Carl Lundberg has been working in supply chain logistics for almost 20 years. He has worked for big and small companies that include Procter and Gamble, L’Oreal and H&M. Six months ago he joined the Babyshop Group as its Chief Operating Officer.
The Babyshop Group was founded in 2006 with a vision of building the best online store in the Nordics for children's clothing. Offering a mixture of their own and other well-known brands, the product assortment includes baby and children's clothes, shoes, toys, strollers, car seats and toys. The company has grown to now host four websites, including UK and French sites, and nine retail stores in Norway and Sweden. The Group has offices in Paris, London and Stockholm, and a turnover of €120 million.
But the heart of the operation is arguably the Babyshop self-automated AutoStore warehouse, located in the city of Jönköping, in southern Sweden. All the products that the Babyshop Group sells across its various platforms to customers in 130 countries around the world are delivered from this 43,000 square meter site that houses 130,000 pick locations.
“It was one of the first automatic warehouse in Sweden,” says Lundberg. “It works via 120 robots that serves the picker with products and picks them into boxes or bags which are sorted automatically into bins or pallets that haulier companies then pick up for onward delivery.”
“We focus a lot on different packaging strategies to reduce the air in the packages that we send.”
As well as helping to make Babyshop very efficient, the warehouse also serves as an integral part of the company’s sustainability vision. “The founders’ focus has always been to work in a sustainable way,” Lundberg explains. “All our own brands have sustainability certifications and we use recycled plastic and recycled cotton. And the warehouse will soon be climate neutral. In Q3 this year we are going to put up solar panels all over the roof so that the warehouse will run entirely on renewable energy.
“We also focus a lot on different packaging strategies to reduce the air in the packages that we send,” Lundberg adds. “We have, for example, an automatic packaging machine that checks how much volume there is in a box and then cuts the box down so that we ship as minimal amount of air as we can. The majority of our deliveries in the Nordics are fossil free too and we are now moving forward with a project to encourage customers to recycle our packaging by getting money for it at a recycling station. But being an e-tailer who ships all around the world is, from a sustainability point of view, a big challenge.”
One of the key ways of meeting that challenge, is according to Lundberg, to build new kinds of relationships across the supply chain and work increasingly together. “That has been one of my guiding stars throughout my career in supply chain logistics,” he says. “We, as the retailer, should not see ourselves as the sole supplier of the customer. Everyone in the supply chain is part of one team, so we should develop new relationships with each other to see how we can make our supply chain the most efficient one possible for our customers and a more sustainable way to shop.
“We are trying to find ways to collaborate by talking to other companies,” Lundberg continues. “For example, instead of everyone having their own warehouses, we are suggesting that some non-European based suppliers could use our warehouse space and facilities and we could be their Nordic platform, and vice versa. At the moment, some of our products sold in Asia are usually made in Asia, then shipped to Jönköping, then back to the customer in Asia. This is not very sustainable. So we are looking into working with our suppliers who have warehouses in Asia. This is the kind of relationship that we want to develop further.”
With e-commerce becoming the new normal, Lundberg says that it is a huge challenge to meet the expectations of customers while being sustainable. “Most people today expect a free delivery, or at least a free delivery alternative, and free returns. But it is difficult to be a sustainable company if you always have free shipping and free returns. So I think in the future we need to move to a situation where people need to be prepared to pay for the service they buy, which is a delivery that saves them going into a store, or to return products, otherwise people buy three different sizes and return two of them!”
Returns, Lundberg points out, are a big drain when it comes to sustainability. “We are very lucky,” he says. “I know some companies have a 50% return rate. We are at 9%. But I think we can be a lot better with helping our customers. We could for example offer more size guides for clothes and shoes and make use of apps where you take a picture of your shoe next to something like a credit card to determine your size.”
One way to help encourage people to pay for these services, Lundberg suggests, is through better understanding the customer’s needs and desires and provide them with value. “E-commerce customers have started to understand the value of time in another way than they did before,” he says. “With everything going faster and faster and people trying to work at the same time as being home with the kids, the time to be together with your family becomes increasingly valuable. And so, especially for us whose target group is modern families, we need to understand how we can create a value for them, and be a very fast e-tailer with a good selection of products that customers know they can turn to.”
“As long as you have sustainable packaging such as non-plastics and use as little air as possible, along with low emission deliveries, there doesn’t need to be a conflict between e-commerce and sustainability.”
As part of its working together ethos, Babyshop is also helping the other brand owners, whose products it sells, with this journey towards better customer understanding. “We have a fantastic customer service team,” says Lundberg. “They answer questions from all around the world and from this data provide our stakeholders with consumer insights and experiences. We have also just created a new group within the customer service team called Voice Of The Customer that is going to work back-end with feedback to our suppliers from our customers.”
Lundberg has observed that European customers are the most demanding when it comes to sustainability, and it is important to offer something for them that provides value in this area. “Customers can be quite disloyal,” he says. “It is usually the price that is their priority. So it is important for us to understand what other triggers our customers respond to. What creates a loyal customer? And by that we could for example meet their sustainability demands by showing them how many emissions they saved by taking our fossil free delivery, or how many trees were saved. We can at the same time offer the option of paying a bit extra for fossil free deliveries.
“It is important that we all work together to reduce the emissions and carbon foot-print when it comes to e-commerce,” Lundberg adds. “Because after all, e-commerce is here to stay. And as long as you have sustainable packaging such as non-plastics and use as little air as possible, along with low emission deliveries, there doesn’t need to be a conflict between e-commerce and sustainability.”