The Growth of Digital Technology in Beauty Marketing


A doubling in online conversion rates. A sharp increase in customer loyalty. Triple-digit growth in turnover. Figures reported by brands like e.l.f., Estée Lauder and Trinny London hint at something extraordinary happening to the beauty market.

In the words of Jacqui Owens, Head of Beauty at Google UKI, there has been “a seismic shift to online purchases and exploration”. Hardly surprising perhaps, given the lockdowns of 2020 and 2021, but there is more to it than mere availability. By embracing the new technologies of artificial intelligence (AI), augmented reality (AR) and virtual reality (VR), beauty brands are bringing the personal experience of shopping in-store authentically into the digital realm – and customers love it. Here we look at some of the stand-out examples of beauty brands embracing AI, AR and VR and consider how the technology might evolve in the coming years.

Virtual try-ons

Phygital is the new buzzword for anything that bridges the gap between the physical and digital world. For beauty brands, the future is phygital. Apps that apply make-up virtually to your face have been available for a while now, but AI has brought a level of realism that is changing the game. Trinny London pioneered this with its innovative and award-winning Match2Me service, which highlights the perfect shades for each user’s unique combination of skin, hair and eye colours.

Other brands have followed suit. No7, for example, launched its Foundation Shade Finder, which uses AI to analyse a customer’s skin tone in real-time, matching it against millions of samples to provide them with their personal No7 foundation shade. AR then comes into play to enable customers to “try on” various options virtually and instantly.

Where this technology scores against older make-up apps is in the accuracy achievable from the vast volumes of data that can be processed by AI. Customers feel confident in the authenticity of the results.

Customer relationships

Consumer confidence is crucial in building brand loyalty and the authenticity offered by AI contributes significantly to that. Virtual try-ons offer the opportunity to go further in building customer relationships. Trinny London again broke new ground in 2020 by launching its Virtual Appointments. Responding to the constraints of lockdown, the brand offered customers one-to-one online sessions with its make-up artists.

“These have proved to be hugely popular with customers, who have valued the engagement, the education and ultimately the conversion to online,” said Mark McGuinness-Smith, Trinny London’s Chief Operations Officer. He added that the initiative was also popular with make-up artists, as it meant they could continue to work during lockdown.

“Technology allows us to engage with people in ways we couldn’t previously,” said McGuinness-Smith, referring to the effect that the company’s digital initiatives have had on customer relationships. Communicating and interacting via multiple digital platforms is exactly what the new generation of consumers, the Millennials and Gen Zs, are used to and expect. According to PowerReviews, 52% of Millennials and 63% of Gen Z use social media to discover new products.

Brands are enjoying success from launches and trials now taking place on the “digital shelf”, supported by omnichannel digital messaging. This allows customers to spend more time interacting with a brand, building that relationship and ultimately leading to more positive shopping experiences.

Shop where you want

The convenience of online is being reinforced by AI and AR to bring the personal experience of shopping in-store to the digital realm. Brands are creating a digital “metaverse”, a three-dimensional online environment into which customers can immerse themselves for a while.

Before Christmas, digital-first beauty brand Charlotte Tilbury blazed the trail with its Shop with Friends function, a virtual, 3D Beauty Gifting Wonderland where customers can meet in real-time from wherever they are and shop together. Friends can try on make-up and chat, guided by stylists and influencers as they explore the virtual store.

Charlotte Tilbury virtual store

In the words of Charlotte Tilbury herself, “It combines all the sparkle and retail theatre of our stores with the ease and portability of the digital universe to unveil a truly immersive Charlotte Tilbury experience.”

Shop with Friends is part of the brand’s virtual reality shop, which launched a year earlier. According to Chief Growth and Technology Officer Corinne Suchy, “By launching this new feature within our virtual store, we are truly operating as an omnichannel business to bring our customers rich and immersive experiences whenever and wherever they meet the brand.”

