Money Matters

Danica Imports leverages ERP to weather the storm and pivot to B2C

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Ahead of the upcoming Sage webinar ‘Managing Supply Chain Risk and Distribution for Distributors’ Sushil Arora, CEO Danica Imports, talks to Sage Advice about how the wholesale business leveraged technology to protect revenue,  inform better business decisions and launch the direct to consumer channel.

Like many Canadian businesses, the story of Danica Imports in 2020 is one of contrast. The start of the year saw the home décor wholesale business investing in new technology to gain better data insights and make more informed business decisions. Another challenge would be to achieve enhanced visibility on their supply chain and ensure accurate traceability of inventory in order to make use of an existing import tax incentive and navigate the fluctuating tariffs between the US and Canada. However, the disruption caused by COVID would move the organization in a new direction and accelerate plans of a direct to consumer channel and see their ‘Shop Local’ initiative that was already in motion sit perfectly in the context of COVID-19.

Technology traceability and tariffs,

As an importer of global home décor to North America, Danica Imports makes smart use of Canada’s Duty Drawback Incentive. Companies qualify for a drawback, (which is a refund of customs duties paid for imported goods) if the final resting place for the imported goods is outside of Canada.

“It’s something which I find fascinating in my years of connecting with other business leaders that are essentially importing goods into the country and then exporting out,” explains Sushil Arora, CEO Danica imports.

“Canada in particular does a really good job in allowing companies like ours to get some duty relief in terms of drawing back once there’s proof of goods being exported…that’s definitely been a major asset for us, which I’m surprised that a lot of companies don’t do,” he said.

Sushil suggests that one of the obstacles that could be preventing more businesses from benefiting from the incentive is the task of proving the inventory in question is eligible for the drawback. Danica Imports had the need to track key information that is tied directly to each container of product and utilized Sage Partner The Answer Company to make use of Sage X3’s Container Tracking which can be leveraged to facilitate Duty Drawback.

“You’re able to take the logic and create a reporting mechanism that can achieve that, which is very, very valuable, especially for a company who has a material amount of export,” said Sushil.

Easier access to smarter data

Like many modern and successful businesses, strategic decisions are data driven. For Danica Imports, it was important to be able to ‘slice and dice’ information at a granular level and from there be able to share this information easily among stakeholders.

“With SCI within the X3 world has been pretty phenomenal in our ability to slice and dice, not only from a product perspective, but also from a customer and a channel perspective. And marrying the two to see where the trends are going, which products are more profitable, which channels of customers are seeing growth. And so seeing things visibly, whether it’s a dashboard or on a graph or through a spreadsheet, there’s been a lot of gains that we’ve really seen benefit from…we didn’t have that before.”

As the company’s investment in technology produced smarter data that could be visualized more easily, it was decided that the information management should be decentralized. With everyone singing off the hymn sheet when it comes to data, the company is saving time, money and ensuring a shared vision across the different teams in the organization. Data sharing within an organization can help keep employees remain engaged, dive profitability and help staff provide better customer service, thanks to a more detailed understanding of a particular issue.

“Pre-X3, we were centralizing our information, and so we’d rely on a person to say, oh, I need this report, I need that report. And can you do this for me? Can you do that for me? And today, right down to our designers and our product team, everybody has access to this information so that they’re able to make decisions themselves, versus being in the dark or relying on their superiors to provide information. I would say that has been absolutely one of the biggest advantages,” said Sushil.

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Commerce keeps moving during COVID

When one thinks of an industry that might be heavily affected during COVID-19, wholesale distribution springs to mind, but thankfully for Danica Imports, after an initial period of uncertainty the company jumped to ‘survival mode’ and weathered the storm.

“To be frank, at the end of March and April, there was one thing on our mind, and that was survival. We were expecting sales to be next to nil for the next couple of months. So we went into full survival mode and the future didn’t matter. Fall [season] 2020 for example…didn’t really cross our minds. We weren’t there. It was about, ‘how are we going to get through next week?’ And then the following week after that and so on. And so survival mode through and through.”

