Friday 20th Oct 2017 - Logistics & Supply Chain

An unexpected gift

Firebox, the online retailer delivering weird and wonderful goods, won Team of the Year alongside arvato at the 2015 Logistics & Supply Chain Excellence Awards. Commercial director Kerry Okikiade explains to Alexandra Leonards why they made such an outstanding team, and how Firebox became the best place to find an unexpected gift…

Tucked away behind the noisy hubbub of Liverpool Street, Firebox’s little office stands at the end of a quiet alleyway. Inside behind a stack of wooden planks (the office is going through the process of renovation), smiley young faces greet and point me in the right direction of Kerry Okikiade, the commercial director. Music can be heard in the background as the team work facing each other around a table. The atmosphere is different here, and so is the business.

This article first appeared in Logistics & Supply Chain, July 2016.

This article first appeared in Logistics & Supply Chain, July 2016.

From the very beginning, Firebox has been a vastly different kind of a company. It all started in 1998 when two university friends, Tom Boardman and Michael Acton Smith, sat up in a loft, hand making 400 units of ‘shot glass chess’.

Back then it was a very gadget led business – offering up radio-controlled helicopters and the like. But over the past five years, Firebox has shifted its focus dramatically – think less boy toys, more exclusivity. From beard-bibs and unicorn tears, to solar system lollies and mini lace manties (panties, but for men), Firebox more than lives up to its tagline: ‘shop for the unusual’.

The retailer’s move towards such a niche range was a strategic decision. “Mobile phones now do 95 per cent of the things you used to buy,” says Kerry. “We could see that the gadget role was ever decreasing, so it became clear that that wasn’t going to be a way to survive – we had to totally change the way we looked at our buying.”

Kerry has worked at a wide range of companies – beginning as a chartered accountant, moving on to projects like the 3G roll out at Hutchinson Whampoa, and later working for Expedia. Her heart lies with working for a small company. But having previously worked for a business that was ‘bitten by the small company bug’, she knows all too well the risky nature of the industry.

For a small business, staying afloat can be extremely tough. It has to keep pace – constantly moving in the right direction within the market. If a trend is out-of-date, the business will be too – sometimes a big change is the only way to march forward. “The only way we can compete with Amazon and John Lewis, and all the big high street stores, is by being different,” says Kerry. And this means making difficult decisions.

When Kerry took over operations, Firebox was running out of a 70,000 sq ft Croydon warehouse. “That was all in-house, we had our own team and we would recruit 100 plus temps every year to come in and help us manage the peak season,” she says. “But essentially 70,000 sq ft for a business our size is only fully used for about 12 weeks of the year. And for the rest of the year it’s a completely inefficient use of space so, that’s essentially what it came down to.

“It was incredibly hard because we had a really loyal and hardworking team in Croydon – they were part of the business for a long time, but we knew that in terms of a future you have to make hard decisions sometimes and that was an incredibly tough one, probably the hardest one I’ve made if I’m honest.”

Because Firebox ran its own warehouse, it had to have a very strict fixed cost base throughout the year. “When you are in the business that we are, which is incredibly peak driven, you need to be able to put every penny you can behind stock and marketing at the right time – you don’t want to be spending it on warehousing that you’re not even using particularly efficiently,” says Kerry. “It got to a point where we decided that the only way forward was to find something with a more varied cross.”

In June 2013, Firebox began outsourcing to 3PL arvato – a company that employs 70,000 people globally. The stark contrast in size makes it seem an odd partnership at first glance. “The thing that swung it for me was that we got on really well, and they really got the brand,” says Kerry. “They were aware that we’re not a big corporate, and that things change daily.”

Kerry says that although arvato may be perceived as a traditional company, it is actually rather advanced.

“They’re quite innovative and they’re forward thinking in how they deal with people, and the team are very much part of the business,” she says.

Although arvato is a big global business, Kerry says that they function very much as a UK supply chain. “They operate not dissimilarly to us, they are responsible for their own P&L, they’re responsible for their world and I think that means that they do have that level of flexibility,” she says. At the same time, Firebox is reaping the benefits from arvato’s broader operation in terms of carrier networks.

Operationally, the main motivation behind picking arvato was flexibility. “One of the most important things for us, which we built together really, is a way of stopping orders once they’re in the system,” she says. “When you first go out to pitch and you’re looking for a 3PL, particularly when you have no experience of it, the very first thing they say to you is, once the order reaches our side, that’s it, you cant touch it, it’s going out.

“So you have to build in these delays up front, because people get the wrong address, they put the wrong info, they change their minds – so, you kind of need a window of customer service to be able to amend orders.“But if you’re holding them on your side it creates all sorts of problems in terms of stock.”

To avoid this kind of disruption, the partnership came up with an alternative.“Through the conveyor belt that they use, we have a button that basically allows us to hit cancel or QC Check, and until the point it actually goes on consignment, we can pull that package off, which is amazing,” says Kerry.

This means that Firebox rarely, if ever, sends packages to the wrong address, or has problems with returns and stock damage. And minimal mistakes mean happy consumers.

 

Innovation

“That one single innovation changed our peak times, it makes a huge difference in terms of how our customer service team can operate,” she says. arvato’s handling of stock shortage is also a big advantage to its customer service practice.

“With a lot of 3PLs, when they go to pick, if the stock is short they will just short ship – and customer service picks up the stress of then having to call the customer,” says Kerry. “But we have a flag in the system which holds any order where there is a stock shortage and then we get to call a customer first and say, do you want it? Do you want to put the whole thing on as a pre-order and wait? Do you want to cancel?

