Naked wines has remodelled its fulfilment network in the US and rolled out new warehouse automation technology in the UK as it seeks to boost availability in the second half of the year.
Reporting its half year results for the 26 weeks ending 27 September this week, Naked Wines explained that in the US the company has eliminated its main hub in Napa, with wines now delivered straight to one of four fulfilment centres before distribution. It says this delivers multiple advantages, including additional capacity to support sustained growth, less network risk, faster replenishment times, enhanced customer availability, and lower cost per case at scale with one less building to operate.
In the UK Naked Wine has fitted its pick and pack warehouse with new automation technology that enables higher volume throughput and increases picking accuracy.
Fulfilment costs were £28.7 million in the period, remaining flat at 18% of total sales. The costs included the $1.5 million cost of transporting inventory from the legacy Napa warehouse to the four distributed warehouses.
Availability is a key target for the retailer. In the first half of 2021 it was 81%, impacting retention in both the UK and the US for out of stocks. The company said it has also had to constrain growth in order to preserve a minimum level of availability for its members.
However it has now restored availability to its target of 90% in the US and UK ahead of the key holiday season.
Delivery has also been impacted, “Too many customers have experienced delays to delivery or substitution of items – and for that we are sorry,” the company said.
While the changes made should help, Naked Wines said it recognised that international shipping and supply chain cost pressures will continue through at least the second half of this fiscal year. As a result the company is creating an additional buffer through increased levels of stockholding in the medium term.