When B2B goes D2C
In Episode 7 of The eCommerce Experience, Andrew uncovers why pivoting to a Direct-to-Consumer model isn’t as simple as you might think when your bread & butter is B2B!
Welcome to The eCommerce Experience - the podcast that turns YOU into an eCommerce expert. Your host, Andrew Rogencamp, shares his wealth of B2B and B2C business experience to take you on an eCommerce adventure.
Each month you'll hear from industry experts and meet people just like you - looking to take their business to new heights online.
Andrew: Welcome to Episode 7 of The eCommerce Experience! This podcast is designed to bring you information about both B2C and B2B eCommerce.
We've interviewed different people, giving you insight on different elements of eCommerce that these days, you really need to know about. This week, we're talking to Olivija van Heerwaarden, and she is the Digital Manager for a company called CWM, out of Melbourne. And they have made the important step of not just being a wholesaler - they're traditionally a wholesaler - but also moving into that D2C (i.e. Direct to Consumer) space. Essentially retailing to customers. And they've done it quite successfully without upsetting their B2B customer base. I hope you enjoy this chat.
Hey, welcome today Olivia. Thanks for joining us.
Olivija: Thanks for having me.
Andrew: Can you just tell me a little bit about CWM? Your brands and you know, a bit of background about the company?
Olivija: Yeah, for sure. So CWM Homewares is our homewares, glassware and cookware distributor in Australia and also in New Zealand.
So we have the exclusive marketing, sales, and distribution rights for a bunch of different international brands like 'Tom Dixon', 'Berndes' cookware, 'black + blum' which is a sustainability brand, 'LSA' glassware, 'RONA', 'Pasabahce'....
But one of the more exciting things is we also develop our own brands, in-house. So we've got 'Degree', 'Symphony', and our most well-known brand would be 'Ecology'. Another cool thing the company does is we offer private label services for our retail partners. So we develop ranges for some of our partners as well.
Andrew: Ah, okay, that are exclusive to those guys?
Olivija: Yeah, their own label, yep. And we do all the product sourcing, the beautiful painting and the artwork for the products, and all that.
Andrew: Excellent, nice stuff. So I guess at heart, you're a B2B company. You've always had a wholesale B2B site... But, you know, recently you also opened a B2C presence as well, or at least a D2C presence, Direct to Consumer.
Olivija: Yeah, we did! So yeah as I said, traditionally we’ve been a B2B business. And we're still very much a B2B business, that’s our bread and butter. That's what we're known for. But yeah, as you said, as a company we'd been playing in the eComm space for our B2B side of the business, so we already had our wholesale website set up. It was working really well, and yeah, it was a really great space.
So technology wise, going to the B2C side of things wasn't that much of a leap. We kind of already had that integration there. But like most wholesalers we’ve just been facing challenges with the changing retail market, stores closing and things like that. So yeah, we found ourselves in a situation where some stock just wasn't moving, and B2C was a really great way to solve that issue.
Andrew: Sounds good. So I think years ago, you know, my experience was as soon as the wholesaler goes out and creates one of those B2C sites, all of the retailers are up in arms, and “you're competing against us!” and things like that. What was your experience?
Olivija: We haven't actually received much of that at all. The retailers actually kind of love us being on eComm; it gives them a point of reference for their own customers. So we list everything at RRP, so it means that they actually have something to reference for their own good deals and things like that. Yes, so they've actually been quite supportive, and they love that they're able to grab product images and product information and everything they need to help support them.
Andrew: So it's really help the brand and, therefore, helps your retailers.
Olivija: Yeah, absolutely, and with all the other marketing that we're doing to support the B2C site, it's kind of supporting the brand. Especially for ‘Ecology’ - getting people to know who Ecology is and what we're about and what our products are. And then they’ll just go off to Myer or David Jones or wherever it is, and by the product there.
Andrew: So the products on that B2C site are really products that, in most cases, aren't going to be stocked in that retailer? The stuff that didn't sell, or last year's stock, that sort of thing?
Olivija: Yeah yeah, definitely. It's a lot of ranges that just weren’t popular with customers or retailers or just aged stock, that we're trying to get rid of and move so that we have more room in the warehouse for all the new stuff.
Andrew: Yeah, yeah, and nobody can blame you for that, you know, it's every business’s prerogative to turn that stock over. And you know, you never know when you develop a product, whether it's gonna be popular or not. You might think it's gonna be popular, and then, for whatever reason nobody buys it. So you've got to be able to move stock.
Olivija: Yes, exactly.
Andrew: Interesting. So I was I was going to say that, you know, these D2C sites can really support the retail channel, but it also gives you a direct connection to the consumer, which you would have never had in the past.
Olivija: Yeah, exactly. Especially having social media to support the website as well. We've got customers talking to us and telling us “Oh we love this” or “we found an issue with this product”, and it means it's kind of streamlined any issues or any product issues that we're having, being able to talk to the customers directly. But yeah, it just allows us to control that brand image as well, and really make sure that who Ecology is is being represented out in the market.