Build your own influencer

The role of influencers in consumer marketing is big and set to get bigger, as technology gives brands more control over their brand ambassadors. Until now, there has been some wariness over the use of influencers in the beauty market, due to cost and reliability. This might explain why figures from Brand Equity show that only 34.1% of beauty industry advertising budgets went on digital advertising, compared to 53.1% for the market in general.

But now brands are building their own computer-generated influencers – avatars that are perfect in every way. Their cost is controllable, they always turn up, they always say the right things, they always look fabulous, and they’re never photographed falling out of a club at six o’clock in the morning!

The virtual influencer is symbolic of the power of digital marketing. More than 50 appeared on social media in the 18 months to June 2020 and today there are over 150 plying their trade, according to virtualhumans.org, which documents the virtual influencer industry. But, rather than paying independent companies to have their virtual influencers promote their products, brands are taking to creating their own.

Charlotte Tilbury’s VR shop features a Magic Charlotte avatar. Prada created Candy to promote its perfume of the same name. More beauty brands are expected to launch their avatars this year. For Gen Z consumers, buying in to a computer-generated role model is second nature and as the technology grows increasingly sophisticated, it will soon be difficult to tell the difference between an avatar and a real human being.

Beautiful for the planet

A by-product of this immersive, interactive, virtual, physical metaverse is that it helps brands to meet sustainability goals. With customers able to try before they buy in a very real online setting, there is less speculative purchasing, fewer returns, less waste, and less energy consumed down the supply chain. Such issues are becoming increasingly influential in consumer choice. If brands can show that they’re not just keeping their customers beautiful but keeping the environment beautiful too, they are more like to gain customer approval and loyalty.

Conclusion

The “seismic shift” to online over the last two years has resulted in a 40% increase in online beauty sales globally. Contrast this with the 8% fall in overall cosmetics sales over the same period. The theory that social isolation is not good for beauty products has been challenged by the performance of the online beauty market, which has bucked the trend in spectacular style.

The pandemic saw e-commerce capture a growing share of the Beauty market – up to 22% from 14% in 2019, according to the L’Oreal 2020 Annual Report – and it’s digital technology that is driving the trend. Innovations that were launched out of necessity at a time of social isolation have established a firm foothold and are now setting the strategic agenda for Beauty sales into the future.

ILG is proud to provide fulfilment services to many beauty brands at the forefront of these innovations, including Trinny London and Charlotte Tilbury.

New Packaging Levies, Part 1

What UK Businesses Need to Know

Two new pieces of legislation are set to transform the way UK businesses approach packaging. The first is the Plastic Packaging Tax (PPT), which comes into force on 1 April 2022. Then, in 2023, the Government is set to introduce Extended Producer Responsibility (EPR) for packaging.

How will these new laws apply, who will be affected and what should you be doing to prepare?

In this blog we summarise the key facts about both pieces of legislation. This will be followed by a second article looking at how they will affect the beauty industry, and what you can do to keep your packaging beautiful for your customers, the planet and your business.

Plastic Packaging Tax – what is it?

The PPT is a tax levied on businesses proportional to the weight of unrecycled plastic packaging they put into the market. It is part of the Government’s drive to cut plastic pollution by making the polluter pay. PPT will apply to the manufacture and import of any packaging that is predominantly plastic by weight, unless at least 30% of that plastic is recycled.

Who is subject to PPT?

Any business that has manufactured or imported 10 tonnes or more of plastic packaging over the past 12 months, or expects to do so over the next 30 days, will have to register for PPT within 30 days of the date you met or exceeded the threshold. For the first year, the count back will start from 1 April 2022. Even if your business does not exceed the threshold, you will be obliged to keep a record of the packaging you manufacture or import. You may be required to present this record as evidence that the tax does not apply to you.

How much will PPT cost me?

Businesses that meet the criteria for PPT will have to pay £200 per tonne of plastic packaging containing less than 30% recycled plastic.

Does it include all types of plastic?

