After THE ICONIC reached capacity at its fulfilment centre in Yennora, New South Wales, the leading online fashion and lifestyle retailer used the challenge as an opportunity to rethink its supply chain operations with consultancy Prological. MHD finds out more.
As one of the Australia and New Zealand’s first pureplay e-commerce providers, THE ICONIC prides itself on setting the industry benchmark for customer service and delivery options.
What started with a small team and a big ambition to redefine the future of retail in Australia and New Zealand, THE ICONIC is a tech-driven, customer-first brand that now boasts more than 2.2 million customers.
Founded in 2011, THE ICONIC is Australia and New Zealand’s leading online fashion and lifestyle platform. With more than 20 million visits per month and five million app downloads, the business reported a 15.7 per cent growth year-on-year and announced revenue of more than $759 million in 2022.
Underpinning any pure-play e-commerce provider is an agile and flexible supply chain – which THE ICONIC continues to invest heavily in.
“Being able to find the stock, get it picked, packed and despatched super-fast is critical for a business like ours,” Erica Berchtold, CEO at THE ICONIC tells MHD.
Overcoming growth challenges
Like many e-commerce retailers, THE ICONIC has been on an exponential growth curve over the past few years – resulting in a requirement to rethink its supply chain and fulfilment operations.
On peak days last year, THE ICONIC processed more than 110,000 orders and up to 250,000 items. You need to be a mature, sophisticated and capable business to do this. However, with ambition to deliver this, not just on peak days – but every day – THE ICONIC knew it needed to transition from good, to very good, to great.
But where do you look to for ideas, inspiration and a pathway forward when you are already, even at a global level, at or near the very best in industry? How do you benchmark? Who do you compare yourself to?
As a result, THE ICONIC started working with ANZ supply chain consultancy Prological to work on its next phase of fulfilment strategy and expansion.
Initially, THE ICONIC engaged Prological to discuss future requirements around expanding its fulfilment capabilities over the next few years – looking at options for a larger site in New South Wales and/or a strategy with distribution centres in other states.
However, once the work began THE ICONIC had a more urgent issue to deal with.
“Off the back of unprecedented growth, we suddenly hit capacity challenges at our fulfilment centre (FC) in Yennora and we needed some urgent advice on how to handle that situation,” Erica says.
With a pressing need to deal with current capacity issues, Prological shifted its brief and immediately started working with THE ICONIC on a short-term solution.
“The thing I really like about Prological is that they are responsive, they are practical, and they integrate very quickly with the business. They are part of the team; they roll up their sleeves and get stuck in,” Erica says.
Optimising THE ICONIC’s current facility
While Prological was initially brought on board to discuss long-term fulfilment centre plans, after starting to analyse current operations it became clear there was some major cost saving and efficiency gains to be made in the short-term.
“Through our work with Prological we’ve gotten on top of our capacity issues. We’ve also introduced a more robust S&OP process and we’ve reworked our existing facility which means we don’t need to expand in the short term,” Erica says.
According to Erica, along with the above benefits, which she describes as “pretty big revenue-saving, profit-driving, cash-preserving initiatives”, THE ICONIC now has the time needed to really work out what the best solution is for the next stage of investments into its supply chain.
“I’m really glad that we didn’t end up racing into our expansion plans. With the economic conditions as they are, things are starting to slow down a little bit for everyone. So, it’s crucial to have flexibility and to be able to sweat the assets you already have. I think if we had gone full speed ahead with our capacity plans, we would have too much space for what we need right now,” she says.
For Erica, working with a consultancy she can trust is crucial to success. “Prological genuinely wanted what was best for our business. They didn’t try to push us into a new FC to feather their own nest. As a result, I really love working with Peter because I feel that I can trust what he tells me. He has a genuine relationship with us and helps us understand what our current and future requirements really are,” she says.
One asset THE ICONIC was able to better utilise was its Automated Storage and Retrieval System (ASRS), which at the time was only being used at 20 per cent of its capacity.
“Prological helped us look at the kinds of products we were putting in our ASRS and it really helped us drive productivity. We weren’t as productive as we should have been with some of the existing technology we had, but Prological guided us through this and helped us really sweat our assets,” Erica says.
THE ICONIC has also invested in Automated Mobile Robots (AMRs) at the Yennora FC and introduced an inbound hub to manage returns, while also significantly increasing the throughput capacity at the main fulfilment centre.
