End-to-End Integration of a Home & Living Assortment for a Leading Luxury Online Retailer
As part of a comprehensive consulting engagement, we supported a leading German online retailer for luxury fashion in fully integrating its Home & Living assortment. The objective was to enhance the customer experience, unlock margin potential, and streamline logistics operations. Through precise analysis, both systemic and physical implementation, and tight coordination of all stakeholders, we ensured an on-time, seamless go-live, delivering sustainable value across the organization.
Initial Situation
Our client, a leading online retailer of high-end fashion, offers a curated selection of luxury brands targeting an exclusive, affluent customer base. The company is known for its commitment to personalized services and exceptional customer experience.
Its central warehouse in Germany is structured into goods receipt, storage, and outbound logistics. The warehouse operates with a manual shelving system supported by automated bin conveyor technology, and is not configured for pallet storage due to item size constraints.
Previously, Home & Living items, primarily luxury furniture and décor, were distributed through a dropshipping model. These products were sourced, stored, and shipped by a third-party logistics (3PL) partner in Italy.
To further improve packaging quality, boost margins, and consolidate logistics processes, the client decided to gradually insource the entire Home & Living assortment.
Project Objectives & Deliverables
- End-to-end integration of the Home & Living assortment (Phase 1), and conceptualization of future phases
- Development of a timeline with clearly defined milestones
- Scenario analysis of volumes and inventory capacities based on reference items
- Definition of operational requirements across inbound, warehouse, and shipping (processes, layout, equipment, packaging, resources)
- Creation of an operational guideline for the Buying Department
Approach
Project Setup & Initial Assessment
A Steering Committee at C-level (CEO, COO, VP Operations) was established, supported by a weekly Operational Committee including all relevant departments and the Buying team.
The initial phase involved a thorough assessment of current inbound, storage, and shipping processes. Assortment lists provided by the Buying Department were enriched with key data points such as purchase/sales price, margins, dimensions, weights, storage depth, and anticipated turnover.
Item Classification & Process Design
Based on item characteristics and logistical requirements, four main categories were defined:
- Standard/Small: Stored in existing bins and handled like fashion items
- Fragile: Additional cushioning added during inbound processing to meet internal transport and customer experience standards
- Oversize: Stored in existing oversized racks without bins, similar to tall boots
- Bulky: Stored in a newly designed bulky zone with pallet bins; shipped in original packaging as separate shipments, independent of multi-item orders
Margin & Cost Analysis
To secure target margins, over 17,000 item and sales channel combinations were analyzed for profitability across all shipping options. Items with negative margins were identified, and mitigation strategies were defined—such as assortment adjustments and revised pricing strategies.
Additionally, a detailed FTE calculation was conducted: every step—from truck unloading to repacking, storing, and shipping—was quantified in terms of staffing needs. A space requirement analysis also defined the necessary number of bins and warehouse areas.
Implementation & Go-Live Preparation
System Adjustments
Working closely with ERP and online shop development teams, all necessary system requirements were implemented. Key milestones included:
- Modification of the ERP system (Microsoft Dynamics) for separate handling of bulky items
- Integration of specific warehouse and shipping processes with the e-commerce platform
- Extensive testing to ensure seamless execution
Physical Implementation
Following the space analysis, a dedicated bulky zone was established. Inbound and outbound layouts were planned and implemented, including dedicated zones for repackaging and inspection of fragile items.
New standard operating procedures (SOPs) were introduced and tailored training sessions conducted to prepare all staff for the new assortment.
Project Steering & Monitoring
Throughout the implementation, we ensured tight coordination across operations, Buying, site management, and the C-level. Key elements included: Key elements included:
- Daily coordination of inbound deliveries
- Early-stage planning of personnel capacities
- Proactive communication of deviations and escalation handling
- Extensive outbound testing to ensure shipping readiness
Results & Achievements
- On-time and successful go-live of the Home & Living integration
- Seamless physical and system-based integration of new item categories
- Identification and evaluation of numerous unprofitable item/channel combinations
- Development of multiple go-live scenarios and decision frameworks for C-level
- Successful training of all involved staff and creation of sustainable operational structures
- Transparent, cross-functional communication maintained throughout the project
