Simplify, the business ecosystem for online stores launched in Autumn 2020, doubled its turnover in less than a year since its inception, becoming KLG Europe Romania’s “star”. To better understand how this remarkable growth was made possible, and to find out what the future holds for Simplify by KLG, Business Review sat down with Cosmin Căpățâneanu, Digital Transformation Director at KLG Europe Romania.
You’ve been with KLG Europe since 2014, what are your thoughts about the evolution of the Logistics Service market in Romania during this time, and what are its perspectives going forward?
Things have progressed in certain directions, but in my opinion, they could and should evolve faster. This is because there are still companies in the market that use outdated versions of software. On the other hand, there are companies that have gained a competitive advantage through digitalization, that use advanced technologies, that allow them to integrate their warehouse management systems with customers’ ERP platforms, and that prioritize development through digitalization.
I’d like to believe that we fall into the second category, and I base this belief on the fact that we have a system that allows us to integrate with our customers’ applications. We have a system that allows us to be integrated with our customers’ applications. We also have the advantage of a well-trained IT component that can support the implementation of complex customer flows, which has given us a long-standing reputation in this market. We are particularly fond of complex projects with a strong flow automation component.
How important is the role of digitalization for the logistics and e-fulfillment industry?
Since the world around us is more and more digital, this aspect is no longer an option – it has become a requirement. Whether we are discussing changes in everyday life, such as work from home, or machine learning, which has propelled e-commerce to new heights, digitalization is one of the most important pillars.
Time is one of the most valuable resources in the logistics industry; as a result, every stage and process must be perfectly synchronized to ensure timely deliveries with no interruptions to the supply chain. And this is not possible without automation, i.e. digitalization. As a result, efficiency is the primary reason that it has become an essential component of a successful business.
Digitalization in an e-fulfilment solution, such as Simplify, involves both data efficiency, optimization of internal and external operations, and ensuring the fulfilment of customers’ business objectives. Essentially, digitalization is a necessary tool for us that allows us to achieve the best results and ensures our long-term development.
You’ve launched the e-fulfillment service Simplify one year ago, how would you sum up this period for this new service?
For several years, e-commerce has been one of the fastest-growing sectors. Especially in the last year, when this sector increased by 30% compared to 2019 and surpassed the 5.6 billion euro threshold. This evolution was also felt in Romania, where it was accelerated and it had a direct impact on the growth of existing market services, implicitly the Simplify service.
For us, it all began with a simple idea to create an e-fulfilment service, but we ended up laying the foundations for an entire business ecosystem centred on e-commerce. We made it possible for online stores to benefit from transport and logistics services from a single supplier within a year of entering the market: from supply to everything related to logistics – product reception, warehousing, packaging labelling, and order preparation. In other words, we provided online merchants with an integrated e-fulfilment solution that addressed all of the issues associated with the outsourcing of specific logistics processes.
And, if I had to think about the most important aspect that has helped us get to where we are today, it would be the fact that we have always prioritized growth, both in terms of developing the Simplify customer business and expanding our customer portfolio.
What benefits can online businesses draw from working with an external e-fulfillment service such as Simplify?
Simplify is an innovative business ecosystem that provides a full range of services for online stores, including supply, logistics for online stores (product reception, warehousing, packaging, and labelling), order preparation, and return. Our customers also benefit from access to the KLG Europe transportation network, which includes road, national and international transportation, air, sea, and rail. This service provides online stores with transparency, operational optimization, lower costs, and development opportunities.
We provide any online store with easy access to the web portal, which allows monitoring the entire activity of an online store, because we understand how important and necessary it is for an e-commerce business to receive assistance in the supply chain, as well as for logistics operations.
A few months ago, you announced that Simplify has doubled its turnover and tripled its operating volumes in less than one year. What are your objectives for the next 1-5 years?
Simplify’s priorities include infrastructure, warehouses, shelves, automation solutions, conveyors, elevators, belts, and software developments. Furthermore, we intend for Simplify to account for 25% of KLG’s logistics service turnover in the next three years, and to be the leader in the Romanian e-fulfilment market in five years.
Our development plans include simple integration with osCommerce platforms such as Magento, Shopify, VTex, Content Speed, OpenCart, WooCommerce, Unas, PrestaShop, MerchantPRO, as well as Romanian marketplace platforms.
In the future, we will also include financing services for online stores and training services: both online market-specific programs and development programs for online store managers, and customer service/call centre services. Since we can manage the entire chain, from the time of online order or purchase to delivery to the final consumer, we can take on the responsibility of answering questions from customers who order online, thereby freeing online stores and implicitly offering a better and faster service than is currently available, given our easy access to order information; online marketing and web design services.
Simplify came at a time when the e-commerce market is in full expansion. Is there room for more growth, and are you prepared to handle even increased volumes of online commerce through Simplify? Are you planning new investments in this regard?
Our expansion plans are also influenced by the Romanian market’s potential for growth. Because the pandemic taught us that planning is the “key”, we are prepared to bring in new business volumes while improving our process automation and transparency across the entire supply chain.
We currently provide services to 20 companies in industries such as fashion, IT&C, decorations, and children’s accessories, with plans to expand our portfolio to include another 40 online stores. Simplify is designed in such a way that we can easily add a larger number of customers to the ecosystem at any time. At the moment, our strategy is to make it as simple as possible for customers to benefit from Simplify services as soon as they sign the contract.
We are also considering implementing solutions to streamline logistics processes, such as scanning equipment. This includes upgrading to Android-based equipment, implementing warehouse automation systems in the warehouse, purchasing communication efficiency systems, and reorganizing the operating area to streamline processes.
In terms of investments, we’re talking about 1.5 million euros over the first 12 months. We intend to raise approximately 5 million euros from internal resources over the next five years.
Which sectors provide the most business for Simplify?
We primarily cover the fashion, furniture, and home and garden industries, as well as cosmetics and beauty, and wellness products, books, magazines, computers, tablets, mobile phones, and IT accessories, including smart accessories such as bracelets, fitness, smartwatches, and other similar devices. These are also some of the most popular product categories sold online in 2020.
Simplify accounts for 10% of KLG Europe Romania’s turnover. Is it becoming the “star” of your company?
It is without a doubt one of the projects on which we will focus most and continue to devote resources. The pandemic context left its mark in all economic and social aspects, but we continued and will continue to develop the Simplify product and provide the same quality of services to maintain our upward trend. We want this e-fulfilment solution to grow especially based on automation and digitalization segments in order to meet the needs of customers in our portfolio who are looking for quality services and business growth opportunities.