There are certain uses of plastic packaging that are out of scope of the tax. For example, in the beauty industry these include:

  • Plastic packaging where the primary function is for storage. This includes manicure sets but not hair and beauty or bath and shower products.
  • Plastic packaging that is an integral part of the goods, such as mascara brush, wand, and cap (but not the bottle) and lipstick mechanism and case (but not the cap), but not including liquid soap pumps.
  • Plastic packaging to be reused primarily for presentation, such as sales display shelves and presentation stands, but not those for single use.
  • Transport packaging used to import goods into the UK, provided it is designed to transport multiple sales units or grouped packaging AND prevent damage during transportation.

Follow this link for Government guidance on what falls in and out of scope of PPT.

Some exempt packaging still needs to be recorded when calculating the 10-tonne threshold and some does not. See Government guidance on what counts towards the threshold.

What records do I have to keep?

Whether you register to pay PPT or you fall beneath the 10-tonne threshold, you need to keep records to support the figures you declare. Registered companies need to show in their quarterly accounts the weight of plastic packaging they have manufactured or imported, along with an explanation of how the figures were calculated and evidence to support the calculations. These accounts must be kept for at least six years from the end of the accounting period.

The weight of any plastic exported or converted into new packaging components must also be recorded, as this can be set against taxable plastic and used to claim credits. Records must be specific to each product line that you produce or import – a ‘product line’ being a group of plastic packaging components produced to the same specification. This includes any plastics that are exempt, for which you must also provide evidence.

If you are claiming exemption because at least 30% of your plastic packaging is recycled, you need to show how you calculated that percentage, keep proof that the plastic was recycled, including the source, and record which product lines and dates the figures refer to.

Click this link for the Government guidance on record keeping.

Extended Producer Responsibility for packaging – what is it?

EPR is a further Government initiative to curb packaging pollution by making the companies that produce packaging of any kind bear the ‘full net cost recovery’ of the packaging they place on the market. That includes refuse collection, recycling, litter clearing etc. Any business that puts packaging onto the market will be expected to pay, with the most polluting materials, such as single-use plastics, commanding a higher contribution.

Who is subject to EPR?

The new legislation is still being fine-tuned, but it is expected that any producer of packaging, including importers, will be required to contribute EPR payments. The existing UK Packaging Waste Regulations do not apply to businesses with less than £2million turnover or packaging use amounting to less than 50 tonnes. However, EPR is expected to encompass businesses of all sizes.

The Government proposal listed five categories, all of which will be subject to EPR at some point along the supply chain, with varying levels of obligation. Those categories are: brand owners, importers, distributors, online marketplaces and service providers (sellers).

How much will EPR cost me?

The amount that a business is required to pay will vary depending on the packaging materials they produce or import and what percentage of that is recycled, as well as whether the packaging is functional, socially and environmentally acceptable/responsible and fit for use.

The aim of this modulated fee system, for which figures are yet to be confirmed, is to encourage wider use of recyclable packaging and to reduce the use of packaging overall by incentivising producers to design their packaging more efficiently. We will go into more detail as to how beauty brands can take advantage of new packaging concepts and designs in our next article.

What do I need to do now?

EPR will come into effect in 2023, but businesses need to start preparing now. As with PPT, affected businesses will be required to collect and report additional data and could see their compliance costs increase. Plan for these extra costs and data collection requirements now and start reassessing your packaging strategy. Could you be using more recyclables? The additional data you gather will help to show up where changes can and should be made.

We can help by advising you on your packaging options and helping to clarify how the new legislation will affect your business. You can also keep abreast of developments by paying regular visits to the Government EPR website.

Stocking up for Black Friday? Is your 3PL Prepared?

Black Friday 2021 – Part 3

In Parts 1 and 2 of this series on Black Friday 2021, we’ve looked at consumer behaviour and retailers’ attitudes in this year of disruption and unpredictability. Now we turn our attention to a vital cog in the Black Friday wheel – the third party logistics partner.

