As a stationary retail chain, how do you build up a uniform online business without putting your own franchise partners under pressure? The specialist retail chain BabyOne from Münster, which has over 30 of its own and 73 partner branches, has found its very own solution for this.
At the end of 2019, just a few months before the outbreak of the pandemic, a hybrid online shop model went live at the owner-managed specialist chain BabyOne for baby and toddler needs, with over 100 branches in the DACH region would become. Until then, the company only operated its own online shop as a digital shop window for the specialist markets. The special thing about the new model: The online shop integrates all franchise partners so that the customer has a uniform shopping experience and all partners benefit. Despite the pandemic, the family business closed the 2021 financial year with record sales of EUR 255.5 million in net sales. The online channel grew particularly dynamically at 34 percent, but the retail company also grew in stores. As in the previous year, the entrepreneurial focus was on the transformation of the business model from a stationary retailer to an omnichannel player. The two siblings Anna Weber and Jan-Willem Weischer, who have been managing the company in the second generation since 2021, explain their ship-from-store model, why they developed it and how it has proven itself so far.
You have developed a hybrid online model that also includes your franchise partners. You say there has never been anything like it on the market. Why bother? Why was it important for you to include all dealers in your online model?
Jan-Willem Weischer: It was extremely important to us to develop further from purely brick-and-mortar retail. But for our franchise partners, every additional online shop is of course always a competitor. That’s why we wanted to design the shop so that everyone benefits. After all, it is of no use to us if we prosper, but our franchise partners do not. The result is our hybrid ship-from-store model, which connects our specialty stores to our online shop. Anna Weber: Our franchise partners did not yet have their own online shops, which of course made it easier to introduce a joint online model. In this situation, everyone found it best to set up a joint online shop. That felt good for everyone. We noticed that there was a lot of interest and as far as we know there was no comparable solution on the market so we had to develop it ourselves.
What were the challenges?
Anna: The difference to other online models is that we are dealing here with a franchise model, i.e. with independent companies. We are therefore convinced that we can only work out solutions for our overall system together. For this reason, we designed the ship-from-store concept together with our franchisees right from the start. Together we also developed solutions for area protection and found ways to integrate the new processes into the stores so that they could be mapped well there. It was also important that the connection was possible via existing systems so that the franchise partners did not incur any additional costs. In reverse, of course, this also meant that a lot of technical integration was necessary and new processes had to be established. Jan: The aim of the development was always that the customers in the online shop do not even notice that the specialist stores are different companies and that they do not even see that the orders come from different places. The shopping experience should always be consistent. It’s also important to remember that the stores had to take on entirely new responsibilities, right down to how to pack a package and how to secure items so they don’t move around. To ensure a consistent customer experience, we had to juggle 100 stores.
How exactly does their hybrid online model work?
Jan: When an online order is received, the system automatically checks which retailer has all the products in stock and can deliver the entire shopping cart. In the next step, the locations are queried. The dealer with the shortest transport route can send the package – or make the sale. That means the sales stay with the retailer and we get a fee. The returns, in turn, are managed centrally. That was also generally desired. So we have a central office that carries out the quality controls.
When you launched the ship-from-store model in 2019, it was just before the pandemic. How did the first few months go?
Anna: Yes, in terms of timing, it was fortunate that we had already completely rolled out our hybrid online model at the end of 2019. It took two and a half years to develop it, so we couldn’t have set it up quickly when the stores were closed, which also initially affected our segment. Of course, Corona has accelerated the success of the shop: Before Corona, the online sales share was around five percent, currently we are around 16 percent. The number of articles has also increased. Corona was a digitization booster. Our franchise partners have become true online shop specialists over time.
What happens to the goods that cannot be put back on sale?
Anna: We offer that to our partners again. Our return rate is relatively low compared to other industries and is between ten and 15 percent. Even with clothing. When it comes to baby clothes, if the pieces are still too big, you just leave them for a few weeks until they fit. That’s why you don’t send them back.
Does the online shop cover the entire range?
Jan: Today we have around 25,000 items online and are gradually expanding the range, but with a focus on good curating. An average-sized BabyOne specialist store has around 15,000 items in its range.
If online trading gains in importance, what does that mean for your range? Are there shifts?
Anna: Definitely. Here we are still in the learning process. There are items that sell like hot cakes online and not in brick-and-mortar stores. Balancing this correctly is a task that we, as an omnichannel provider, naturally have to tackle.
How do you deal with the subject of marketplaces?
Jan: Of course we’ll keep an eye on them, but that’s not an urgent issue. Anna: It is very important to us that we have direct contact with the customers. What we learn there is more important than cavorting in marketplaces.
The subject of babies and children is highly emotional and requires intensive consultation. How do you implement advice in the shop?
Anna: We’ve definitely gotten a lot better since Corona! Of course we tried a lot during the lockdown phases, including live chats and live sessions, where employees used Facetime to walk through the store and advise customers. Necessity is the mother of invention. We have retained and developed much of it and are now making it more professional – our live shopping sessions can now also be called up later. Our midwife consultation hour, which we play via social media channels, has now become an integral part of our customer approach and is very much appreciated by our customers. In any case, we notice that these offers are used and are important.
How has your online model proven itself? How many packages does a retailer send on average today?
Anna: Since the online shop has existed, we have definitely all grown in sales. Every retailer sends around ten to fifteen packages a day, maybe more on Monday mornings because orders from the weekend have been backed up. In addition, our method results in a real advantage for our customers – they can be supplied from over 100 warehouses. That’s ideal. We are much faster with our system than with a central warehouse. Jan: Since we developed the system ourselves, we initially had few reference points. But that also makes the project even more valuable, since all stakeholders were involved in the process right from the start and in the end a real team solution was created that is supported by everyone in the BabyOne franchise network.
What goals do you have for the next few years?
Jan: We want to position ourselves even better in terms of IT and become even better and more convenient for customers in our omnichannel activities. We are also planning to launch our own brand before the end of this year, but we cannot say anything about it at the moment. The aim is to get out of comparability.