How FabFitFun Grew to Become a Force in E-Commerce

How FabFitFun Grew to Become a Force in E-Commerce

FabFitFun’s explosive growth is thanks in no small part to its immense capacity, technological innovation and forward-thinking strategies in logistics

The rise of FabFitFun since its inception has been truly remarkable. 

In a relatively short period of time, the business has served millions of subscribing members. 

For those unfamiliar with the company, FabFitFun is a shopping and lifestyle membership for women, with a core mission to deliver happiness and wellbeing to members through an ecosystem of products, content and community. 

Its flagship product is the FabFitFun seasonal box, a fully-customisable selection of on-trend full-sized products from up-and-coming as well as established brands covering beauty, fashion, fitness, wellness, home and tech. 

In addition to the box, subscribing members have access to exclusive shopping opportunities, not to mention a host of online content and a flourishing community. 

“Part of what makes us unique as a retailer is that we place very large orders for box items because we have so many subscribing members,” explains Julian Van Erlach, SVP Global Supply Chain, Fulfilment and Logistics at FabFitFun. 

“Our symbiotic relationship with brands provides substantial exposure to our consumer membership base, who in turn get access to great products at deep value. Typically, it's 6 to 8 product items in a box, plus, potentially, some samples. 

“Our ability to write large purchase orders (POs) combined with the bundling of products behind a paywall affords us great pricing opportunities and a discovery experience for our members that makes us truly unique at the box level.”

Julian speaks to Supply Chain Digital from the FabFitFun base in the city of Chino, located about 35 miles east of Los Angeles. 

What also sets this site apart is that IT, finance, HR, security, engineering and beyond are also embedded into the operation. 

Coping with COVID

As one might imagine, the pandemic presented a host of challenges for FabFitFun and its various teams. 

As an e-commerce business, the pandemic did not adversely affect customer demand for FabFitFun the way it did in many other industries. The challenge was figuring out how to meet that demand while operating responsibly and in compliance with the various governmental mandates and directives.

Before the virus began to hit the US in a significant way, FabFitFun was ahead of the curve and ordered hundreds of thousands of units of personal protective equipment (PPE) for its facility and was one of the few such entities in the LA area to have masks and gloves in substantial quantities. 

When COVID was in full swing and testing centres and other medical facilities began struggling to obtain sufficient supplies, FabFitFun was able to donate significant amounts of its supplies in an effort to help alleviate the situation. 

FabFitFun also set about making its warehouse as safe as reasonably possible in an effort to prevent and contain spread of the virus among employees. 

This included investing US$1m on bipolar air ionis(z)ation, an advanced system that shoots positive and negative ions in the air to kill viral and bacterial matter. Negative air pressure, laser temperature screening, single-serving food, toilet seat covers, and reorienting operations and lines to allow for social distancing were just some of the other measures introduced. Elsewhere, recognising that carriers would be focusing much more on the most profitable clients during this period, FabFitFun opted to diversify its carrier network.

“Basically, we implemented whatever  technological, scientific and business process we could think of that was commercially viable before COVID hit in a big way,” continues Julian. “Therefore, unlike just about everyone else in the area, we substantially mitigated our labour problems and other foreseeable challenges along the way. Although there’s no doubt that Covid had a material and adverse impact on our operations, it could have been devastating. Ours was a case study in safe but effective operation under these extreme circumstances.”

The result? The organisation endured some unavoidable cost and inefficiency, but was able to ultimately fulfil the demands and requirements of its members. 

Entering the 3PL space

FabFitFun has been able to scale efficiencies to such an extent that it ended up with plentiful excess capacity in Chino – in other words, the incremental ability to ship at least 20 million more orders every year. 

The firm’s response, in its continued bid to grow, was to enter the third-party logistics (3PL) space.

FabFitFun has been actively building its 3PL clientele out of Chino and can already count Gordon Ramsay-promoted cookware company HexClad (in the western half of the US) Rachel Zoe’s Curateur luxury box and soap specialist Dr Squatch as key partners. 

Making the case for his employer’s immense capabilities, Paul Mendez, Vice President of Finance for Supply Chain, 3PL and Partnerships, says: “All these savings and cost improvements, the process refinement and value we’ve generated for FabFitFun – we can also generate that for our clients. 

“In some cases, it could be truly game-changing for these organisations because of the sheer dollar value we can drive to their bottom line.”

