationship with 3PLs which can help anticipate growth stages that retail businesses go through.

 

DELIVERY

 

Made.com looked into setting up its own fleet for deliveries initially but “it didn’t make sense,” says Callede, so instead a number of small partners work with the company to deliver to different areas of the UK. Many of these have expanded over the years to offer a wider service.

 

Made.com has always handled directly the negotiations and relationship with delivery partners, since it has always found it more effective and a better way of avoiding operational issues. When it started, one company was delivering very small items, another handled the very large items and 2-man deliveries and a third handled items which couldn’t be sorted on a conveyor belt but can be delivered by one person.

 

Since the early days, Made.com has asked customers for feedback on their delivery experience. Customers who rate the delivery are then asked to comment further. These are all fed back to the delivery companies to improve the service and also help with developing the proposition, explains Callede. “Customer feedback helps us a lot to anticipate the next move,” he says.

 

It also helps Made.com to feed back and highlight issues such as packaging with the delivery companies. “It helps them to manage their service,” he says. “While scaling, it is very important to help your partners scale with you.”

 

When it comes to choosing delivery partners, Callede advises others retailers that they shouldn’t choose delivery partners based solely on price. “Don’t go cheap,” he says.

 

One of the delivery issues the company had to decide upon early on was the actual cost to the customer of delivery especially where large items requiring 2-man delivery were concerned. Delivery costs can sometimes represent up to 30% or 40% of the product cost, explains Callede. Delivery partners can ask up to £80 or more for a 2-man delivery which is something that “people don’t want to pay,” says Callede. Therefore, the delivery cost to the customer is very often subsidised in ecommerce.

 

However, customers don’t want to be lifting 30kg plus items into their house from their doorstep so the fulfilment service includes delivery into the room of the customer’s choice and removal of the packaging. Made.com has also looked at assembly and other add-ons that customers are looking for as a part of the delivery service.

 

The delivery promise therefore is one of value. Customers are happy to accept a longer lead time and this has reduced from 14 weeks when the company started to an average of 2 to 3 weeks now from the time the customer places their order until the item is delivered to them in the UK. Right now, a lot of items are even despatched next day.

 

Longer lead times can actually work in Made.com’s favour since some people won’t always want a sofa delivered the next day. It’s about service and being accurate when giving a delivery date and time slot. “Giving them [the customer] the choice is good,” says Callede.

 

INTERNATIONAL

 

Until 2013, Made.com operated only in the UK but the business has expanded with websites now for France, the Netherlands, Germany, and Switzerland with in-country teams ensuring that the business fits the local market. Orders from customers in Ireland are fulfilled from the UK site and customers in Belgium can purchase through the French site while the German site also fulfils orders for customers in Austria.

 

The launch of international websites brought additional logistics complexity and the company has had to evaluate different logistics and supply methods, look into whether items should be stored in different countries, be sent directly to customers or handled by a third party.

 

Having local warehouses is better for P&L but is not so good for supply chain since product has to be held across the different countries and this adds expense as well as risk. With the additional cost of transporting large items across the channel, Made.com decided to keep his first hub in the UK – as this accounts for around half of its business and still has plenty of scope for growth – with additional hubs in mainland Europe

 

Callede’s advice to other retailers looking to take their business internationally is “take your time and keep it local.” He advises others to sort out their business model in the UK and learn from it before taking time with international, planning well and looking at what other retailers are doing. “What are the local best practices,” he asks. The next step is then to localise the delivery and brand marketing and use local teams to manage customer service.

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