DC Velocity - Tipsheet 2013

When the Dutch online retailer worked with a key supplier to switch from weekly to daily replenishment, inventory levels improved— as did sales, service, and working capital.

wehkamp.nl takes it
ONE DAY at a time

Companies that sell over the internet face a whole new set of demands when it comes to inventory replenishment. To ensure that products are available as promised yet still keep stock levels down, an “ e-tailer” must fashion a more collaborative supply chain with key suppliers than traditional bricks-and-mortar retailers typically do.

Five years ago, the Dutch online retailer wehkamp.nl did just that, forming an unusually close arrangement with its chief supplier of computers and related items to support a shift from weekly to daily restocking of its distribution centers. The two companies worked together to develop a process that closely connects replenishment and inventory levels to actual demand. As a result of that partnership, both retailer and supplier improved their inventory turns, reduced working capital in the supply pipeline, and boosted sales, especially for fast-selling items. Here’s a look at how wehkamp.nl achieved those improvements with help from its supplier.

FROM MAIL ORDER TO INTERNET-ONLY

Based in Zwolle, the Netherlands, privately owned wehkamp.nl has become the largest online retailer in that country. It sells a wide assortment of home goods, from televisions and computers to apparel. It handles more than 100,000 different stock-keeping units (SKUs) and makes some 4 million shipments each year. Although wehkamp.nl does not release revenue figures, its parent company, RFS Holland Holding B.V. (which also owns other retailers as well as credit management services in the Netherlands) reported annual revenues of about 488 million euros (about US $780 million) in fiscal year 2010/2011.

After starting out as a mail-order merchant some 60 years ago, today wehkamp.nl is online only. “We came from being a catalog company, meaning we sent a catalog once or twice a year to our customers,” says Gerco van Norel, the supply chain planner for wehkamp.nl’s electronics group. “We have since made the change to a full Internet company, so our only [platform] is the Internet.”