Where does your business stand when it comes to digital readiness? If Covid-19 has taught us anything, it’s that if your business systems aren’t nimble, flexible and remotely accessible, there is no more tomorrow or next year to get there. If you found yourself having to scramble to provide your employees access to physical servers and other collaboration tools, now more than ever you should be thinking about making the change to cloud-based technology, otherwise known as a SaaS (Software-as-a-Service) platform.
Here are a few key points to consider when evaluating SaaS platforms:
The reality is that given the speed at which businesses move today, it’s no longer practical to rely solely on on-premise servers and hard-wired solutions. Many cite security as a concern, but ask the question: does on-prem truly provide your business increased security, or might it actually be introducing risks that can compromise your data? SaaS software is secured by the same powerful firewalls, intrusion prevention systems, antivirus software, and access controls as on-prem, but surpasses it with redundancy and timeliness through automatic patch updates and high availability. Most importantly, with a SaaS implementation, security is handled by experts prepared to quickly roll out solutions. This not only frees up your IT resources to focus on other projects, but also expedites security fixes immediately, without the minimum 2- or 3- day window your internal team would need to learn about the issue and deploy a solution.
Organizations around the world have struggled in recent months because they did not have adequate access to locally stored files once shutdown orders were put in place. The fear that download speeds from the cloud would be too slow, or sometimes not available, has kept thousands, if not millions, of businesses from moving business operations to the cloud. But what happened when we no longer had a choice?
Broadband and mobile speeds continue to make big strides year over year, and Covid-19 has forced the broadband industry to step up and expand. In a matter of weeks this past spring, the global remote workforce tripled! The cloud technology that so many have resisted has enabled companies to keep their doors open and their businesses running, even in the most trying of situations.
Access and Continuity of Service
Cloud services and SaaS are intended to replicate traditional servers. Loss of access is a concern no matter what platform you use, and it’s actually less of a risk with cloud services when you think it through. Electrical outages, equipment failures and other unexpected issues can cause downtime in an on-prem setup. But SaaS platforms have cloud optimization, server backups and built-in redundancies to reduce the risk of outages and service breaks. Ask your provider about this, along with data on outages and breaks in service, then compare this to an on-prem setup. SaaS will likely come out ahead, with stronger redundancy and back-up plans.
With SaaS, your software is alway up to date and eliminates the upfront cost of hardware purchase and installation. Multi-tenant hosting distributes hardware costs to many vs. one, resulting in reduced maintenance expenses and smart resource usage. These benefits outweigh the risks and expenses of running software on equipment you have to install, maintain, upgrade, and service on your own. The SaaS provider handles updates, patches and critical infrastructure needs, lessening the demand on your internal resources and employee costs.
Contingency and Emergency Planning
As we all learn and adapt given the evolving Covid-19 situation, one thing that has surfaced to the top for many organizations is emergency planning. In addition to getting through this current situation, do you have plans in place to make sure you are as ready as possible to handle future emergencies and unknowns? Moving to a SaaS platform solves a big piece of that, with physical access to your servers no longer being a problem to account for.
We’d love to discuss other considerations about why SaaS might make sense for you. Reach out today.
Symphony’s mission is to enable brands to connect and sell to their customers wherever they may be in the digital world. The need for Commerce as a Service has never been greater as commerce is becoming increasingly distributed and Amazon and other major retailers are aggressively launching private label product lines.
When I arrived in January 2017, Symphony was serving the small, mid and enterprise markets. We have also provided a host of professional services to support our technology platform. As the team and I reviewed our strategy, it became clear that our major growth driver has been mid and enterprise brands in the CPG, Fashion & Apparel, and Durables markets. We also concluded that our long-term competitive advantage is our technology platform, rather than the day-to-day operational services that surround it.
We have decided to focus our business entirely on those markets and our key differentiators. As a result, we are decreasing our professional services offerings and investing our resources into the core SaaS platform. To enable Symphony to fully focus on this target market, we will be exiting the small business market. We anticipate that, over time, our platform will diverge from supporting the needs of SMB brands, so we will not be pursuing any new SMB customers.
For our existing SMB customers, there will be no immediate change to their service. One of our corporate values is to “treat brands as partners.” Staying true to that value, we will partner with each of our customers to create a plan for how we will navigate this change together.
