Ahead of the forthcoming Black Friday/Cyber Monday (BF/CM) pre-Christmas online retail peak - when online sales are predicted to run at levels around 20% higher than the equivalent period 12 months ago - SHD Logistics caught up with Brian Gaunt, the Chief Executive Officer of iForce, the outbound-to-rebound logistics and software company.
iForce is a company riding on the crest of an eCommerce wave, with 60% growth in two years. Gaunt, its former non-executive director, stepped up to CEO at the end of 2013, and has guided the company from a turnover of £32m to £52m in 2014. "We're looking at £50m in 2015," he tells us, "thanks to growth both organically and new business. The industry is growing, and we're outstripping that rate of growth."
iForce's client list reads like a Who's Who of retail giants. It includes: Sainsbury's, Tesco, Waitrose, John Lewis, Greene King, Screwfix, Maplin, Fortnum & Mason, House of Fraser, Paperchase... tell us when to stop!
An industry veteran, Gaunt's previous roles include MD of Christian Salvesen (later subsumed into ND then XPO), chief executive of Home Delivery Network, and Europe Supply Chain Director of ASDA Walmart. Gaunt knows the industry inside out, which is why he's well-placed to comment on its behaviour around BF/CM.
But why did he leave the 'relative comfort' of a non-exec role to take the big job?
"The key reason was the company's systems - they are unique." This is a word bandied about liberally in our industry, so what makes iForce so different? "When I was MD of Christian Salvesen, we used Red Prairie as our WMS. So do Clipper, DHL... they are all on the same WMS. It's very good, but they are not in control of its development.
"They are also constrained in as much as they have to pay a licence fee and pay for amendments to the system.
"iForce was orginally a software business before we were a 3PL - we sent out the first-ever John Lewis eCommerce order and it still uses our system to run its eCommerce warehouses."
Sainsbury and Tesco also uses an iForce system, so there must be a good reason for them to.
"It's its functionality and its adapdability," says Gaunt. "We're not charging what Red Prairie are charging for example for amends. We offer 16 years of John Lewis development as part of the package. You get the knowledge of Tesco's returns systems.
"The second key reason (why Gaunt stepped up to CEO) is the way we operate - the people and how thay know how to get the most out of those systems. I can give customers that, plus a returns solution, plus a carriage management system - I can give them an entire eCommerce solution out of one box. We're different, and the clients we've had for years like our systems."
January used to be the 'returns season', with unwanted Christmas purchases hitting the warehouses in vast numbers. But that model has been torn up in the new eCommerce-driven climate, with the post-BF/CM period now by far the busiest for returns.
"We run the largest returns operation in the UK," says Gaunt. "For example for Tesco and Screwfix - everything from an iPad to a concrete mixer. 60% of returns have no fault. We're seeing at the moment a large number of televisions returned following the Rugby World Cup!
"We aim to recover the value of those assets to the retailers - we consider it a failure if it appears on our auction site! For every £1 spent with us, we will give them £15 back in the value of returned goods. We do this by designing a system whereby any judgement is taken away from an operator and is systemised to maximise recovery.
"One of our clients used to send every returned bicycles straight to landfill. We turned that around by employing two qualified bicycle mechanics and sent the bikes back out to sale in pristine condition. Another example is with Tesco; if it suffers a broken wine bottle, we will take the whole crate back and repackage and resell wine in mixed crates.
"We had a turnover of £5m on our auction site last year, and the way we run it means that we achieve 5-6% more than public auction siutes. Again, it's all about giving value back to our customers from the returns process."
BLACK FRIDAY/CYBER MONDAY
On average, iForce's clients will see a 100% uplift on returns compared to the rest of the year following BF/CM. How does that disrupt iForce's customers' operations, and how can Gaunt's company work with them to get through this challenging period?
"The genie's out of the bottle with Black Friday," he says. "We can't stop it now! We have to learn how to manage it. It's about people behaving professionally and working closely to look at orders and capacities. For example, our client John Lewis will turn off certain services on its website so it doesn't generate more volume than the network can cope with.
"Other retailers are not looking at how product reaches the market, but only at capturing sales.
"I know the carriage market well, not just from my days at Christian Salvesen, and I know that not many of them are making money. Their 'year' is December, and they have a finite number of resources. If they go over, it takes them a long time to recover. They try to restict retailers to a certain capacity, but it's proved to be very hard to police.
"The onus of the management of this rests with the retailers - they control how the industry responds. They have to undersatnd and to work with us to deliver the promises they are selling. The carriage industry can only respond according to its capacity - it can't 'magic' vans or people out of nowhere!"
So how does iForce work with its customers to get through the BF/CM peak?
"The peak is unpredictable now - it's very hard to forecast. IMG says Christmas will be 20% up year-on-year, but that BF/CM will be slightly lower than that. Take our John Lewis operation at Redditch (where iForce operates a 'manual' operation to augment JL's much-vaunted automated eCommerce sheds at Magna Park, Milton Keynes). We take 40% of the JL volume at Christmas - its automated systems are designed to cope with 80% of peak, and were not designed with redundency in mind. That's where we come in.
"We bring in 900 people to Redditch, and train them to use equipment, to scan, to pick and pack, to familiarise themselves with a warehouse and its layout. We get in students, local labour - we even coach people in from Birmingham. Our business in total is typically 700 people - supplemented by 2,000 more at Christmas. Add in the unpredictability of BF/CN and there are lots of moving parts to manage!
"BF/CN has brought the traditional peak forward. It used to be three weeks before Christmas. Now we bring extra staff in earlier, and work hard to train them up to work at a certain level of performance. This, of course, puts a certain strain on a site's infrastructure - toilet facilities, parking, security, etc. We have to work out a shift system to stagger when people log on.
"It's the most extreme case of flexible labour I've ever seen!"
All this is unseen, of course, by the consumer. If any of this operation falls down, we'll all get to hear about it. But iForece is in the business of ensuring it's not one of its own customers that steps inadvertently into the firing line this peak season when its systems fail to deliver - in every sense of the word.