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eCommerce Logistics

How to deliver to consumers…faster

November 20, 2019

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Weave Solves the Most Complex Demand and Supply Planning Problems

SUPPLY PLANNING

EXPERTS

Our parent company – TAL Apparel has over 70 years' experience mastering the craft of sourcing, manufacturing & distribution globally.

Supply Chain Knowledge

Weave supports end to end supply chain planning; offering both demand and production planning to guide inventory from raw materials to end consumers.

Weave specializes in retail and soft goods. 80% of clients are retailers and manufacturers who operate in these sectors.

Retail Expertise

Weave enables fast and sustainable supply chain transformations. Proprietary advanced analytics solutions allow for quick deployment of our solutions.

Proven Models & Methodologies

E2E Supply Chain Planning

We have helped some of the world’s largest retailers:

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eCommerce was growing, and still is…

Source: Statista, September 2019

eCommerce revenue comparisonChina, US and HK (US$ million)

572,042

633,858

723,131

274,755

315,628

365,207

4,063

4,356

4,742

2017

2018

2019

10.8%

14.1%14.9%

15.7%

7.2%

8.9%

2018 2019

All regions expected to grow

eCommerce revenue growth comparisonChina, US and HK (% Year over Year)

Hong KongUSA

China

USA

USA

China

China

HKHK USAUSACN CN

44

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And the winning category is…

Source: Statista, September 2019

Major Product Category Division

39%

21%

18%

15%7%

28%

26%21%

17%8%

26%

27%26%

13%8%

China

US

HK

FashionElectronics & MediaToys, Hobby & DIY

Furniture & AppliancesFood & Personal Care

• Fashion is the leading product category in eCommerce across China and USA since 2017

• In HK, Electronics and Fashion are head to head

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What do consumers value when making online purchases?

Source: PWC Global Consumer Insights Survey, 2019

PwC global consumer insights may give us some ideas

75%

71%

67%

66%

62%

60%

44%

43%

41%

41%

Better prices

Fast, reliable delivery

Good assortment

Convenient payment options

Easy website, mobile app

Good return policy

Unique assortment

Trusted brand

Loyalty programme

Test / try and free return options

10 key elements of a successful online shopping experience Fast, reliable delivery

• 99% of US consumers say “fast delivery” is important

• 31% opted for same-day delivery in 2018• 79% would switch retailers if offered more

convenient delivery options

Convenient payment options

• Reasons for abandoned shopping carts at check out process• 36%: no guest checkout option• 29%: I was charged extra for my preferred

payment method

Good return policy / free return options

• 49% of consumers actively check out return policy before buying

• Consumers with negative return experience are 3x more likely never purchase from the same retailer again

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eCommerce is a very fast value chain as customers are expecting super fast delivery or even same-day delivery

Fast delivery does not rely on just one part in the value chain

Fast, reliable delivery

• 99% of US consumers say “fast delivery” is important

• 79% would switch retailers if offered more convenient delivery options

• 31% opted for same-day delivery in 2018

Inventory management

• Right product available at the right place (nearest WH / DC)

Warehouse operations

• Able to process the order, pick and pack fast and accurately

Delivery service

• Collect the parcels at WH / DC and deliver the correct parcel to customer within promised service level

https://www.dropoff.com/blog/retail-delivery-consumer-survey-shoptalk-2018

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What’s the worst that could happen?

What is the worst that can happen?

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Digital natives are openly call out incumbents…

Digitally native companies are using speed as their competitive advantage

Source: RSR Research 2018 Consumer Insights report

23%

26%

26%

32%

42%

51%

53%

We have changed delivery

We are cheaper than retailers

We have changed customerservice

Our products are unique

We have changed the customerexperience

We are faster & moreresponsive

We provide the highest qualityproducts

Retail ‘Disruptors’ C-level survey showing % of Top 3 responses for competitive advantage against retailers

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Capturing the customer requires an Agile eCommerce Value Chain

Source: https://www.tilog-logistix.com/image/download/E-Commerce_&_Logistics_Disruption_Dr_Ruth_Presentation.pdf

CustomersRegional DC Local Consol. CentreManufacturer

Multi Echelon Inventory Management

Challenges

Small number of pieces per order

Extreme peak season volumes

Real-time, accurate inventory and order visibility

High potential for brand damage from poor fulfilment performance

High volume of returnsfrom end consumers

Agile eCommerce value chain

• Direct customer delivery

• Vendor managed inventory programs (VMI)