We will also be restructuring our team to focus on larger customers, which results in the elimination of 18 full-time positions. This was a very difficult decision. It’s painful to say goodbye to some of our team. We will miss each of these teammates who have helped us grow into the company we are today. We are thankful for their many contributions to Symphony.
Throughout this process, I have been humbled by the support of our outstanding team of investors, partners, customers, and teammates who have been and will be a critical part of Symphony’s ability to deliver value for its customers. We look forward to continued partnership as we enable brands to connect and sell to their customers wherever they may be in the digital world.
Ken and the Symphony Team
For questions, please refer to Q&A.
With the push of a button, an Uber can promptly arrive outside my house and take me anywhere in the city I need to go. An experience that used to require calling a cab service, having them dispatch a taxi, and spending endless minutes over the phone for status updates has now been simplified into a seamless, 30 second in-app experience.
Amazon launched their Prime service back in 2005, charging customers $79 per year for free 2-day delivery across a variety of products. While Prime had steady user adoption between 2005 and 2011, it didn’t take off until 6 years later in 2011. This was due to several reasons, the most apparent being growth in their product selection. For years, Amazon had to invest heavily in their fulfillment infrastructure (e.g warehousing, shipping, etc.) to offer a wide enough selection for Prime to be valuable to customers. Similarly, Uber didn’t take off until late 2011 (2 years after being founded), as they needed to build enough network density within each city to become valuable to riders. Their asset-lite model enabled them to grow at a much faster pace than Amazon.
However, I believe that there lies another, deeper reason behind both Uber and Prime’s seemingly “coincidental” hyper-growth in late 2011. As both products became more attractive to users, they planted the seed for entirely new type of consumer – one that expects instant gratification. This created a symbiotic relationship, as the “Uber” consumer was attracted to Prime’s 2-day shipping, while the “Prime” consumer was drawn to Uber’s 5-minute pick up times. Both products built off each other’s momentum, and as they acquired more customers, their products became intrinsically more valuable.
So, what do Amazon and Uber tell us about the future of eCommerce? That the future of eCommerce will be driven by instant gratification. And that great fulfillment drives instant gratification.
Uber is now positioning themselves as a logistics network, leveraging their network density to offer same-hour delivery of household goods via UberRUSH. Amazon is pushing their fulfillment even further, spending over $4.55 billion last quarter on fulfillment alone, up from $3.5 billion the same quarter a year prior. They too are looking to control the last mile with two-hour PrimeNow delivery, and are even promising thirty-minute delivery times through PrimeAir drone delivery.
This trend will extend far beyond just Amazon and Uber. Other retailers, like Walmart, Jet and Target, will look to improve their fulfillment through similar programs (check out Walmart’s newly released Shipping Pass). Even the tech giant Google is looking to deliver Amazon-like fulfillment experiences with Google Express, offering free same-day delivery to their new customers.
Perhaps Toby Russell put it best in his TechCrunch article last August when he said “the next generation of retail will be dominated by online sales and direct-to-consumer logistics companies.” As consumers begin to demand instant gratification, great fulfillment will drive the next generation of retail.
If I were to ask you to buy a blue polo shirt, how would you do it? Traditionally, you would go to your local shopping center and purchase a shirt at a department store. Today, you also have the option to shop at online marketplaces or directly at a brand’s website. If you are even more tech-inclined, you can shop on Pinterest, ask Siri, or ping a bot in Messenger to purchase. As this basic exercise shows, there are increasingly diverse ways for a brand to merchandise and present their manufactured products to a customer. But how does that brand ensure discovery across department stores, local retailers and online marketplaces in addition to their own website? How do they have the proper inventory displayed and in-stock across each of these channels? Once you have decided to buy, how does the brand deliver an efficient purchasing experience?
It is increasingly difficult for brands to keep up with the widening diversity of purchasing channels. Brands today must be able to address four key channels: big box wholesale or B2B (selling to large businesses), boutique wholesale or B2SB (selling to small retailers), marketplace dropship or B2M (fulfilling orders through online marketplaces), and direct-to-consumer or D2C (selling directly through their own store). While consumer-facing technology has progressed to allow customers to easily buy things from any channel, the technology for brands to capture, process and fulfill orders across those channels has lagged behind.
