During our CFO Brew Live event Lessons from Supply chain, editor Kim Lyons spoke to Adrianne Lee, CFO of Overstock.com, and Somer Webb, CFO of Solo Brands, about lessons each of them learned from the supply-chain crisis that emerged during the pandemic.
Here are takeaways from their conversations.
This interview has been lightly edited for length and clarity.
What did the supply-chain disruption mean for your company?
Adrianne Lee: Overstock has a unique business model compared to some of our competitors. We are an asset-light model, meaning that we don’t hold inventory. We have over 3,000 vendor partners that supply us inventory on our site and we also do not have a significant logistics network or facility footprint. We have three distribution centers that we lease and give our partners an opportunity to place products in if it makes sense for the customer.
For example, during Covid-19, we obviously saw a huge migration online and we were able to keep products in-store, or on site, because of this vast partner network, so as one partner ran out of inventory, there was another swiftly behind it. So we saw this great opportunity within our asset model during high times of supply. During times of lower customer demand, we have an advantageous model because we don’t have yellowing or discounting or anything like that.
Agility, pivoting—that’s what we’ve been about.
Did you find yourself tweaking processes a lot more than expected?
Adrianne Lee: Probably some of our bigger tweaks in the year were early on. We knew that there would be waning consumer sentiment, macro uncertainty, inflationary risks—so I think we were pretty prepared for that. We run a really lean business, so we keep our costs low knowing we would need to navigate some of these headwinds. Where we really had to pivot was the amount of promotional activity and discounting that was in the market was significant.
What parts of the company did you get to know better during the supply-chain crisis?
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Somer Webb: You’re very close to sales and marketing. You want to see the calendar. You want to see inventory and where you desperately need to be forecasting inventory. But the partnership with supply chain and operations specifically was critical to that we became in lockstep. It’s not just weekly meetings, but daily updates.
You can’t sell a product that you don’t have, at least for a certain period of time. Your consumers are forgiving and they will buy it for a certain period of time. We’re not like refrigerators, however, where people will wait for two years. There is a certain amount of time that you have when you’re on consumer discretionary spending.
What’s your biggest challenge in 2023?
Somer Webb: We’re used to being nimble. We are a consumer discretionary business and, as a result, we’re always looking at the trends of our consumers. We’re getting so many mixed signals, with even Amex releasing an earlier report that said they’re not seeing recessionary signals. This probably won’t change as we update our monthly forecasting, so all we can do is track our consumers. I use transportation and freight as indicators.
Looking at where we are, I’m anticipating what the Fed is going to do in the next couple weeks, but being nimble. We don’t want to make decisions that compromise our long-term growth.—LR