As with many Canadian businesses, the repercussions of the tough decisions made in March and April 2020, are starting to appear now. For wholesale distributors selling B2B, the challenge is to combat the ubiquitous stock shortfalls in their customer businesses. In Danica Imports’ case, it’s critical to carefully examine their supply chain and drive efficiencies where possible, in order to keep up with demand.

“We were fortunate we still had a lot of good inventory leading into the pandemic, but now we’re in scramble mode to make sure that we maximize our supply chain, whatever we can to make sure that we maximize the demand that that is coming our way. It’s a good problem, I guess, but it’s something where somebody has to be disappointed where they might not get product that they want. And so our job is a bit harder to manage, largely from an inventory point of view, ” explained Sushil.

Pivoting to a direct to consumer channel

Since 1964, Danica Imports have supplied Canadian and US retailers with stock from all over the world, remaining firmly in the B2B space. When COVID came, it seemed the right time to reactivate the shelved plans of establishing a direct to consumer channel for Danica Imports.

“It’s something that we always wanted to do. And I had a six point strategy for many years, and the last thing on that was always direct to consumer. But being true to the B2B business and recognizing, knowing who we were, that we were a wholesale at heart and knew what we did, I was always worried that something of this nature would disrupt and take away from our energy and effort to serve the retailers. And so it was always something we wanted to do, but it never really got the traction,” said Sushil.

Normally, the challenge for a wholesaler would be to establish itself as a brand from scratch. Fortunately, Danica Imports had made strides towards becoming a brand with the acquisition of Now Designs in 2004. The home décor design company is headquartered in Vancouver and produces a number of product lines each season, with manufacturing taking place overseas.

Sushil and Danica Imports overcame the initial hesitation that the launch of the consumer channel would confuse the identity of the business and adapted a new market positioning philosophy for the ‘e-commerce era.’

‘…the digital age has been moving so quickly that I’ve learned that in order for us to be successful with our customers, the retailers, you have to sandwich some between your efforts and the consumer traffic. And so you have to get the consumer to want your product, and then therefore go to the retailer…And so that wasn’t something that I really believed in up until very recently. And so the pandemic has obviously accelerated that notion,’ said Sushil

Across their wholesale customer base Danica Imports saw their customers scrambling as typical brick and mortar, small mom and pop retailers, who would never consider shipping to a consumer because they also felt the same way about their business, started doing that because they didn’t have a choice, because there was no traffic in their store. This helped inspire Danica’s decision to bite the bullet and properly launch its direct to consumer channel.

“As they moved, we tried to move. And so we recognized that this is the only way. And so we accelerated our efforts, and that’s not necessarily to say that we weren’t selling to the consumer directly in other ways. We sell to Amazon, we sell to Wayfair, we sell lots of big online only retailers,” said Sushil.

The consumer channel has also acted as a study for selling to the US for Danica Imports. Up until now they had successfully sold to the US from Vancouver, but had noticed there were some turnaround issues when it came to selling to the East Coast. According to Sushil, Danica Imports are “using it as learning opportunities, not only to serve the consumer, but also to better and improve our existing infrastructure as well”.

The pioneers of shop local

One of the positive stories that emerged nationwide as Canadian businesses weather the impact of COVID-19 is the Shop Local campaign. The initiative encourages consumers to shop in their local businesses whenever possible and is often promoted by merchandise in the form of tote bags, cups etc. that reminds consumers to make the effort where they can. This range of Shop Local goods are produced by Danica Imports and are in their second season. The impact of COVID simply strengthened the need for a campaign like this to help support businesses in need.

“It’s something we always believed in and we had it prior to COVID. We just spotlighted it and really, really pumped it up and went all out in terms of the story behind it, and resonating with all the Main Street customers out there to say, “Hey, we’re just like you. We’re all in this together, and shopping local and supporting each other is the way to go,” Said Sushil.

Join Sage and Sushil Arora, CEO Danica on September 17th for a live webcast “Managing Supply Chain Risk and Distribution for Distributors”. Learn how leading organizations are adapting supply chains to respond to unprecedented challenges. Register here.