Billabong signs omni-channel deal to protect it from the “little companies”
Thursday, May 7, 2015/
Beleaguered surfwear retailer Billabong is turning to omni-channel retail in a bid to revive its fortune.
At the SuiteWorld conference yesterday in San Jose Billabong, Billabong announced it has signed a deal with NetSuite and will use the cloud provider’s SuiteCommerce platform across its business.
The goal is for customers to be able to shop seamlessly across Billabong’s bricks-and-mortar stores and websites through a constant real-time flow of customer, order and inventory information across all of its sales channels.
Billabong is working to transform its fortunes after a tumultuous few years for the ASX-listed business.
The surfwear retailer was bought by US hedge funds Oaktree Capital and Centerbridge Partners last year and posted a net profit of $25 million for the December half, compared with a loss of $126 million for the previous corresponding period.
Zach Nelson, chief executive of NetSuite, told the conference Billabong suffered from a “hairball” of IT systems and so the best option was to re-platform rather than try to integrate new systems.
“It’s an omni-channel, omni-brand, B2C business model and global,” he said.
Kadima Lonji, chief technology officer for Billabong, told SmartCompany the retailer currently uses six ERPs and three point-of-sales systems.
“In our world we have so many systems, they seem like they are connected but in reality it’s hundreds of little integrations and managing all those integrations is a tremendous challenge,” he says.
“Its not just in our industry, I know many retailers have this issue. Our vision is to simplify and just enable inventory for customer visibility and experience.”
“Today if you walk into one of our stores and want a particular colour or size and that store doesn’t have it, there is no way for us easily to see if other store or the web has that product,” he says.
“In the new world with inventory in a single place we will be able to solve that.”
Lonji says saving one sale every day in each of Billabong’s 300 stores with an average purchase price of $125 translates to $13 million dollars over a year.
“We did the math and sat down and said we can build a bunch of integration and the other option is to scrape and replace and potentially get ahead of our competitors.”
Lonji says chief executive Neil Fiske has led a turnaround at Billabong.
“Neil for me sets the tone in the organisation in terms of this whole turnaround,” he says.
“The way he approached this was he was super ambitious about making a transformation that was technical across all the systems as well as getting the people into the organisation who could drive the ship during the project as well as beyond.”
Lonji says despite “a lot of angst” from some parts of the business about moving to a cloud-based system, Fiske’s vision and support have been unilateral.
“The focus is there and the resources I am being given to hire as well as to fund the project are significant and serious,” he says.
“90% of people are OK with the change but 10% are more reticent and cautious, but they usually have a very big voice and you need to find a way to ensure their concerns and questions are addressed.”
Lonji says the retail market is so competitive now, Billabong had to act decisively.
“There’s little companies starting up websites all the time and selling product and they have less struggle than us because they don’t have legacy. They can start up and be super efficient and have all the cool features,” he says.
“Yes, we have a storied brand and 40 years of history, it helps us from a brand perspective; but it also means we have all this legacy that prevents us from moving fast and competing.”
Lonji wouldn’t reveal how much the move to an omni-channel approach will cost the retailer.
Cara Waters travelled to San Jose as a guest of NetSuite which paid for her flights and accommodation.