Made.com Prepares for Brexit by Diversifying Its Supply Chain
Brexit is looming large and, by the time you read this article, the process may have been completed. However, with two weeks left to go (at time of writing), the waters could not be any less clear.
On March 12th, the UK's withdrawal agreement - negotiated by UK Prime Minister Theresa May with the European Union - was, as expected, soundly rejected by the House of Commons with a majority of 149. This is the second time a proposed deal has been rejected. The following day, the House voted once again, this time on whether to take the possibility of a no-deal Brexit off the table. MPs voted by 312 to 308 to reject a no-deal Brexit under any circumstances. On March 21st, the EU agreed to let the UK delay Brexit until May 22nd, if the UK agrees.
With so much uncertainty in the air, savvy businesses have been getting their ducks in a row in preparation for Brexit, with many moving operations out of the UK entirely.
Made.com
While it's not abandoning the UK, online homeware and furniture retailer Made.com is making its own preparations for a post-Brexit landscape.
The first of these steps is to significantly expand its operations in Europe. The London-based company recently announced its intention to open in four new European countries - Portugal, Italy, Denmark, and Sweden. Once completed, these additions will increase the brand's global footprint to 13 countries in total.
"The increase in sales is because consumers nowadays are more comfortable with buying expensive and big items online," said Made.com Chief Executive Officer, Philippe Chainieux. "Over the past 18 months, we have seen an accelerating trend towards customers shopping online for big-ticket items, driven by a massive shift in consumer behaviours and the rise of the digital generation."
Expected to be completed later this year, the expansion is set to make the company's European business overtake its UK revenue for the first time. The UK presently handles 58 percent of Made.com's business. Overall sales have grown 37 percent to a record 197 million Euro. In the UK alone, sales grew 34 percent to 114 million Euro, while international revenue increased by 40 percent.
European expansion will give UK-based companies such as Made.com a more secure footing to continue to grow in a post-Brexit marketplace. It would also give them the option of leaving the UK if necessary.
Diversified Supply Chains
What will become of the supply chains is of great concern to businesses. They presently rely on the frictionless movement of goods between countries, all thanks to the UK's membership of the EU. With waiting times at the Dover/Calais crossing predicted to increase to such an extent that work has already begun on gigantic new lorry parks in Kent, it will likely become more difficult and expensive to move goods between the UK and the continent.
Made.com is preparing for this by separating its supply chains in the UK and Europe.
"Part of the business is to move boxes across borders, and when you have a border that is closed that is more complicated," said Chainieux. "So, we have set up two different infrastructures - one being dedicated for the UK, the other being dedicated for Europe. We have the obligation and we have a process to finalise that to really segregate what's linked to UK activity and European activity."
The current plan is for the company to continue operating from its headquarters in London, but to significantly increase staff at its Paris hub, which will serve as the centre of operations for the new European supply chain.
Final Thoughts
Brexit is a massive concern for ecommerce businesses operating between the UK and the rest of Europe, and it's only by making serious preparations such as those being implemented by Made.com that they can give themselves the best chance of remaining operational.
"This was a business decision that has been accelerated by a couple of political decisions," concluded Chainieux. "It's about how do you manage your risk as an international company, and it is about your capacity to attract talent and attract the right people, making sure you're going to get them in the long term. I think when you want to mitigate the risk, having a second hub which will be positioned differently is a good way to have a capacity whatever the situation, to allow us to attract the talent we need to grow the company."
You can hear Made.com's Chief Financial Officer, Adrian Evans, speak at eTail Europe 2019, taking place in June at the QEII Centre, Westminster, London.
Download the agenda today for more information and insights.