Today, most brands navigate omnichannel commerce through disparate systems individually deployed across each channel. For instance, a brand will utilize an eCommerce platform for direct-to-consumer orders and a B2B commerce solution for big box wholesale orders, while boutique and marketplace channels are addressed with third party plugins. This piecemeal approach is an unfortunate reality that most brands must reconcile today. eCommerce platforms don’t provide the EDI capabilities required to capture wholesale orders, while B2B commerce solutions do not offer the storefront capabilities needed for direct-to-consumer orders. And since neither B2B nor eCommerce providers offer a fulfillment piece, brands need to go through separate fulfillment vendors to ship orders.
This is the world of fragmented commerce, which leads to issues with efficiency, cost and stability across the entire commerce stack. Developing a separate order capture system per channel requires significant upfront time and capital, leaving many channels neglected. As for fulfillment, brands must employ different fulfillment networks per channel, as certain warehouses cannot meet specific pick, pack and ship requirements. This causes operational complexity that lowers order-fill rates and slashes revenues. Inventory allocation is also a headache, as brands must physically allocate inventory per channel, leading to stock outs in some channels and overstock in others.
Eventually, the technology for brands will reach a tipping point, as these inefficiencies become major impediments that reduce profits and hamper growth. Brands will have to re-think commerce in a holistic way, rejecting the current fragmented model and pursuing a truly unified and omnichannel solution. In the market today, we see unified platforms that power the full stack of commerce (store, inventory, order management, and fulfillment) across every purchasing channel imaginable. Brands no longer need to develop separate systems to capture orders, and can quickly open up new channels through a single platform. Unified fulfillment networks account for any specific packaging rules by channel, preventing operational headaches and maximizing order-fill rates. Not only does a unified solution solve the pain points that come with disparate systems, it also unlocks powerful back-end capabilities. For example, brands can virtually allocate inventory across each channel from a common pool, improving efficiency in inventory allocation and turnover.
Brands with a unified approach will thrive, while those with disparate systems will continue to struggle and underperform. Remember the blue polo shirt we asked you to buy? It’s clear the brand behind those shirts will have to become truly omnichannel to succeed, but true omnichannel commerce can only be achieved through a unified platform, not a piecemeal one.
In the world of operations and logistics, seasoned vets of commerce operations are accustomed to receiving coal in their stocking every year. Holiday fulfillment means things will fall apart, things will get delayed, or things will fall through the cracks. But it doesn’t matter, ops teams are used to getting their hands dirty every holiday season. Every one of them has already been planning for months beforehand to tackle yet another unpredictable holiday season, using two absolute truths as the core of their playbook:
1. Forecasts are crucial. If you don’t plan ahead, you plan on hurting.
Planning ahead makes it easier to handle the inevitable rush of demand. Servers and systems can be upgraded to handle the website traffic while warehouses and carriers can be prepared to staff up the infrastructure-heavy pieces.
2. Forecasts will fail.
The holiday season is a capricious one. Something can literally fall out of the sky to ruin your best laid plans*.
*Protip: It doesn’t matter how smart you are, sometimes you just can’t outwit heavy snowstorms hitting all of your Midwest hubs.
Contradictory? Of course it is, it’s the holidays. The magical season where absolutely anything can (and usually will) happen. This is where our story starts – at the junction of best practice and actual execution.
The Week Before Christmas…
One of our clients had planned to receive a shipment of containers filled with their products the week before Christmas.
That’s a lot of Christmas presents that needed to get out of a container, onto shelves, picked and packed into boxes, loaded on a carrier pick up truck, processed at a sortation center, put on a plane, processed again at a sortation center, loaded on a delivery truck, and lowered into someone’s chimney. Again, because of the work required to process these products, proper forecasting was required to get the necessary labor to keep things running smoothly. This was built into our forecasts, which we then used to prepare our warehouses and carriers for staffing. There was ample time to receive the inventory and fulfill 40,000 orders with it.
That’s when we got another holiday season curveball: the containers got delayed at customs by a week, which made our forecasts as useless as the paper it was printed on. Let’s look at the fallout.
