Childsmart was founded in the early 2000s to fill a gap in the market for quality and innovative children's products in Australia. Retailers were hungry for more than just commodity goods, and Childsmart seized the opportunity to bring quality baby brands to Australian retailers.
The company quickly became a one-of-a-kind kids’ product distributor, growing its range to include toys and games, puzzles and educational DVDs, nursery gear and equipment, furniture and even drinks.
“We look at distribution as not just being focused on a particular category, but also being focused on bringing solutions to our retail partners,” says Managing Director Stanley Ichikowitz. “So over time, we’ve covered the whole gamut of products from pre-birth to about eight or nine-year-old kids. It’s amazing to sell these products that add value and bring joy to families and their kids.”
A Changing Market Reality
Childsmart grew by building relationships with independent retailers and some national chains. Their sales team met face-to-face with 50 or so customers a month, Stanley says. But as in other markets, ecommerce, retail consolidation and a lack of consumer confidence and spending took a toll on Australia’s brick-and-mortar stores.
“Online was starting to become a player, and a lot of the independent retailers as we knew them were falling by the wayside,” Stanley says.
Sales volume increased as Childsmart’s business shifted to online stores and retail chains, but orders were now coming in for one or two items. All these changes strained how the distributor operated, from the sales team to how Childmart processed, picked, packed and shipped orders in its warehouse.
“We had to change how we engaged with the retailers, the product range we gave them and how we fulfill orders,” Stanley says. “In the past, we used to have a rep that would go out with a paper price list and take orders in the store. Now we had to ask if we had the right resources allocated correctly; if we were getting the right value out of what we were doing and how we were doing it.”
A Distributor Redefines Itself
Childsmart took a number of decisions to make-over their business model. This required they revisit how they processed orders, among other changes.
“We found that our inventory management systems and the way we were running our business with our own warehouse facility and our own teams just was not providing the returns that we required,” Stanley says.
The company had relied for years on spreadsheets to process and track orders while using MYOB Exo for accounting and inventory management. Neither made sense anymore as Childsmart’s business shifted increasingly online.
“We were touching pieces of paper too many times, handling orders way too many times for it to be profitable or efficient for the business,” Stanley says. “We needed to move to a 21st-century world where everything was integrated.”
Cin7: The Agility to Adapt
Childsmart’s emerging business model included shifting to a more productive model where warehousing was outsourced to a 3PL warehouse and increasing efficiency by shifting to handling orders electronically. To do that, the company moved from spreadsheets and MYOB Exo to Cin7 and Xero in early 2018.
“Our business had changed drastically and without Cin7 and the integrations it brings with both national retailers through EDI and online channels, we probably wouldn’t have been able to do that,” Stanley says. “We’ve become a much more efficient, leaner organization, focusing our attention on the retail channels that actually were driving growth opportunities and profitability.”
As a small, family-run company, Childsmart needed integrated processes at a lower cost than other solutions. Cin7’s pricing and its integrations to Xero, 3PLs and big retailers (with built-in EDI) ticked all of Childsmart’s boxes.
“It all boils down to efficiency and productivity,” Stanley says. “Today we’re reviewing an order once. It doesn’t matter what channel it’s coming from, we review them and then push them through to our warehouse, and they pick, pack and ship the product and it all flows through the system.”
Their strategy helped Childsmart to “face the reality of market dynamics”, Stanley says. Cin7 helped make that pivot possible.
“Cin7 has enabled us to become a lean, efficient business with a much tighter range of products for a much more specific audience,” Stanley says.