ReplaceDirect offers 600,000 electronics parts on its webshop, with another 10,000 products added every month. The etailer wants to deliver as many orders as possible within 24 hours and aims for a high service level. But how do you do that without jeopardising your cash flow? Mark Lebouille of ReplaceDirect explains.
From its Beek en Donk distribution centre, ReplaceDirect ships 10,000 orders every week. Currently, the parts giant can deliver next-day in at least 90 per cent of cases, but this has not always been the case. According to Lebouille, ReplaceDirect only found the right balance between inventory and cash flow 1.5 years ago. "That's the risk with such a huge range," explains the managing director. "If you make a wrong choice, you quickly have a service level or cash flow problem." At ReplaceDirect, the latter was especially prevalent at times, Lebouille confesses. "In addition, we made mistakes with our product range. We sometimes did not offer products that were in high demand."
Using four steps, ReplaceDirect was finally able to arrive at the right strategy: product level, smart product enrichment, classic marketing and inventory management. "At product level, we look at a product's life cycle to determine how long the product will remain relevant and when it is time to scale down," Lebouille explains the first step. "Another component is smart product enrichment. That means we measure a product's potential online even before we add it to the range. In short, the investment of a product increases with the potential the product has. We also do marketing and promotion, of course. A product that sells well is also highlighted more prominently." Last part of the strategy is the logistics piece. "ReplaceDirect uses the classic ABC/XYZ analysis. The products with the highest turnover rate and high margin are also stocked the most. So our strategy is a combination of logistics, classic marketing and data." That strategy has not hurt ReplaceDirect so far. According to Lebouille, the parts online shop grew 12 per cent in sales and 17 per cent in margin last year. "Figures we can be quite proud of," he says. Over the next five years, Lebouille hopes to achieve 150 per cent growth. That opportunity is also offered by the distribution centre in Beek en Donk, which now has an area of 2,500 square metres. "We have the opportunity to scale up there. If we adapt the systems and racking, we could still grow up to 300 per cent in Beek and Donk."
Want to know more about making the right choices in assortment and stock? During Webwinkel Vakdagen, Mark Lebouille will talk about the strategy that has led to sustainable growth at ReplaceDirect. You can register for this lecture on 19 January 2016 here.
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