The insolvency of Keller Sports shows that e-commerce companies need a high level of operational excellence to be successful.

The biggest challenges in e-commerce are too much diversification, logistics problems, too high costs and the risk of getting bogged down in ambitious tech projects.

To achieve operational excellence in e-commerce, companies should implement a philosophy such as lean management, make targeted cost savings, and optimize their IT systems and processes.

Keller Sports: Why operational excellence is so important in e-commerce

In recent years, the e-commerce sector has become one of the fastest growing industries. However, this also means that the competition is getting stronger and stronger and companies are forced to continuously improve. One company that has failed to recognize the importance of operational excellence is Keller Sports. The company, which specializes in the sale of sporting goods, has slipped into insolvency and is now facing major challenges.

However, Keller Sports is not alone in this situation. In fact, many e-commerce companies are experiencing similar difficulties due to a lack of operational excellence. The Keller Sports insolvency thus provides an excellent opportunity to examine the various issues and challenges that exist in the e-commerce sector and demonstrates the importance of being operationally excellent.

A short failure of the financing round at the end of November, as well as the over-diversification of the brand from fitness to running to sneakers, fashion and lifestyle, as well as its own bonus program, have not made Keller Sports' business model stable enough. In addition, the company also has problems in logistics and supply chain. The failed logistics move from one fulfillment service provider to another (from PVS to Fiege) and the overly high costs in the face of misjudged, lower demand have led to a massive loss.

Another problem for Keller Sports was that the company focused on too many ambitious tech projects, such as the development of a completely self-developed online store and order management system. This has led to a significant consumption of resources and the company has not been able to devote enough resources to its core business processes.

The lack of flexibility in logistics, supply chain and operations was another factor contributing to Keller Sports' insolvency. Online retail is very dynamic, and there is often fluctuating or sharply rising peak demand to manage. If companies cannot respond quickly enough, this can lead to a poor customer experience and ultimately insolvency.

Clearly, e-commerce companies need to take steps to prepare for these challenges. This includes implementing an operations philosophy such as lean management, which enables companies to respond quickly to changing load peaks and valleys. A lean management approach requires a culture of continuous improvement that enables companies to optimize the efficiency and effectiveness of their business processes.

Another way to achieve operational excellence in e-commerce is to implement targeted cost savings. Companies can do this by applying a variety of strategies, such as establishing the philosophy of Kaizen, to achieve continuous improvement in all marketing and operational areas. Incorporating employee ideas via CIP process, strictly eliminating the '7 types of waste' in all value-added processes and order process automation can also help to increase efficiency. In addition, companies should consistently align their marketing budget allocation with ROAS to ensure that their marketing spend makes sense.

Value stream mapping for all value creation processes and the elimination of non-value-adding activities is another important step towards achieving operational excellence. Companies should realign their target operating model (TOM) between business, IT and operations and reprioritize the digitalization project portfolio. IT development should also be aligned with the MVP (Minimum Viable Product) or MVO(Minimum Viable Offering) approach in order to be able to react more quickly to changes.

In IT and operations, companies can also save costs by consistently applying 5S at all workstations in logistics, customer care and order management. Reducing 'data waste' by recognizing patterns in orders and the supply chain can also help to create better order forecasts and increase the effectiveness of the supply chain.

Another important step that companies can take is to increase the use of customer self-help in customer care (FAQ, chatbot, etc.). Companies can also introduce minimum order values or shipping costs to reduce their costs. It is also important that companies make a make-or-buy decision for logistics, customer care and IT in order to achieve lasting cost benefits.

Another important measure is to introduce small units in logistics that are designed as U-islands and increase their throughput using a uniform optimization logic of lean management. This ensures that companies can react quickly to changing conditions while keeping their costs under control. Overall, it is important that e-commerce companies understand the importance of operational excellence and take steps to prepare for the challenges of online retail. A combination of an operations philosophy such as lean management and targeted cost savings can help to increase the efficiency and effectiveness of businesses and ensure that they remain competitive.