Predicting consumer behaviour and preparing your own retail strategy are only part of the challenge when it comes to Black Friday. Without a 3pl who is prepared to respond to the temporary spike in demand with equal vigour, any plans you make will be dead in the water.

Let’s look at the constraints affecting fulfilment and logistics right now and how we’ve been preparing for Black Friday at ILG.

Constraints on fulfilment and logistics

The same disruptions that have affected consumer and retail confidence have been keenly felt in logistics. The pandemic, Brexit and their knock-on effects in Europe and across the world have put considerable strain on UK 3pls.

Brexit has created a labour shortage, which has made warehouse staff and delivery drivers harder to come by than before. Black Friday brings a spike in demand that needs a corresponding spike in staffing. Can your 3pl be confident of securing the temporary staff they need to meet the sudden rise and then fall in demand?

Black Friday has tended to start earlier and earlier in previous years. So when is the right time to start gearing up? Go too early and staff will be standing idle. Leave it too late and the demand will swamp you. How has your 3pl been gearing up for Black Friday? Do they have everything in place to fulfil your Black Friday offers?

And then there’s the supply chain. Shipping delays and the driver shortage have put timely deliveries in serious doubt. What is your 3pl doing to mitigate potential supply problems and help you manage stock flow and customer expectations?

ILG’s preparations for Black Friday

Over the years, we have established a reputation as an employer that takes care of its employees. By instilling a culture of collective responsibility and teamwork, together with fair pay and career development opportunities, we make sure ILG is a company that people want to work for. As a result, we have been able to recruit 300 additional staff for the peak period.

Managing employee shift patterns is key to keeping operations efficient and responding to peaks and troughs in demand. We have established round-the-clock shift patterns that enable us to keep working 24/7 in order to meet demand.

Stocking up in preparation for Black Friday has needed to happen earlier this year because of the delays and uncertainties over deliveries, and that means having the warehouse space to handle the increase in stock levels. This year we opened our biggest facility yet, and our first warehouse outside the South East, ILG Brackmills in Northampton. This not only increases our ability to scale up in line with our customers’ requirements but also delivers major advantages in speed and efficiency.

Keeping all channels open

When it’s running at full capacity our Brackmills facility will be able to process 35,000 orders per day. The Midlands location also enables us to extend our carrier times by four hours from 6pm to 10pm.

For customers selling to the EU, we also opened a warehouse in Wroclaw, Poland. This facility enables UK retailers to bypass the administrative burden and delays created by Brexit, as well as placing stock much closer to the major European market of Germany and cutting delivery times.

We haven’t just been gearing up our services in a bubble, though. The most important thing you need your 3pl to do is talk to you. We’ve been meeting our customers to discuss their plans for the Black Friday peak and offer advice on how they can prepare. Tactics include stretching out the sales period to give supply a better chance to meet demand, simplifying packaging to speed up the packing process, withdrawing the promise of express deliveries and giving us their peak period forecasts as early as possible.

Black Friday may well be a scaled-down event this year but that means the opportunity increases for retailers that do take part. By planning carefully and making sure your partners are as prepared as you are, you could make this Black Friday a big one after all.

If you would like to talk to us about streamlining your peak periods, please call ILG on
0844 264 8000.

Read Part 1: Peak or Trough? Why Customer Behaviour is So Hard to Predict This Year

Read Part 2: Twist or Stick? How Retailers Are Approaching Black Friday Amid Huge Market Uncertainty

Twist or Stick? How Retailers are Approaching Black Friday Amid Huge Market Uncertainty

Black Friday 2021 – Part 2

More disruption? Who needs it?

Since it landed in the UK in 2013 Black Friday has forced retailers to completely rethink the traditional Christmas shopping period and post-Christmas sales. To an increasing extent, those two key periods in the retail calendar have merged into one week in November, when cash registers ring and online orders ping and the bottom line – as the name implies – moves from the red into the black.