“And so again it gives us the edge on customer service, which is one of the ways we can really differentiate ourselves, so it’s a really key channel for us to be able to treat our customers incredibly well, particularly when things go wrong, because inevitably they always do at some stage. There’s always a moment where things like that are incredibly valuable.”

And as a small company, customer service is everything. At Firebox, it’s the companies offering that customers will always speak to someone in the in-house customer service team. Because it is such a small and exclusive business, Firebox’s products need to be out in the market first and on time, no exception. And flexibility is key in keeping the supply chain as agile as its product launches and promotions.

“There’s a lot around the timing, but also, a lot around constant stock management,” she says. “The challenge for arvato is that our product range is not only diverse in content, but diverse in size and shape, and trying to constantly rework our space to fit what can be a really crazy range from tents and massive cushions to lip balms is a challenge.

“It must frustrate them endlessly when something comes out of the blue and suddenly they’ve got 5,000 orders they weren’t expecting that day, but they do it with very good humour.”

A particularly memorable moment for the company was when the Star Wars Droid was released. Firebox had worked with the makers of the droid, Sphero, for three or four years prior to the release. And they knew something big was coming.

“Because we had this relationship with them they chose us as a launch partner, so I think it was us, Amazon were offered some, Harrods, and maybe another, but we were up there.”

Kerry and the team had an inkling that the product would bring in a lot of interest, so they put in an order that they thought was ‘decent’. “We were quietly confident and it was all under embargo until midnight on this certain day in September, and so our buyers were up at midnight putting it live at the right time and we sold out by 2am,” says Kerry. “It was gone, so our buying team spent the night on the phone, which is one of the benefits of being a small business, calling the guys at Sphero to find out, because they’re in the States, where the UK stock was and then securing everything we could get our hands on so, that gave us the head start – essentially.

“All the others went out of stock almost instantly. But because we’d had buyers on the phone all night, we managed to bring the stock in next day.”

The droid saga was unexpected – but Firebox generally forecasts very tightly, it’s a part of the company’s working capital model. “We’re extremely tight on how we forecast our buying, so equally that pays back for them because they know pretty much, apart from the odd spike, which is impossible to predict that they know what they’re getting so that helps. And it helps them with their carrier management and peak timing and things, but that’s not to say it’s not a challenge for them.

“It’s a challenge for anyone – and I’ve run our warehouse so I know what peak can feel like. It’s like a wave, a tidal wave, compared to the rest of the year.”

Even more impressive than its gold sugar and remarkably furry “Mororo Robot Cleaning Ball”, is the company’s “Crap Wrap”. This is a form of gift-wrap that incorporates lots of brown tape, slashed paper and uneven edges. “We’ve been doing crap wrap for almost as long as Firebox, people love it,” says Kerry. “It’s actually very hard to wrap that badly, it looks really easy but it’s not. So when we first trained up arvato on how to we did gift wrap, and we were showing them the beautiful gift wrap – not a problem.

“You can learn to do beautiful gift wrap – even I, occasionally, can do beautiful gift wrap – but to do crap wrap really well, it will be “no, it has to be crapper. It’s not crappy enough, I want to see it so bad that it’s on Twitter with an ‘oh my god, what is this?”

Strong partnerships are at the core of the business. And while the dominance of the internet has made it increasingly difficult for Firebox to source products, its relationships guarantee it still finds the best items for its consumer base. “Everyone can search, everyone can go and look for things,” says Kerry. “So we have three buyers who are constantly trawling the internet for new products.

“We also have really good supplier relationships, so some of the suppliers we’ve been working with we’ve worked with for 15 years, so they know us, so quite often they’ll come to us first, because we have a very strong PR Team. So we tend to be able to launch things very effectively.”

The team at Firebox commonly gets to take part in an X-Factor’ style session when it comes to picking the products. The products, and their many talents, are showed off – often leaving the team in hysterics. The business’ flexibility reaches far beyond its operation. Kerry is a mother, and works part time – Firebox gives her and her colleagues the opportunity for a more fluid schedule, and ultimately a better balance between home and work life.

So what does the future hold for an SME like Firebox? Increasing its international shipping is certainly on the cards, and it has already established networks outside of the UK through arvato.

“One of the things arvato has done for us is expand our carrier network, something that was very difficult to do with an in-house system before,” says Kerry. “So its allowed us access to the US market for orders, which is booming, and also all over the world.”

This alone has enabled the company to grow its reach – but it is looking to expand even further.

As well as this, it is looking to create more of its own products. At the moment, it makes around 20 per cent of its range.

“We make some of it in the office, and if it works then we go and find manufacturing, and it’s a good way to test,” says Kerry. “We have two in-house product developers, so everything is pretty much, apart from the logistics, done in house, so we have design, tech, marketing everything else is apart of the in-house team.

“So it’s nice, things come right through from concept to being on the shelves essentially.”

Firebox plans to develop this part of the business – creating more own brand products, in turn, magnifying the exclusivity of its range.

“The more we make ourselves the more opportunities we have to be able to sell that first years worth,” says Kerry. “But then also we do a lot of wholesale so behind the scenes we have a trade business that operates and we sell a fair bit into Europe, but also across the UK.”

From its flexible processes to sturdy partnerships, it seems the future for Firebox will be bright, sparkly and no doubt a bit unusual.

 

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