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“We've had to build from scratch”: In conversation with Maplin

“We've had to build from scratch”: In conversation with Maplin

24 Jun 2020
Sam Tidmarsh
During Customer Week 2020, Andy Mulcahy, IMRG, sat down with Oli Marshall, Maplin's Managing Director. to discuss ecommerce resurrection and Covid-19 resilience.


Andy Mulcahy: “I'd like to introduce Ollie from Maplin. You will remember Maplin. It did close. But the news is, it's back."


Ollie Marshall, Managing Director, Maplin: “Yes! So I can give you a little bit of background. For anyone who doesn't know, we relaunched in February 2019. We're 100% online only, very fortunate to pick up a brand and run with a brand which is extremely well known. To be honest, people often call it a resurrection. I mean, it was down for about six months.

But the brand has very much stayed in consumer consciousness, it’s very well loved. People know what we sell. I want to share some of the challenges we’ve had, and what we think we've done reasonably well.

An area which I think we didn't appreciate was quite how specialist and unique the Maplin brand is. Our customer is after metal detectors and soldering irons, which is not a category of products that a lot of people think of when they think of electronics. It's certainly not something a lot of the mainstream retailers are selling.

But it's an area that, once we really dug into the Maplin brand, really understood what it was about and what people wanted, it’s actually the niche brands and the niche products. We’ve found out that this is a competitive advantage for us over time, as we've managed to find supply of the more unusual products.

Another challenge, which we came across was, Maplin was known for its components, so very much that Maker Movement, building things with electronics. But actually, once we moved online only, something that we found very challenging was saying no. So components, which are maybe one tear resistor, or a little LED light bulb, is not viable online.

There are things that you definitely can't do online as sustainably as maybe you can do physically. Just delivery charge costs a lot more than the cost of the components.

In terms of the resurrection, the biggest part was probably the infrastructure and the supply chain, which we've had to build from scratch. My background actually is as a software developer, so I'm more focused on the operational side. So we worked really hard around being very supply centric, partnering very well with our brands and vendors out there.

Our goal is very much around building now a long lasting business model. So it's online, not very focused on this positive unit economics. We're definitely not interested in discounting. We very much want to be a very long lasting brand for people to buy their electronics.”
 

Andy Mulcahy: "When you picked the brand up, did it have a marketing database, or was that gone? Were you able to reactivate previous customers and say, guess what? We're back.”
 

Ollie Marshall: “So, as many of you know from a GDPR perspective, it’s very challenging when it comes to customer databases, and that very much sat with the old business. So no, we didn't pick up or continue that database.

However, we were very pleasantly surprised on day one, when we switched the website back on. And even today, about 50% of our traffic is organic. There's a lot of people searching just for the brand name Maplin. It's very much in their consciousness.

We probably have missed something by not being able to reengage a database that pre-existed; millions and millions of transactions over the years. But you know, we've been okay with just picking up the organic growth that has come with just the name.”


Andy Mulcahy: “Okay, interesting. And so having picked this thing up, then it seems to be going pretty well? Are there certain things about the process that, if you had your time again, perhaps you wouldn't have done it that way?”


Ollie Marshall: “Our team has done a very good job. We're a relatively small team. And something that, coming from a technical side rather than a retailing background traditionally, I've been able to, I think, look at things slightly differently.

Day one, we definitely thought we were going to continue exactly where Maplin was going. And in the later years, we're moving more to typical consumer electronics, bluetooth headphones, these kinds of consumer electronics, which obviously are highly competitive.

I think we probably spent too long running where the old business had gone in the direction it had gone in and tried to compete on these highly competitive products, rather than really focusing on, what does the Maplin brand mean? What are the origins? Who are the customers? What does it mean now it's online?

Therefore, we probably would have come sooner to realising that the Maker Movement, soldering irons, metal detectors, you know, a couple of the batteries, cables, all of these very Maplin products, even smoke machines! Maplin was the weird and quirky retailer and the high street. So, I wish we had focused maybe a little bit quicker on those categories of products rather than trying to be too mainstream."
 

Andy Mulcahy: “It was only last year that you got Maplin up and running. And then you had forecasts and trends that you are following along. But then the pandemic happens. You sell into a category, though,  that has seen an incredible boon during that period. What happened for Maplin?”


Ollie Marshall: “We don't really have year on year comparisons that most retailers are talking about. How I've been comparing pre-covid and during Covid-19 is Q1 versus Q2. We’ve seen around a 130% increase Q1 to Q2, and we still have a couple of weeks left.

