The company has opted for Sage 200 due to its ‘unbreakable’ nature and the excellent reputation and longevity of Sage which also provides access to a strong ecosystem of trusted add-on solutions.
Implemented and supported by CPiO and hosted by CPiO Cloud, Sage 200 underpins an integrated, end to end online architecture for a company that is doubling its turnover every 12 months. With Data Exchange from CPiO partner Eureka Solutions feeding sales information in and stock information out of Sage in real time, Shop@PhysioWorld can ensure it presents up to date stock information across its ten plus sales channels, including eBay and Amazon – a key requirement to maintain the company’s excellent marketplace rankings.
With a complex product mix including own-brand goods manufactured in China and a range of third party providers, Sage 200 is playing a key role not only in providing accurate sales and finance information for Shop@PhysioWorld but also supporting forecasting and stock management.
Online Business Model
While the Internet has opened up a world of new business opportunities, getting the right online business model is critical. When Shop@PhysioWorld was first set up in 2012, the original vision was to provide fast-track access to a wide range of fitness and rehabilitation products for the clients of PhysioWorld’s existing 150 strong network of physiotherapy clinics. When Paul Dallimer was brought in as a consultant to review the business model, however, it quickly became clear that simply reselling existing products – which range from exercise mats to wrist supports – in this highly competitive market was not a profitable approach.
As Paul says, “The Internet is a wonderful thing and a great platform to promote and sell on but it is fiercely competitive. If you are reselling other people’s product your margins are wafer thin – and there are a lot of ‘mama and papa’ sellers operating from home who have the price advantage of not being VAT registered, as well as the competition of US imports.”
Instead, he recommended Shop@PhysioWorld design, develop and adapt its own range of products to be sold alongside products from other well-regarded providers. This new model was quickly adopted, offering a far more compelling product margin and the chance to build a strong brand reputation. However, taking the own-brand route also adds significant challenges and risks to the business – from managing manufacture and quality assurance, to extended production lead times and the implications on stock availability.
To get the new business up and running, Paul, now the Managing Director of Shop@PhysioWorld, had to address both the initiation of the own-brand strategy and, in parallel, create a robust infrastructure to support the online sales model. The first step was to identify high volume products with good potential to redesign and rebrand, and then source good quality manufacturers in China. Paul’s first trip to China was in June 2012 – and the first products arrived in September. By this time, he had added two members of staff to the business, including son Dan who is in charge of building the online sales channels, and the first products were listed on eBay and Amazon.
As Paul says, “The goal is to build a range of products and make those products available to as many people as possible through as many channels as possible.” It was therefore essential to get the right ecommerce infrastructure in place – and for Shop@PhysioWorld that has meant creating a robust platform, including Magento Webstore and Channel Advisor, underpinned by the Sage 200 ERP solution.
With a long background in ERP software sales, Paul was better placed than most business owners to get the right solution. “From my perspective, when you put in an ERP for any business, but especially for a growing business, the mind-set has to be best of breed,” he confirms. With a firm commitment to the Software as a Service (SaaS) model and minimal onsite IT, Shop@PhysioWorld initially assessed a number of pure-play SaaS ERP vendors. However, he insists, “I reviewed a number of products, including NetSuite, and none of them could provide the longevity and ‘unbreakableness’ I was looking for.”
Instead, Shop@PhysioWorld turned to Sage 200 which is supplied and hosted by CPiO in the company’s CPiO Cloud. Paul says, “Sage is a household name, with thousands of users, is tried and tested and totally fit for purpose; while CPiO has a great reputation and is just down the road. The CPiO Cloud managed service is fantastic. From back-ups to business continuity, the whole thing is managed for me, I just don’t have to think about it and having the Sage support and the hosting from the same company has worked really well.”
Paul is keen to highlight the value of the best of breed approach. He says, “In addition to Sage 200 covering the core business functions we need – in spades – the great thing about Sage is this ecosystem of partners and add-ons, which is really valuable.”
He cites Data Exchange from Eureka, also supplied and supported by CPiO, as a key add-on which is used heavily by Shop@PhysioWorld to take information from multiple sales channels, including eBay and Amazon as well as its own website, directly into Sage 200. With around 1,000 SKUs and 450 products in stock at a time, the company processes around 10,000 orders a month. Orders are automatically uploaded into Sage 200 via Data Exchange and Sage 200 also constantly broadcasts stock availability to Magento, which then pushes stock updates into Channel Advisor to ensure stock availability is managed across all the marketplaces.
Paul says, “It is critical to have up to date stock availability – especially on marketplaces where reputation is everything. Real time, accurate stock information is an important aspect of the quality of customer experience.”
Managing the flow of stock into the business is also a challenge. There is a minimum 60 day lead time on own-brand products manufactured in China – and those lead times are highly volatile – and third party suppliers can also experience stock outs. Combine this inbound process with a business enjoying 100% growth year on year and the entire forecasting and stock management process is extremely complex.
Prior to introducing Sage 200, the company was manually updating its stock on a daily basis on an Excel spreadsheet – a process that could often result in customers having to be contacted about delivery delays. With Sage 200, Shop@PhysioWorld has immediate and complete visibility of products in stock and is gaining greater insight into trends in demand by using Sage’s Business Intelligence (BI) module. “I expect our growth to accelerate and the ability to undertake more detailed product sales and margin analysis using BI will be important in supporting our expansion,” says Paul.
In addition, the immediate visibility of trends in demand enables the company to manipulate price to suppress demand and avoid an out of stock situation. “With long lead times the only tool we have to manage demand is flexible pricing. Out of stock has a very bad impact on marketplace rankings, so the ability to identify quickly the demand versus stock availability is key to keeping our stock at the right levels,” he says.
In addition to having almost real time stock information available, the company now has far more confidence in its financial position. Paul says, “The business has grown rapidly and before implementing Sage 200 we had no faith in our numbers. The stock was never accurate, the P&L was not right – it was a hugely painful situation and a real challenge when you are trying to build a business.”
The introduction of Sage 200 has brought a strong system of record, providing the company with a single version of the truth. From improved sales order processing to real time stock information and cash management, Paul says, “We rely on Sage 200 100% for stock and financials.”
Looking ahead, Shop@PhysioWorld plans to add warehouse management to the Sage 200 environment to gain even greater control over the end to end experience; as well as automatically producing dispatch labels as part of the distribution process to gain further efficiencies.
In the three years since the Shop@PhysioWorld concept was first seriously considered, the business has expanded rapidly. Indeed, while the company initially gained significant value from the PhysioWorld brand, with the majority of sales derived from customers of the physiotherapy business, the retailer company has since massively extended its reach – with products now available via multiple channels, including France, Spain, Germany and the US, and the PhysioWorld customer base now represents just 10% of total sales.
The future is looking extremely positive, with plans to develop another own-brand range, and focus heavily on the US market. As Paul confirms, the speed of expansion has been a challenge, “The business would not have gone any further without Sage 200 – it would have just disintegrated. Now we not only have accurate sales, finance and stock information but also access to the Sage software ecosystem which will provide all the additional functionality we need to support our aggressive growth plans.”
The service that CPiO provide is excellent, they demonstrated a clear understanding of our business and its unique requirements and have worked non-stop to ensure that the solution was implemented smoothly.
The ability to interact with local experts who understand the market and changes to UK legislation is incredibly valuable
The transition to Sage ERP 1000 v4 has been very smooth, with very little or no disruption to the users.