DABS.com
Upgrading the commercial operation
DABS.com was an early entrant to the online IT retail market and rapidly developed an enviable reputation in the B2B and B2C markets, relying entirely on it's online presence and developing a range of innovative processes and applications to deliver a market leading edge. However, at the time before the start of the SOLSUS assignment, whilst DABS.com had enjoyed rapid revenue growth, gross margins had continued to fall short of the levels targeted by the operating board. A SOLSUS associate was placed as Commercial Manager and quickly identified the following problems;
A team bonus structure that was heavily biased towards revenue delivery over other margin influencing factors
Poor maintenance of product data on the bespoke online store system, leading to inadequate customer information for decision making
A lack of knowledge within the teams of the precise impact on profitability of slow run rates and aged stock
Team roles and responsibilities that were to broad, including all buying and merchandising aspects, from data management and order raising through to supplier negotiation and online product placement decisions
SOLSUS provided a Commercial Manager, who revealed some significant risks within the existing operating environment that would severely restrict the ability of DABS.com to counter growing competitiveness in the market.
Recommendations from SOLSUS took the following form;
1. Organisation design
Output 1: Separation of the teams into purchasing and commercial/merchandising roles
Output 2: Refocus the operation on a balance of revenue, gross margin, stack management and system housekeeping
2. Tools
Output 3: The creation of a performance dashboard that allowed team members to track their personal performance and bonus position on a daily basis
Output 4: The development of a range-wide revenue and gross margin target plan, based on GMROi theory (gross margin return on inventory investment)
Output 5: Tools to support deal making that allowed buyers to use variables such as stock, run rate and buying price to calculate the likely GMROi based profitability
3. Implementation
Output 6: A six month SOLSUS placement to drive and embed change as Commercial Manager
Output 7: Coaching and mentoring of the teams to manage the transition period and train staff about the new methodologies and toolset
Output 8: Active use if the new performance dashboard to challenge performance and celebrate success
The results of the exercise? Parallel improvements in stock fill rate and aged stock inventories during a period that saw record increases in revenue and gross margin;
Revenues increased by 18%
Gross margin increased by 18%
Stock fill rate increase by 10%
£0.2M aged stock reduction KPI linked dashboards
New KPI driven bonus structure
"This improvement was critical in order to support our companywide
drive to improve revenue and profitability" Jonathan Wall - Marketing Director DABS.COM
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