Anyone looking for proof of FabFitFun’s competence in the 3PL space need look no further than last Thanksgiving, when HexClad asked the business to look after orders for the entirety of the US – just two days before peak demand. 

And guess what? FabFitFun was up to the task, fulfilling 33,000 large orders on a Saturday. 

“That’s something very few entities out there – no matter their size – can do on a dime,” Julian adds.

The Supply Chain team is also building three unique patent portfolios on behalf of the Company with 6 issued and a number of pending patents in the fields of WMS enhancements for the management of expiring products; enabling carrier-related platforms to become a large digital ad-serving venue; and novel enhancements to order rate-shopping technology that enable carriers to understand market shares and competitive positioning, and shippers to understand carrier options and their own competitive positioning.

A warehousing evolution

At the heart of FabFitFun’s high-level evolution from a warehousing perspective are a number of key partners, all of which have contributed to the company’s astonishing growth.

“This journey of building the facility that we have now started with picking great partners,” emphasises Mark Gavin, Senior Director, Global IT.

The first step was to select technology giant Körber for its exceptional warehouse management system (WMS), a standout solution thanks to its flexibility and ability to ingest a million FabFitFun orders in a matter of hours instead of days.

Mark enthuses: “We haven't come up with a problem that we haven't been able to solve with Körber’s solution at the forefront.”

Other platforms are integrated into this area of the business. Bastian Solutions was chosen for its warehouse execution software, ensuring FabFitFun is sufficiently covered when it comes to print and apply and pick to light.

Meanwhile, a fruitful cartonisation partnership was formed with MagicLogic, recently purchased by EasyPost. 

“They were able to do things for us that we weren't able to do before,” Mark continues. “We’re talking a dynamic pick-to-kit, picking the correct sized box, with a certain design – it just revolutionised what we were doing. 

“We saved US$4 a carton and, with our volume of doing upwards of 125,000 a day, that adds up very quickly.”

Finally, a trucking management platform from EasyPost Enterprise is able to carry out rate shopping at the necessary speeds to keep pace with operations, giving FabFitFun true visibility into what packages are actually going to cost.

“Our work will never be done,” says Mark. “We’re constantly evolving to realise savings and cope with the new challenges we face week after week.”

Cutting costs in logistics 

Facilitated in large part by the aforementioned technology partners, FabFitFun has been able to achieve a virtually unmatched level of cost-effectiveness in its middle-mile and last-mile transportation network.

The ability to rate shop and create competition with multi-carrier coverage in each region of the US takes away the need to negotiate with a carrier at no contingency. 

FabFitFun now enjoys carrier depth in each area of the country, as Nathan Goodrich, Senior Director of Inventory and Logistics, explains. 

“If we can move business naturally – purely based on rate shopping – from one carrier to the next or one lane to the next to optimise our volume density or order profile, we have the ability to do that,” says Nathan. 

“It’s not simply a case of one carrier serving one area and being locked into their service mode or cost profile.”

Further afield, FabFitFun is reaping the benefits of a strategic partnership with international cross-border delivery specialist Asendia, which is enabling access to the UK and Canadian markets at a cost-effective rate - providing exceptional service along the way. 

Nathan continues: “Combining that with our domestic network, which is eight carriers deep across the nation with up to three carriers servicing each region, we have the ability to zone induct regionally, taking our average zone based on our customer profile from about six-and-a-half to three-and-a-half.

“So, the benefit of what we're talking about from a cost profile standpoint is pretty significant.”

FabFitFun and its logistics team has also moved to burden the rate shop with the middle-mile cost-per-package. This means that, during zone induction, middle-mile cost and time are being incorporated into the package calculation that determines which carrier is awarded each package. 

Nathan goes on: “That’s been very effective for us because, collectively, we can negotiate middle mile and last mile competitively with the same type of strategy by having multiple service providers in each lane. 

“We’re constantly rebidding that work in a way that creates competition and service level improvements based on the fact everyone knows they need to earn our business quarterly.”

Improving efficiencies at pace

Looking ahead, FabFitFun and its team members are laser-focused on continuously refining processes, thus ensuring the business is well positioned to deal with impending risks and changes in the market. 

“That’s something the team here specialises in as we continuously look to improve in-house, with all the various support roles we have here at our fulfilment centre,” concludes Paul. 

“We must continue to get better and drive costs out of the system to make sure we're improving efficiencies even faster than we're seeing sales grow or decline.”

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