Andrew: Okay, so it allows you to control that narrative around the brand. And does it allow… like if I bought something in you know Myer or David Jones, can I then get on the Ecology website and talk to you guys directly about maybe an issue I had with that product?
Olivija: Yeah, absolutely. We always have customers coming to us through our customer service portal, just asking us questions about products, saying “I saw this at David Jones, and I can't find it now. What is it called?”
Andrew: You could even direct them to stores that DO have that product, based on who you know you've sold it to in the wholesale environment…
Olivija: Yeah. We usually direct them to one of the majors because we know that they're kind of stocking most of the stuff. But we try our best to accommodate for where the customer is, and what their local store is as well.
The Difference Between B2B and B2C
Andrew: So I'm always banging on about the difference between B2B and B2C. And, you know, as you said before it, it wasn't a great leap for CWM to go from B2B to B2C. But I always talk about how in B2B, you have a buyer. And in B2C, you have a shopper. And they behave very differently. I'm interested to get your take on how you're dealing with B2B people and you're dealing with B2C customers… How those two beasts are quite different for you? And the same?
Olivija: Yeah, I think in terms of what the retailers are buying for B2B, that's definitely based on buyers and what they're seeing in trend books and things like that. Whereas obviously the consumer is seeing either what they see in magazines or on social media or on Pinterest or whatever is inspiring them, and their own personal style.
So definitely what we sell into a retailer can differ so greatly to a consumer. And that's why the Ecology website has been so great for us. To push those things that aren't moving to retailers - because there's gonna be a consumer out there who loves that print or loves that colour, that just didn't work well in retail land.
Andrew: Yes absolutely. A bit like when you're driving down the road and you see a car that's some colour that you just think “Who would buy that?!” But some people do!
Olivija: Yeah that's right. There's always a customer out there!
Andrew: Yeah. There must also be differences in the way, you know the level of interaction between a B2C customer and a B2B customer. You know, in terms of how they deal with your business
Olivija: Yeah, definitely. We've got Sales Reps with us, who are kind of dealing with the major retail customers. And with private label, there's a big relationship there that our sales reps have had to build with those buyers at the retailer. Whereas the kind of queries we get from end consumers are obviously very different to the questions that we get through the B2B channel.
Andrew: Yeah. What about things like freight and packing and things like that?
Olivija: Yeah, I think that's definitely being one of our biggest challenges when opening the B2C site. As we’re traditionally a B2B wholesaler, all our stock that we're getting in is packed in a way to ship to retailers. So we'll have 6 mugs packed nicely in a box, it’s not gonna break. So we face this challenge of how do we ship just 1 mug to a customer without it breaking through transit?
Andrew: And then I guess the challenge is you've then got 5 left in a box, which you can no longer sell to a retailer.
Olivija: Yeah, exactly. What do we do with that? And also just picking single orders was taking so long. So again, how do we combat that issue? Instead of picking one mug here and one plate there, we’re now kind of consolidating all our pick slips for B2C, and picking it kind of like we would pick a retailer, and then packing it separately.
Andrew: Okay, so pretending like all of those customers are one retailer, and picking them all in one hit.
Olivija: Yep, so maybe there are 6 mugs ordered for that day, so we can pull those particular 6 mugs at once, instead of going back to that aisle, that location.
Andrew: Makes sense! Instead of going “Oh hey, I picked this same mug five minutes ago…” Yeah, that makes a lot of sense.
And I guess there are some of the things for people listening to this podcast, who might think “Oh we could just sell B2C direct…”. There are a lot of logistical things that you need to think of and the cost of sale. You know, we often bang on about the cost of sale in selling those products. You know, there might even be post codes for instance that you don't want to ship to.
Olivija: Yeah, exactly. We're finding that just shipping one mug to a rural suburb was at a loss to us. It was not profitable whatsoever - even when we were charging for freight. They're the kind of challenges…
Andrew: Yes, even when you're taking that full margin too.
Olivija: Yep. So then you face “Well, we could charge more freight…” But who’s gonna pay three times as much freight, and the cost of a product?
Andrew: That's interesting, yeah. So I guess - without giving anything away confidentially - what do you see for the future for your two sites?
Olivija: I think we really want to delve more into technology for both sites. So we've been looking at things like clickable catalogues. You know, taking really beautiful photography, turning that into a catalogue, something that the customer can browse through, and they get more of an understanding of how that product could fit into a home. Kind of personalize it, but still be tech savvy, where they can click in the catalogue, add it to cart… So that would be for B2C and B2B.
For B2B, and I guess this is a response to COVID and just, you know, everything that has brought about… is there were no trade fairs this year. So how do we get new customers? How do we sell in the new season? So we've been looking again at interactive platforms to showcase our product and one of those being like a virtual clickable showroom or a virtual trade fair.
And look, maybe next year we don't need it, but we do think it's obviously always great to advance as much as possible, and give both our retail customers and our consumers the best experience on both sides.
