Four years ago, electronics retailer Proshop a/s found itself facing the classic growth challenge. Its business was expanding quickly, with sales volumes rising by the month. But that growth also had a downside: It was putting a serious strain on the Højbjerg, Denmark-based company’s fulfillment capabilities—to the point where it was placing the entire business at risk.
The problem came to a head during the Christmas season of 2017, as the retailer struggled with an influx of orders. Proshop initially tried throwing labor at the problem, hiring more and more people in an attempt to keep up with the volume. But that strategy proved unworkable. In order to compete in the cut-throat consumer electronics space, Proshop operates on razor-thin margins, and the added labor costs were eroding those margins right out of existence. At one point during that period, the company even had to shut down its online sales portal because it was unable to turn a profit on those orders.
“Price competition is extremely fierce in the electronics market. You … make [just] a few bucks selling an iPhone or a laptop,” Proshop CEO Ivan Jæger Christiansen said in a release. “So if we are not efficient enough, we cannot sell the product cheap enough, and if you cannot sell it cheap enough, you will not sell it at all.”
In search of a solution that would reduce its fulfillment costs, Proshop’s leaders asked other retailers how they had coped with the problem. A competitor mentioned that they might find what they were looking for with Element Logic, a systems integrator and logistics consultant based in Norway.
Working in concert with Element Logic, Proshop opted to install an automated storage and retrieval system (AS/RS) from AutoStore. The system’s ability to integrate with Proshop’s existing warehouse management system (WMS) and enterprise resource planning (ERP) software platforms was a selling point, and the company liked its flexibility in handling multiple types of products, according to Proshop’s warehousing and logistics manager, Ronnie Stormfeldt.
The AutoStore system is now installed in one of Proshop’s two warehouses in Denmark, a 16,000-square-meter (172,000-square-foot) facility that prepares both orders that are handed off to couriers for last-mile delivery (80% of the volume) and orders for customers that pick up their goods directly (20% of the volume). The AutoStore system allows for dense storage through a structure of steel racks, fitted with thousands of mobile plastic bins that are constantly retrieved and rearranged by shuttle-type robots. Proshop added 30,000 more bins to its system in July, bringing its “fleet” to 100,000 bins, with plans to expand to 160,000 units within a year, Stormfeldt said.
Proshop has arranged its AutoStore system with 16 stations handling both inbound and outbound flows. The goods-to-person workflow enables employees to work more efficiently than was possible with previous processes, Stormfeldt said. “With a man-to-goods workflow, an employee might walk 18 miles in a day, but now it’s just one and a half miles,” mostly for trips to the restroom or break room, he explained.
Armed with this new capacity, Proshop has been expanding its catalog of products from electronics into tools, perfumes, lotions, and more, adding new category groups and opening territories in new countries. The company is confident that the system’s flexibility and efficiency will allow it to keep up with the volume during peak season.
“Our prime time is from Black Friday to the end of February, like every e-commerce business,” Stormfeldt said. “We sent 6,500 orders out today, which was a normal day. That could reach 14,000 on a busy day, and in December, it could be 20,000 to 25,000. We haven’t done that yet, but now we could.”
Proshop sees more automation in its future. It is adding a new packing machine and is considering adding a robotic arm to handle bin picks, according to Stormfeldt. “And someday soon, many of our employees, instead of being warehouse and logistics workers, will be robotics operators.”