We don’t like to brag about “we told you so” but in November 2020 we will tell you about the big logistics turnaround that El Corte Inglés was preparing: a remodeling of its gigantic storage and distribution infrastructure designed to optimize resources coming, to a large extent, from the pre-digital stage of ECI and that can now be key to facing new challenges.
The one that had been a leader in the sector for decades thanks to its model of large (huge) physical warehouses I needed a change of course to adapt to new consumption habits and obtain income that compensates for the loss of income in sectors such as tourism through El Corte Ingles Travel, a division that only a year ago announced a The appearance of covid has only accelerated these changes, and the company seemed determined to tackle a more than necessary evolution.
And now, finally, that change is about to happen.
El Corte Inglés is born Advanced Logistics
El Corte Inglés will launch a new subsidiary, El Corte Inglés Advanced Logistics, which will bring together 3,500 employees and logistics assets, all except real estate, to its new subsidiary that will make its extensive network of warehouses, distribution centers, points of sale and, of course, workers available to the brands, the affected personnel will maintain the same conditions they had until now . The change will take effect from March 1when the company begins its fiscal year.
This falls a bit short compared to the forecasts that El Corte Inglés itself had advanced to the end of 2020 when I expected this new division to group totaling 1.2 million square meters of surface in Spain and Portugal. According to these initial forecasts, the idea is that this movement would allow it to triple the volume of its logistics business and invoice up to 1,200 million euros.
Does this business model ring a bell to you?
Fulfillment by… El Corte Inglés?
In early 2020, in response to a time of poor company results.
Among the ideas of El Corte Inglés was the redesign of its logistics and distribution network, with changes such as the restructuring of those points of sale that give recurring losses. And it is that many of these centers were created during the “boom” of the economy, and even some of them when the crisis began to be noticed between the years 2008 and 2009.
A decade later, the company has managed to get these centers to cover their expenses as they obtain positive EBITDA. However, once corporate costs, amortization and deterioration of merchandise are added, the red numbers jump. El Corte Inglés has 2,000 stores in Spain, carefully distributed so that more than 80% of Spaniards have a company establishment less than 40 minutes away by car, in addition to multiple logistics centers throughout the territory. Therefore, with capillarity that this produces, and your logistics network worked well, the brand could exponentially multiply its delivery capacity.
Due to the health emergency and the commercial closure during the state of alarm, El Corte Inglés limited its activity during confinement to sales in its supermarkets and essential areas. Your marketplace experienced strong demand during those months, and it was then that they realized that their logistics capabilities were underutilized.
New logistics strategy of El Corte Inglés for sellers
The idea behind this movement is that El Corte Inglés takes the reins and offers brands that agree to sell from its marketplace, a complete logistics system. In other words, it would be in charge of the entire process, from the showcase where the products are displayed, to the storage service, management, delivery of the same and customer service.
«We have strategically located stores, which we use as warehouses for deliveries, and which allow us to reach customers faster than our competitors” the company claimed in the prospectus of a bond issue in 2020.
In this document, El Corte Inglés highlighted how its logistics platform used to work at 50% of its capacity. «We want to extend our offering to third-party brands by leveraging end-to-end and distribution capabilities to help brands be more efficient.” they added. In addition, he gave as an example Nike and Pepe Jeans for using this service to take advantage of its capabilities and reduce costs.
This proposal may remind us of the . A system that allows any person or brand to sell their items on Amazon. People who agree to sell their products from this platform will have advantages such as:
- The ability to store products in Amazon warehouses.
- That the company is in charge of managing and sending the products to the clients.
- In addition to refunds, returns and providing excellent customer service.
And, in short, that is what they are looking for with this new strategy. Rredesign the distribution network and open new ways of business through the links with third parties. In 2020 the English Court announced that it was in negotiations with 100 brands to become its , assuming all these processes. “We are currently negotiating with the brands to provide them with a complete and end-to-end logistics service on our platform,” explained the company itself.
El Corte Ingles Plus
One of the first phases of this evolution of its logistics model included the launch of the application. This service, similar to , has a flat rate of €19.90 per year with which you can receive orders in two hours without shipping costs. Through this channel, users have access to more than 500,000 products, with delivery in less than 24 hours, including fresh food from its supermarket chain.
This service poses strong demands at the logistics level: the company must be able to fulfill its promise of ultra-fast shipments when necessary, and its capillarity will be key to achieving this.
In short, El Corte Inglés has always been a physical showcase for other brands and it always wanted to maintain this in its entry into digitization. With these initiatives, the company wants to exploit its renewed omnichannel strategy, betting on the logistics activity linked to eCommerce. A market that shines more than ever, after the check that the coronavirus has given to many small businesses and even large stores.
Stay informed of the most relevant news on our news channel
Facebook Comments
Disqus