This disruption, however, goes beyond the effect Black Friday has had on the retail calendar. It applies to stock management, fulfilment, logistics, staffing, advertising – creating a spike that is hard to predict.

And this year it is harder than ever. As covered in Part 1, consumer behaviour is being disrupted by a variety of socio-economic anomalies, resulting in a predicted fall in spending this Black Friday, compared to pre-pandemic levels.

In this part, we look at the factors influencing retailers’ Black Friday strategy this year.

Uncertainty over stock and labour

Port closures, driver shortages and administrative complications (for example, new customs requirements arising from Brexit) have played havoc with supplies this year. Back in the summer it was clear that certain goods would be in short supply this Christmas, particularly electronics and toys, but generally anything coming from South-East Asia.

These shortages, coupled with the resultant escalation in shipping costs, have made retailers cautious about ordering stock for Black Friday, knowing that it might not arrive until after Christmas. This is further influenced by the knowledge that labour is in short supply – will your 3pl be able to staff up as required to handle the increase in volume?

Any Black Friday strategy depends on being able to stock up, restock and despatch rapidly in order to meet the spike in demand and for many retailers that is simply not an option this year.

Rising prices

With shipping costs having more than doubled and the cost of diesel hitting a record high, retailers will be understood for deciding this is not the time for a discount bonanza. Indeed, the trend is towards prices rising, with inflation forecast to top 4% by the new year.

Some good news for in-store retail came in the Autumn Budget, with the announcement of a 50% cut in business rates for bricks and mortar outlets. This may be enough to give some retailers the confidence to discount now, although for those that also sell online, the likely introduction of an online sales tax looks set to negate any saving on business rates.

Rather than add to the price volatility, there are indications that many retailers will be going small on Black Friday and putting their efforts into attracting a more consistent flow of customers throughout the pre-Christmas period.

Advertising constraints

One of the retail phenomena that has arisen during the time that Black Friday has taken place in the UK is the ability to target customers with online advertising. Gathering data from platforms like Facebook to enable personalised ads to be targeted directly at individual consumers has become a key part of the Black Friday strategy. A customer who has looked at an item can be persuaded to come back and buy it in the Black Friday sales.

A recent policy change by Apple, however, means that “tracking”, as they call it, is no longer permitted unless the customer opts in. As well as putting an end to personalised ads for iOS14 users, this also limits the ability to measure the performance of campaigns.

Without these tools to promote their Black Friday deals, retailers will feel they have less control to manage their strategy and drive the traffic they need to make it worthwhile.

The lingering impact of Covid-19

While society has “opened up” considerably since lockdown was lifted in summer, there is still some reticence over mixing in large crowds – sales shopping being a case in point.

With retailers safeguarding their staff, as well as trying to second guess consumer behaviour, many are deciding to give Black Friday a miss in-store this year. According to research by Emarsys, 46% of global retailers will not be running in-store promotions this Black Friday.

Conclusions

Black Friday has become a big deal for retailers over the last eight years, presenting an opportunity not only to bolster turnover but also to attract new customers and build brand loyalty. That opportunity will still be there this year; it’s just a question of how best to embrace it.

The uncertainty over stocking up and staffing up, together with the threat of Covid-19, looks set to reduce Black Friday activities in-store to a fraction of their pre-pandemic levels. As we saw last year, Black Friday can work very successfully as an online event, although the constraints on personalised advertising will give retailers something new to think about.

As Black Friday approaches, the signs are that it will be much less of a spike this year and that the focus for retailers will be on re-establishing stability and consistency over the Christmas period.

Coming soon – Part 3: Stocking up for Black Friday? Is your 3pl prepared?

Peak or Trough? Why Customer Behaviour is So Hard to Predict This Year

Black Friday 2021 – Part 1

Black Friday falls on 26th November this year and retailers will be hoping for a spectacular uplift in sales. But, with the impact of the COVID-19 pandemic and Brexit continuing to rumble on, uncertainty is rife. How will customers behave during the Black Friday period this year?

