Case Study: Margin Improvement via Supply Chain Restructuring for DTC Footwear Brand

Situation

The well-established Australian footwear brand for stylish, waterproof rain boots, with a significant online presence in AU, NZ, and Europe, aimed to expand its footprint in the North American direct to consumer market. While already operating primarily in the ecommerce space, the current cost structure was keeping the brand from being competitive in the North American market and needed a large reduction in landed cost to be viable.

Objective

The brand engaged Zefyr Consulting to conduct a comprehensive review and restructuring of their US and Canada operations. The primary objective for the client was to reduce the Cost of Goods Sold (COGS) for ecommerce products while continuing to deliver high-quality products and maintaining competitive pricing and service levels in the North American market. With freight and duty adding more than 50% to landed cost, this area was a key target for a strategic cost review. Additionally, the brand had outgrown its current 3PL solution.

The project followed a structured approach over a 3 month period, tailored to the brand’s ecommerce focused business model:

  • Zefyr Consulting started with a detailed analysis of landed cost. The analysis included evaluating international freight, customs clearance, warehousing, inventory management, shipping rates, and reverse logistics for returns.

  • Next, Zefyr Consulting assessed the existing supply chain processes and partners, including forwarders, brokers, third-party fulfillment partners, order management systems, last-mile delivery partners, and technology platforms.

  • Utilizing our industry expertise, Zefyr Consulting identified best practice partners and service providers that could enhance the brands supply chain efficiency, reduce costs, and improve customer experience. To close the project, Zefyr assisted the brand in final negotiations with selected partners, ensuring favorable terms and conditions that aligned with the brand's cost-saving objectives.

Results and Deliverables

The outcomes of Zefyr Consulting's engagement with the brand were impressive:

  • In 2024, the supply chain restructure and ecommerce-specific cost-saving measures are estimated to save the brand over $600,000 in COGS, a substantial improvement in their profitability.

  • The optimized supply chain is projected to generate even greater savings exceeding $1 million in 2025, demonstrating the long-term viability of the cost-saving measures.

  • The renegotiated contracts with ecommerce partners reinforce cost savings, improve operational efficiency, and strengthen the brand's competitiveness in the North American ecommerce market.

"Zefyr Consulting's expertise in optimizing our supply chain has been instrumental in our expansion efforts in the North American market. Their tailored approach to the unique challenges of online retail, coupled with their ability to identify and negotiate with the right partners, has not only saved us significant costs but has also enhanced our ability to serve our customers efficiently.

We are confident that these measures will continue to support our success for years to come.”

– “Client Head of Operations”

 

>$600K COGS Reduction

Through supply chain restructuring efforts

>$1M Long-Term Savings

Long-term viability of cost savings measures projected to increase over time

Competitive Position

Negotiated contracts reinforce cost savings and strengthen the brand’s competitive advantage.

 
David Kelley