“Peter and the team gave us a lot of advice on how to relay our current fulfilment centre and helped us identify which functions we could do offsite in the inbound hub we introduced in December 2022,” Erica says.
A further advantage THE ICONIC realised after relaying its current fulfilment centre with Prological was added safety benefits.
“It’s super, super important in a big fulfilment centre like ours that safety is paramount. By being as efficient as we could and not being so congested in our FC, it has allowed us to be even safer and to really amplify our safety culture in that facility,” Erica says.
Operations to the forefront
Every week, THE ICONIC has a trade meeting with marketing, sales and operations. Prior to the work with Prological, Erica says the operational part of the meeting was always at the end of the meeting.
“We would always be running out of time and wouldn’t give operations the time it really needed. Since the work we’ve done with Prological, we now kick off that meeting with operations. We’re now asking crucial questions such as: ‘What’s our capacity? What was our on-time despatch last week? What was our on-time delivery?’ Our operations processes and team are absolutely front and centre now,” she says.
Prological helped THE ICONIC establish more processes and communication pathways that enabled the operations and supply chain team to have much greater visibility and encourage more collaboration between sales, marketing and operations.
“Our ops team certainly have benefited from our engagement with Prological because it helped put them front and centre,” Erica says.
Due to the work spent on optimising its current FC, THE ICONIC has been able to roll out some new initiatives including its Fulfilled offering and expanding its marketplace offering.
“There’s no way we could hit the sort of volumes that we are now without going through this process. We’ve got on top of our capacity issues and reset the way we do things in the FC. I don’t think we would have been able to launch initiatives like Fulfilled by THE ICONIC if we hadn’t gone through this process with Prological over the past 12 months,” Erica says.
For Erica, the work with Prological has led to a significant shift in priorities for the leading retailer.
“We’re a much more operationally focused business now. While we are still led by assortment and technology, operations have come on leaps and bounds and are now standing shoulder-to-shoulder with those other core areas of our business,” she says.
What’s next for THE ICONIC and Prological?
By delaying its fulfilment centre expansion program, Erica says the business is now in the advantageous position of being able to analyse more data and make a much more informed decision about the future.
“We’ve really bought ourselves some more time to analyse trends and now we’re looking at a roadmap for 2026 and beyond. We have the breathing space to ask the right questions and build the best future for THE ICONIC’s customer and their delivery requirements,” Erica says.
When reflecting on working with Peter and the team, Erica says she’s a much better CEO after having engaged Prological.
“I’m learning more about supply chain than I ever thought I’d need to. I’ve loved diving into it, and that’s because Prological were here riding shotgun with me,” she says.
The feeling is mutual, with Peter echoing Erica’s sentiment and saying he has loved working with The ICONIC because it’s expanded his idea of what it is to be a great business.
“While I’m very proud of what we’ve been able to contribute to THE ICONIC, it really does come down to their commitment and culture of continuous improvement. They are truly committed to innovation, and it’s a place where all ideas are valid. Erica really drives this across the entire business,” Peter says.
For Prological, the opportunity to work with a global leader in online retail and add value to their business has been a fantastic journey. “To work with a business of such incredible scale has enabled us to build knowledge and capability that we have thought about for a long time. We’ve needed the right client to explore our most innovative ideas with and we’ve been able to deliver great things because that ethos of innovation and driving continuous improvement is so aligned with who THE ICONIC is,” Peter says.
According to Peter, the key to the success has not been Prological’s ideas, nor challenges, but Erica as a curious leader.
“Curiosity drives a culture that explores and understands the value of problem solving. In turn this prevents THE ICONIC getting stuck at problem identification. Problems are everywhere, solutions are rare. Erica drives a business where problem solving is a very high value and the gateway to an improved tomorrow. It is because of this culture that Prological’s approach has been successful. We have been able to develop new ideas and innovations with their team, unlock new ways to approach old tasks and in this we, the collective team of THE ICONIC and Prological, have achieved great success, with much more to come,” he says.
Erica closes by advising other executive leaders who are looking at transforming their supply chain to look at the people, structures, and processes around the systems already in place.
“Be curious about supply chain and logistics. Even if it’s not your area of expertise, there’s a lot you can add and there’s even more you can learn,” she concludes.
Prological continues to work with THE ICONIC on its future fulfilment requirements and strategy.
For more information on Prological Consulting, click here.