Andrew: So it's interesting you talk about that trade fair. I know, being in the IT industry, there's a whole lot of things that we would have gone to this year, conferences and things like that, that obviously just didn't happen. And they all got run virtually, most of them. Global Retail did some stuff, and Microsoft did a big one recently with all the partners, which would have been, you know, go to Melbourne, stay in a hotel for four days… And almost the way they have done these this year was a better experience for us. Because you really only had to attend the ones that you wanted to attend. Often at those things, you find that “Hmm I need to attend only three today, and god, they're all on the same time. So I'm gonna be stuck doing nothing, you know, sitting in an uncomfortable chair, just responding to emails for the rest of the day.”
Whereas this year you could just go to the one you wanted to, and get the recordings of the other ones. And I sort of question whether some of those big conferences will ever come back after COVID.
Olivija: I definitely think it's changed things going forward. We've all had to be agile and change what we're used to. I think it's definitely shaped a whole different future for every industry.
The Magic of ERPs for eComm
Andrew: For everything, yeah. I don't think there's anybody that's not been affected. So, speaking of COVID, what's COVID been like for your business?
Olivija: COVID’s definitely been a bit of a roller coaster. I think at the beginning obviously, everyone shut down. So eCommerce was great, but then all of the retailers shut down. So the B2B side of the business was affected. But luckily the B2C side of the business was going great. As I said, eComm just saw such a spike in volume of orders. It's definitely something that we weren’t prepared for, but, you know, I spoke to being agile, and the agile nature of CWM meant that we could easily deliver that.
But we've got a lot of online retail partners, so we saw that obviously their orders were increased as well. So it was managing those that became a priority for so long. But I think one negative impact for us, and what I think most Aussie-wide wholesalers are experiencing – is stock delays. Because of border closures and obviously things being produced overseas and having to fly in. We’re planning for launch and a range has been pushed back a couple of weeks because containers are being cancelled and this and that.
Andrew: Yes. I remember speaking to a customer very early in the piece, when all the rush was on, you know with food and stuff like that. And he sells rice. And he had a call from one of the buying managers of one of the big two supermarket chains. He normally sells this supermarket chain a pallet of rice a month. And they said “How much have you got?” He said, “100 pallets.” They said “we'll take it all.” And you’d think that would be good, but his problem now is he can't supply rice to anybody else.
And, you know, giving that all to one customer actually caused him reputational damage with hundreds of other customers that he would normally serve. And he couldn't get that stock then for four months. So you’ve gotta be careful to not see those massive big you know, “I'll take everything you've got”... Sometimes they're worse than spreading it out amongst all of your customers and being a bit fairer that way.
Olivija: Yeah, absolutely. And I think that’s something that we're definitely experiencing at the moment on our B2C website. We had such traffic, and such a volume of orders. So much product was being shipped out, but we weren't getting product in from our suppliers. So now we've kind of got a lot of Out Of Stocks at the moment, not much variety on the website because of this supply and demand issue.
Andrew: So you're also selling through marketplaces?
Olivija: Yeah, we are. So we're on five marketplaces at the moment. And it’s just been a really great opportunity for us, again, to get rid of that old stock from especially other brands, stock that is aged, brands that aren’t that popular anymore, or just product that isn't that popular anymore. And as I said, there's always going to be a consumer out there that wants it. And we found marketplaces kind of the perfect avenue to get rid of that.
Andrew: And obviously you're integrating all of that back to your ERP, it’s just all magic?
Olivija: Yeah! Yeah it all comes through the same channel. It all goes through to the warehouse the same way, so the warehouse doesn't see it any differently. It’s all seamless. It's been really great!
Andrew: I think that's really important you know? That's another thing I often bang on about is integration. If you don't think that integration to your ERP is important, then you're setting yourself up for failure. Because without it, the bigger you grow, the bigger problem you're going to have.
Olivija: Yeah, absolutely. And I think having everything in the one ERP, whether it's the Rep portal for our sales reps, the B2B site, the B2C site, or marketplace… Everything gets managed in the one ERP, and it's really easy. You don't really leave that much room for silly mistakes because it's ALL coming back to the one product in the one ERP.
Andrew: Okay, sounds great. Well thanks Olivija for joining us today! It's been quite an insight into what you're doing down there in Melbourne. We hope you get out of your lockdown very soon. You must be pretty much over it, your bubble. As you know, we're up here in Queensland enjoying the sun..
Olivija: I know! We’re all very jealous of the rest of Australia!
Andrew: You know, I've known you Olivija for a couple of years now, and what you've done in that business has really transformed the position they're in now. And I think really, without those B2C sites, and the drive you've put behind it... It'd be a different situation. So congratulations.
Olivija: Thank you. Thanks Andrew.
Andrew: Thanks again Olivija, we’ll speak soon.
Well I hope you enjoyed that chat. Olivija certainly does give a lot of insight into how to do that D2C step without alienating your true wholesale customer base. And you know, how to do it with grace and really have a good successful result from those initiatives.
We'll see you next time on The eCommerce Experience.
Thanks for joining us! If you found today's episode valuable, be sure to subscribe to the podcast so you don't miss out on our upcoming shows.
If you'd like to preview some of our other episodes, you can find them here - https://www.commercevision.com.au/podcast