Receiving and Fulfillment
Once a shipment of product arrives at the warehouse dock, several things need to happen before the contained products are put on shelves for order fulfillment:
- The shipment needs to have a record and must be associated with a client.
- Its contents need to be sorted and counted, while damaged units must be separated.
- The units are then transported to the pick locations.
I’ll let you visualize how many man hours are needed to receive a container full of product. All of this must be done before orders can be processed, picked and packed into boxes, and picked up by the carrier.
Thanks to our rockstar warehouse partners, we carefully orchestrated staffing and overtime schedules to receive the shipment. As inventory numbers increased, our systems slowly released eligible backorders to their fulfillment systems. Over the weekend, all 40,000 backorders were ready for shipment. Now, it was time to get these backorders where they belong – the customer’s doorstep.
At this point, it’s four days before Christmas Eve, and our warehouses managed to process 40,000 boxes that were needed to be under Christmas trees all over the U.S. Normally, trying to push 40,000 extra orders onto our carrier networks wouldn’t be a problem, but not on the 51st week of the year.
Here’s a little context:
Each year, the news labels UPS or FedEx as “The Grinch Who Stole Christmas” depending on each carrier’s holiday performance (or lack thereof). Not wanting to be in headlines this year, FedEx invested $1.6B (yes, with a B) upgrading airplanes and package-sorting systems in addition to hiring extra drivers and package handlers for the holidays. They even installed enhanced vision systems on their aircraft so pilots could land in low-visibility conditions. All of this to accommodate a projected 12.4% increase in holiday shipments. They worked with the largest shipping accounts, including us, to get accurate shipment projections so everything would run smoothly and they would avoid the “Grinch” label.
The 51st week’s projections were mostly Express shipments, but these additional 40,000 packages put us out of compliance with our forecasts. I thought this might be a good time to rope in our carrier account managers, who we have built great relationships with over the last four years. I thought, “No problem, let’s just call them and see if they can fit in a last-minute request. I know these guys, I know they’ll come through.”
Except they couldn’t, even if they wanted to. Our carrier partners couldn’t take more than a portion of the packages on the Express network. Their planes were simply at capacity*.
*Protip: You can’t beat physics. If you can’t fit those boxes in, you can’t fit those boxes in.
So I called my team for an emergency brainstorming session. It wasn’t because I wanted them to partake in the client’s agony, but because I knew this was a problem that needed a creative solution. After spending what seemed like eons (but was really only two hours), we had a strategy:
In 2015, Symphony launched multi-warehouse capabilities, which afforded 2-day transit times to anywhere in the United States, provided the client had inventory in all locations. For this client, the inventory was only being replenished in one location, and the ship methods for all packages was express. So we disregarded the requested ship methods, and superimposed the recipient zip codes with the carriers’ zone-map. We discovered that roughly 45% of all orders would see a 2-day transit time on ground networks and another 20% or so within 3-day transit time.
We hopped on calls with the carriers well out of business hours and managed to negotiate accommodation of 35% of the packages in their express network in lieu of utilizing their (basically empty) ground network. Once acknowledged, we proceeded to electronically modify the orders with updated ship methods. Our warehouse had the packages relabeled and ready to be picked up by Monday afternoon.
The end result? Out of the 40,000 shipments, 39,560 found their way to their recipients’ doorstep before Christmas.
Which brings us to a new truth that I’ve added to my playbook:
3. You have to think agile. And agility is the result of innovation and execution.
There were three things that came into my favor this year – one was the highly talented set of fulfillment operations managers on my team who were able to think and act fast. Two was the great relationship we have with our carriers that helped us absorb deviations from our forecasts. Three was our capability to fulfill out of multiple warehouses, which was only possible after some very hard work by our Product team.
For clients that have high sales velocity and low SKU counts, shipping out of multiple warehouses is an obvious choice. Not only do they get the benefit of lower ground shipping costs, they also get to outwit the holiday shipping traffic by leveraging underutilized ground networks. Plus, it acts as insurance against Mother Nature, who’s more than capable of rendering a particular warehouse location inoperable.
