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Delivering for online retail a logistical dream
It was while doing his own buying and selling online that Leigh Williams started to look into what it takes to get products to customers.
Despite no experience in the logistics industry, what he discovered led him to setting up eStore Logistics in 2008 catering to the warehouse, inventory and distribution needs of online retailers.
The business has grown strongly and Williams’ achievements were recognised earlier this month when he was named International Young Professional of the Year by the Chartered Institute of Logistics and Transport.
Williams talks to StartupSmart about how he started the business, overcame hurdles, and plans to expand in the future.
How did you decide to launch the business?
Throughout my time at university and while working in my first real job I spent a lot of time buying and selling online. I remember selling a shipment of sporting equipment that I had imported from China. I was getting up at 4am before work to answer customer emails and package up orders for delivery before heading off to work for the day. I would get home at 7.30pm, have dinner and go through the same process again.
I started to do some analysis into the logistics industry to understand what offerings were out there to service online retailers. What I found at the time was that the logistics industry was not adapting to shifts in the retail landscape and that most logistics providers were not interested in servicing online retail, and those who were interested were not doing a very good job. Within two weeks of conceptualising the business I wrote a business plan and gave my notice of resignation from my job at IBM. Fast forward four weeks, and it was all systems go!
In your own words, what does it do?
eStore Logistics specialises in providing warehousing, inventory management and distribution services to online and multi-channel retailers, and recently we have extended our offering to traditional bricks and mortar businesses.
Basically, eStore provides all of the magic in the background to ensure that when a shopper clicks a website 'buy' button, they receive their purchase in an accurate, cost effective, and fast fashion. This includes tasks such as order picking, system-driven order containerisation (which involves analysing all items on the order and automatically selecting the most appropriate packaging size and type), and system directed automatic freight carrier selection (based on factors such as least cost routing and speed of delivery).
By outsourcing the logistics function, our clients are able to focus on what they do best, and at the same time realise lower costs and smoother operations than running in-house.
What were the main challenges when starting out?
The biggest challenge that I had when starting out was convincing prospective clients to use eStore Logistics services. At the time I was 26, however, people often said that I looked a few years younger. I would often go to meetings with prospective clients and hand over my managing director business card, and this would turn them off as they perceived risk in giving a young business owner the responsibility to look after millions of dollars of stock.
Just based on my age they didn't have the comfort that my business could protect stock from damage and theft, and ensure that it got to the right place at the right time. I knew we had tremendous systems and processes that were years ahead of anyone in the industry, but this was definitely a challenge in the early days.
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How did you overcome those challenges?
At the outset, when the business was small, I had to make it look bigger so that I could secure clients and have them feel confident that eStore Logistics could fulfil client requirements and expectations. I went out and had another set of business cards printed with the title "Solutions Specialist" and also used this title in my email signature.
This slight tweak made it look like I was just the sales guy (who also seemed to know a lot about IT and operations). This did wonders for my sales meetings and meant that I sailed past the initial meet and greet without the prospective client losing interest and enabled me to progress further and talk in more detail about eStore Logistics services and how we can add value. Using this method I quickly picked up new clients, and today I have dedicated sales staff.
Who are your clients and how did you attract them?
Most of our clients are online retailers. However, we also service a handful of traditional bricks-and-mortar retailers.
Our clients, big and small, come from a diverse range of retail sectors selling products such as brown goods, health goods, apparel, lifestyle goods, books, furniture, homewares, technology, artwork, home fixtures and fittings, hardware, wine etc. Among our clients we service Australia's biggest name in health and weight loss, Australia's largest online retailer of electronics, and a global apparel company which sells in 44 countries.
We first attracted clients by getting up a nice clean website and doing work on SEO to get at the top of Google searches for specific keyword terms. This still works today and drives dozens of sales enquiries every day.
After a while I realised that the best client enquires that we received were via word of mouth, and that it was important to build the eStore Logistics brand. Big companies that have a logistics requirement don't spend time Googling for logistics providers, instead they pick up the phone and call logistics brands which they have heard good things about.
Therefore, we have always ensured that we maintain the best possible levels of service to clients so that only positive things are said about eStore.
How many clients did you start out with? How many do you have now?
The business was started with one client and we still service that client today. In the four-and-a-half years since the business started we have grown the client list to over two dozen.
How many staff did you start out with? How many do you have now?
I started out with one-and-a-half employees. I was one employee and the other half was a casual who worked about 25 hours per week. Today we have over 50 full-time, part-time and casual staff.
What were the main drivers of your growth?
Main drivers for growth include:
- Shift in retail landscape leading to growth of online retail. Other logistics providers have been slow to develop and offer services for online retailers, which has made eStore Logistics the go-to company for innovative logistics outsourcing
- Development of the eStore Logistics brand resulting from happy clients telling other prospective clients about their positive experiences with eStore.
- Personalised service and custom solutions. Not all businesses are the same and we understand that a one-size-fits-all model often doesn't deliver a cost-effective solution.
- Implementation of agile systems which enable eStore to rapidly on-board new clients. Other logistics providers can often take three months to set up their systems and develop standard operating procedures, whereas we have a dedicated team of analysts who can get it done within a week.
What do you think has been the key to your success?
The key to the success of eStore Logistics has been the in-house development and implementation of our proprietary warehouse management system (WMS), which has enabled us to provide customised, cost-effective and accurate solutions to clients.
A WMS is the brains of a warehousing operation and dictates whether a warehouse is run efficiently and accurately, or whether it's a failure. We ran our own analysis of off-the-shelf WMS solutions in late 2008, and at the time everything we looked at was geared toward business-to-business sales order profiles instead of business-to-consumer, and cost upwards of half a million dollars.
Since nothing on the market was suitable for our needs, and I certainly couldn't afford anything that was available, using my information systems background I embarked on developing the eStore WMS, which we still use today and is continually undergoing updates.
Any plans for expansion?
We are running a project to set up an interstate facility on the east coast which has a target go live by the first quarter of 2014. By 2018 we plan to have facilities in all major cities in Australia.
Facts and figures:
- eStore has fulfilled over 1.37 million sales orders in the 2013 financial year and over 3.4 million sales orders since the business started in 2008.
- The company is based in Melbourne and recently consolidated from multiple smaller facilities into the flagship Laverton North facility, which is 11,000sqm and has capacity for 9000 pallet places.
- 99.4% of sales orders have been sent domestically. Most clients who sell to other countries have contract warehousing arrangements in those countries in order to minimise freight costs and deliver fast.
- Revenue grew 280% in FY2010, 88% in FY2011, 76% in FY2012 and on track for 80% growth in FY2013.