We've been very lucky in that we're in a category which has boomed. Working from home, we've been able to pick up that. And entertainment - after people finish working, they need to do something in the evening because they can't go out.

So we've just been very fortunate in that we're online, we can continue to trade, and we're in categories that have been booming. So overall, trading has been very positive for us. I think actually, the biggest challenge is now over the next weeks and months where stock availability seems to be the name of the game.

We have quite a significant Far East operation. A lot of the Maplin products that are our core staple products, like for example double A batteries, are one of our top selling products. A lot of that comes out from the Far East.

Early on, China was hit a lot more than Europe and the West. So we had slowed down there. And I think now we're just starting to hit those stock shortages of our own supply chain. But also some of the big name brands are starting to feel the pinch of the supply too."


Andy Mulcahy: “In building it from scratch, what did you do to get the Maplin supply chain in place?”


Ollie Marshall: “This is a big part of what makes us unique. We offer a hybrid inventory model. So what that effectively means is 60% of what we sell, we fulfil and stock ourselves out of our own DC. And then the other 40% is direct from the supplier. You know, a lot of people call that dropshipping.

For us, drop ship or hybrid is not so much about the long tail, or the non core range, or the extended range. For us, it really is a part of our business. That split is actually the same pre Covid-19 and post COVID.

When we decided to go down this route, it was actually more about the experimentation. It allowed us to be able to try products very quickly, and be very agile to market changes, without having to take huge amounts of risks.

We can work very closely with a trusted supplier. We can say, you're holding some inventory, so let's test this in the market, and as that picks up, then we can look to take it into stock. Maybe if it's a very bulky product, for example, lithium batteries which are very difficult to transport, we will continue to do that with a third party supplier.

But it means we've been able to be very agile. So a good example of that has been e-scooters. E-scooters were not a product we were arranging pre Covid-19. You know, largely because of the grey area, or not so grey area, in legislation. But hopefully that's going to change very, very quickly.

We had some demand for it, but we didn't feel it was enough. So we weren't prepared to take the risk on that. However, once COVID set in and people were looking for different options to public transport, we've seen a huge spike and we've been able to get that listed. You know, my team listed that in two days, and it became the best selling product on the website immediately.

Being able to be agile, down to two days, all comes from this hybrid inventory model.

The other benefit, which I think is interesting when it comes to Covid-19, is the business continuity element to it that definitely was not planned at the beginning. But what it has actually meant is that effectively we have 38 warehouses in the UK, one being ours and then the rest being our suppliers. We were able to keep going, pretty much entirely, with the exception of a couple warehouses, we have been open.

However, I guess if for example, we did have to shut down due to an outbreak, we at least can keep trading, whether it be a limited range and vice versa if our suppliers have to shut down. So we found that actually dropship has meant we've had a business for resiliency case for it that we hadn't even planned initially.

So, overall, actually, it's been very smooth trading for us. Very thankful for the infrastructure that we invested in early on. Pretty happy with how that's gone.”
 

Andy Mulcahy: “I wonder, to what extent there is sort of artificially inflated demand. There was a big demand for freezers for example. Now, there's always a certain level of demand for freezers, so when it goes through the roof because of stockpiling, it's artificial, right? You can plan for that, because it's not gonna last forever - you can only have so many freezers.

But to what extent do you think some of the products with big demand will be a long term thing? Do you think customer behaviour is changing?”


Ollie Marshall: “I mean, that's a challenge we really recognised, particularly where we've had products that have gone from very low run rates to extremely high run rates overnight.

I'm pretty sure it will return back to a level higher than what it was [before Covid-19]. And part of that will be that more people know about Maplin and us being back online.

I think we’ve just got to make sure we take it case by case. So particularly our Far East team at the moment is spending a lot of time looking at trying to forecast but also trying to take into account that okay, this is a freak event. Some of these trends are going to smooth out.

I'm obviously hopeful that we're going to continue to grow. So therefore we are building in a level of growth that's going to be there. But no one expected this level of growth, and that's where the stock availability issues are coming in now, because everyone's out of stock, having sold it all through. No way was there anyone stockpiling that much stock! We certainly weren't.

So hopefully, it's going to be about being very mindful not to over expose ourselves, and not overstock, but also cater for what is hopefully going to be someone new normal for us."
 

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