So while it was the Ops team who did the heavy lifting to pull us out of this Christmas pitfall, it was actually a company-wide effort (even if they weren’t reading zone-maps with us) to get this done. Our engineers and QA teams worked countless hours to implement a great multi-warehouse feature that didn’t fail under such complex use cases. Our brand strategists kept the client apprised of our progress in real-time (and allowed everyone to work towards a solution undisturbed). I can’t think of another service that would go this far for their clients. To us, however, it is just another day at Symphony.
So there concludes our crazy holiday story. If you have one of your own, we’d love to talk.
Recently, I did a talk at NRF’s Big Show on how Retail is becoming more accessible and how it’s affecting the entire Retail landscape. Retail at its core is all about capturing and fulfilling demand. Store and Fulfillment. Businesses capture demand through their physical, online, and partner reseller’s stores and fulfill demand through their storefronts, warehouses, and distribution partners.
However, behind these two simple concepts are many layers of complexity. Setting up an online store can be a gargantuan task for many brands: building responsive websites and connecting them to point of sale systems, order management systems, warehouse APIs (all of which painfully unique), shipping endpoints, and returns systems. In theory, Retail is simple, but in practice, it’s extremely complicated. This complexity separates the largest brands from the smaller ones, big brands have the capital and resources to build out world-class commerce systems that consistently deliver delightful experiences.
But all this is changing at a rapid pace. According to a recently released Goldman Sachs report, the annual number of new brands has been growing faster than ever.
Why is that?
First, it requires far less capital to start a new retail brand than it used to. Businesses no longer need physical storefronts with locked inventories to get started. Asset-lite Commerce storefronts and centralized inventory reduces the need of upfront capital. At Symphony, we have seen very successful businesses start with little to no up-front capital
Second, it’s cheaper to operate a retail business these days. Businesses no longer need to staff physical stores or buy expensive ad space. Lower overhead and better marketing tools are fostering faster growth rates for businesses. When we compare growth rates for comparable periods between two sets of very respectable companies – two big players and two rising stars – we can see that brands in the new era of retail are growing much faster than before.
So we have more brands getting created, we require less capital, we have better marketing at our disposal, and we have new generation retail businesses growing faster than ever. So is world-class commerce truly available to everyone?
Unfortunately, we’re not completely there. The next step for democratizing retail is lowering the cost barrier of Fulfillment. Fulfillment accounts for at least half of the commerce experience, if not more. It’s also the single biggest expense after product manufacturing. Fulfillment – which includes storage, pick pack, inbound shipping, outbound shipping, and returns – accounts for 25% of revenues for an average brand. But when we compare that to Amazon, we can see why Fulfillment has room for democratization. Amazon, who probably delivers one of the fastest and most delightful Fulfillment experiences in the market, only spends 12% of their revenue on Fulfillment. If we want true democratization of retail, we have to offer systems and cost structures that deliver an Amazon-like experience to any brand.
So what can a brand do to create a world-class fulfillment experience for their customer? Instead of wishing for Amazon’s extensive fulfillment network and resources, there are a few ways to recreate their cost savings and shipping speed:
- Choose Multi-Warehouse Distribution: If you are shipping over 500 packages a day, you have to start thinking about distributing your products in 2-3 warehouse in the US. Multi-warehouse allows you to reach the majority of your customers in a much shorter time frame using standard ground shipping, which deeply cuts your Fulfillment costs.
- Economies of Scale: Brands should partner with companies that can help them achieve economies of scale. Thanks to their sheer scale, Amazon is able set up Fulfillment networks that quickly deliver packages and negotiate rates for less than the industry average. In order to mimic this, young and mature businesses alike should partner together or work with Fulfillment networks that can pool demand and create efficiencies for everyone, creating economies of scale that can compete better with Amazon.
Companies that invest in Fulfillment infrastructure to deliver world class Fulfillment have a great future in the new era. Goldman Sachs estimates that “Brand.com” (the modern online arm of a retail brand) will grow at 22% YOY over next 10 years and will see a 10% increase in profitability.
The Golden Age of Retail is upon us. It’s time to seize this opportunity and become truly iconic.
If you’d like to learn more, click here for the full set of slides I used at my NRF presentation. If you’re interested about discussing democratization affecting your brand or how to improve your current commerce set-up, we’d love to talk.