Planning for Scale

CategorySkiiing & Outdoors
Business TypeBrick & Mortar Retail
Study GroupPhase 3
StatusCompleted
Company NameAlpin Haus
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Having implemented ArgoMetrix e-commerce strategy – Phase 2, Up State New York based brick and mortar retailer, Alpin Haus, was ready to ramp up its revenues. After generating over $250,000 in sales within six (6) months from Amazon FBA business account launch, they were ready to invest in inventory to fuel their growth. Their Amazon FBA Seller account was well established by meeting Amazon’s seller ratings which provided competitive advantage over other Amazon sellers.

While the Company performed well over the shopping season and generated significant revenues, Alpin Haus had another challenge, as their business was seasonal. They needed to avoid relying solely on seasonal items and create a revenue base from items that were in demand throughout the year. In addition, such items should be able to be sourced competitively and, therefore, sold profitably. In short, Alpin Haus needed a merchandizing strategy with not just a set of projections, but a revenue model to drive growth.

By now, the Company had accumulated sufficient amounts of financial data for management reporting and analytical purposes. It was essential for Alpin Haus to know the operation was yielding net profits and carrying sufficient but not excessive inventory. However, they needed more accurate and prompt financial reporting to be able to respond to the changes in the economic climate. Alpin Haus needed more than regular reporting with sales, profitability and expenses. A complete set of Key Performance Indicators (KPIs) were necessary to manage the operations.

The Company also needed a set of protocols and a clear plan to ramp up the SKU base by adding items that would meet the new criteria. Also, they needed to be able to respond to the changes in KPIs and drive the Company’s financial performance. This was critical to align the daily decisions with the financial model.

In addition, as the order volume grew, new staff needed to be added to the team. Since the operation was primarily managed by one person, training the new team members became disruptive to their growth. To ensure that every team member would carry out their designated tasks consistently, it became necessary to develop a Company Playbook.

As the financial year ended, Alpin Haus also needed to produce their year-end financials, in which the value of the inventory held at Amazon facilities was necessary. This valuation changed dynamically due to the nature of the transactions with new sales orders where they were fulfilled by Amazon without any notification to the Company. The year-end statements had to be streamlined with all shipments to and from Amazon as well as all sales orders booked as revenue.

We used proprietary software to identify high demand items Alpin Haus could sell on Amazon in addition to their current product lines. They would enable the company to create a steady stream of orders throughout the year. We further processed the product data to determine future trends and profitability at competitive costs the Company could purchase. As a result, Alpin Haus added over 100 new items to their active listings on Amazon FBA business account.

We then created a financial growth model by analyzing the historical performance of their suitable existing items. Additionally, we applied our proprietary algorithms to predict future trends of both existing and newly added products. Once this process was completed, we divided the active SKU base into seven (7) separate buckets to create a model that would project the order volumes for each bucket as a whole.

We then moved onto projecting the net yield in each bucket by dividing them into five (5) sub groups based on net profitability. This model would allow us to predict inventory financing required while projecting the top line and net profitability.

The next step was to introduce a complete set of KPIs that were not only comprehensive, but also had protocols associated with each KPI. This turned the Company’s actual performance data into actionable intelligence for key decision making.

We set up a Company Wiki intended to be the Operations Playbook.

Finally, we undertook the most analytical task of reconciling the Company’s year-end inventory valuation. This involved back tracking outbound/inbound shipments from Alpin Haus’s main location, shipped orders, returns and refunds to coincide with the closing balances of all other related accounts.

Our actions ultimately resulted in:

  • Full implementation of the e-commerce strategy integrated into Alpin Haus processes and strategy
  • Revenues of over $100,000 and 2,200+ pieces sold within the first three (3) months of the operation
  • Integration of the new Amazon FBA business account into the company’s Operations and Accounting
  • Optimization of Alpin Haus inventory management and purchasing processes, which yielded savings in cash flow more than $250,000
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