Flexible and customized distribution

• Local small DC players

• Shared economy

Distribution

• 3rd party logistics

• Last mile players

• Shared economy

Payment systems

• WeChat pay

• AliPay

• PayMe

• Apple Pay

• Paypal

1 2 3 4 5

1111

Prediction: Combination of enablers for product localization is the future

Product mix localization unlocks product hit rate

Storage and warehousing operations

• Shared warehousing space

• Smaller forward replenishment centres

Mixed Delivery Options

• Mixed size fleet

• Shared delivery services

Inventory management and product mix localization

• Multi echelon inventory visibility

• Dynamic safety stock levels per SKU

• Product mix localization

• Integrated read and react systems

Less inventory in more strategic location

Higher last mile efficiency

Higher inventory turnover

Restaurant mix in Editions per geography and faster delivery (HK)

Filling up their returns in US warehouse for better product mix (UK)

Short term, Airbnb type, small space warehouse for rent with ABC costing (Indonesia)

Optimized last mile partners with world’s largest organizations (HK)

FMCG companies have been using forward replenishment centres for years

Uber-like on-the-way ride app that can deliver any package for you (USA)

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APPROACH

CASE STUDY – VMI and inventory optimization program

Source:

IMPACT

Weave worked with client on multiple solutions to improve sales with less inventory commitmentSales per week4%

• Data visualization helped ensure WOS targets are being met

• Increased material utilizationof existing fabrics and trims in new styles

• Minimized raw material write-off

A B C

Establish VMI program with segmented inventory

Optimize inventory level through assortment planning

Improve raw material commitment decision with E2E

supply dashboard

Developed store and DC replenishment program for weekly and monthly order respectively

Redistributed inventory according to the new store assortment plan developed based on sales contribution

Established end to end visibility of finished good and raw material commitment

Sell-through2.4%

Net store inventory0.3%

Nordstrom

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APPROACH

CASE STUDY – Replenishment solutions for Vietnamese footwear retailer

Source:

IMPACT

Centralized planning model encompassing replenishment, forecasting, and intake planning • The model allowed our client toincrease stock availability while streamlining the assortment

Sales growth in stores with new assortment

10%Assortment

PlanningDemand

ForecastingAutomatic

Store Re-orderingDC

Re-orderingCapacity

Optimizer

1 52 3 4

Correct historical data/ Bottom-up estimate forecast

Dynamic safety stock calculation to re-

order from factory

Order up to point to enable re-order at

stores and control of inventory

Optimize the number of products sold per

store

Automatically prioritize factory orders based on

capacity available

Big data and data visualization tools enabled more effective planning and implementation within 3 months

In-stock rate improvement during peak period

23%Reduction in SKU

19%

Bitis

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An organization built on industry knowledge, we are not a typical consulting firm

Apparel, Footwear & Accessories is our focus. Sourcing & manufacturing across Asia is our foundation. We manage large, multi-brand, US/EU based clients with Asian sourcing operations.

Industry specific skills, leaders & innovators – we bring best practices & insights relevant to you. Small, nimble & adapt to change, there’s a reason we work with the biggest in the game.

As experienced specialists, we focus on partnering with you and are an extension of your team & a part of your world.

With a great ratio of industry experts and strategy consultants, we strive for the maximum impact in the shortest amount of time.

Process, People, System, Repeat.

Focusing on process and people, we are able to get the right solution for the business. Unique approaches to workshops to make processes lean, analytical skills that can develop mini-tools to prove concepts before scaling.

We are output driven & focus on the issues - no impact, no project.

We are not generalists

We are not conference room warriors

We are not system developers

Weave can add value where other firms cannot

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Supply Chain Experts

SINGAPORE19th floor, 3 Phillip St, Singapore

HONG KONG8th Floor, TAL Building, 49 Austin Road, Kowloon

U.S.A14th Floor, 415 Madison Avenue, New York City

Vietnam46th Floor, Bitexco Financial Tower2 Hai Trieu Street, Ben Nghe Ward, District 1, Ho Chi Minh City

weave@weavenow.com

www.weavenow.com

Weave Services Limited

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Challenges

CASE STUDY – ASOS warehouse glitch case that lost them 25M USD

Source: SupplyChainDive

COMPANY

ASOS is a £2.4 billion British

online fashion and cosmetic

retailer founded in 2000. The

website sells over 850 brands

and ships to 196 countries

IMPACT

• Sales1 Deployment of a new automated warehouse management

and warehouse control systems disrupted warehouse operations

• Systems failed to catch up with inventory flow rate, creating inbound backlog

• Reduced inventory available to customers

2 Initiatives to build up brand awareness and offering in the US did not run smooth

• Some of the brands have not shipped to the US before and struggle with compliance issues

• Failed to build up an inventory at warehouse

• Failed to maintain optimal stock level (80% of optimal)

• Margins

£20 – 25 million

250 basis points

due to the costs associated with tech fixes and price cuts to help retain and win back disappointed consumers