That uncertainty makes it hard for retailers to plan. There are so many factors affecting consumer spending right now that it’s hard to predict whether sales will return to 2019 levels, rise above that record of £8.6billion, or fall well below as they did in 2020.

Let’s take a look at the factors influencing customer behaviour this November.

Autumn budget targets online retail

October’s autumn budget contained mixed blessings for the retail sector. A 50% cut in business rates for bricks and mortar outlets, coupled with the possible introduction of an online sales tax (in consultation at the time of writing), is designed to help high street shops fight back against the rapid advance of online retail. But how will it affect consumers?

The online sales tax is aimed primarily at giants like Amazon, eBay and Asos, but the likely outcome is that smaller online shops – many of which are offshoots of bricks and mortar outlets – will be the ones that have to put up their prices. That in turn would give the high street some scope for price increases, all of which will impact on consumers.

With no announcement expected until spring, however, this could provide an incentive for consumers to buy now before the prices rise. Or, together with further tax increases and a predicted rise in inflation to 4.4% next year, it could be the cue for consumers to tighten their purse strings now.

Buy early to avoid Christmas disappointment

The timing of Black Friday is more significant than ever this year. Since the American tradition first arrived in the UK in 2013, it has steadily grown to be the period when UK consumers do their most spending, as they seek out bargains for Christmas. Indeed, several leading retailers have already announced that they will not open on Boxing Day this year.

The rush to buy early for Christmas will be more compelling than ever, due to the widely publicised delays in deliveries. Consumers are well aware of the supply chain issues, brought about by a combination of major port closures and a driver shortage. They have seen it first-hand at the fuel pumps and in the food aisles and have heard the warnings of major retail brands that certain goods will not be available in time for Christmas.

Therefore, we can expect more and more consumers who usually leave their Christmas shopping until December to change their habits and try for the extra lead time of Black Friday.

Tougher spending choices

2021 has seen the financial impact of the lockdown, Brexit and the shipping crisis hit home, with unemployment up on pre-pandemic levels, the highest tax burden since the early 1950s, rising fuel and energy prices and the end of the furlough scheme resulting in a fall in disposable income*. At the same time, consumers have more spending choice than they did last year, when non-essential shops and pubs, bars and restaurants were all forced to close throughout the Black Friday period.

This year, hospitality venues will be going all out to entice customers through their doors in the run up to Christmas and, with so many Christmas events cancelled last year, they can expect an enthusiastic response. That, of course, will be tempered by lingering concerns about the spread of COVID-19 in crowded venues, which is likely to keep some consumers, particularly in the higher age brackets, at home.

Overall, however, with less money to spend, higher prices and more consumer choice outside the retail sector, this could signal a fall in Black Friday demand.

Exodus from the High Street to online

Black Friday 2020 was, by necessity, an online event. Barclaycard saw a 32% increase in the value of online transactions processed during the period, and this was even higher in gift categories such cosmetics, jewellery and electronics.

But the migration to online shopping has been happening steadily for the last seven years and a good indicator that it will continue this year can be found in Google search trends. In 2014, search interest in the term “Black Friday” started to increase seven weeks before Black Friday. This year, that rise started 12 weeks in advance.

The unavailability of bricks and mortar shopping last year will have driven more consumers to adopt online shopping as their primary option and, perhaps surprisingly, the most marked uptake in online shopping is among the older generations. Fear of the virus continues to play its part in how and where people choose to shop.

Conclusions

It is safe to say that demand will increase during the Black Friday and Cyber Monday period, but the question is to what extent? Retail footfall is forecast to tumble – down 17% on 2019, according to Springboard – and the heaviest demand will be online.

At ILG, we are gearing up to meet the increased demand for e-commerce fulfilment and help our customers plan their Black Friday strategy. In part 2, we’ll be looking at the current sentiment among retailers and how this will affect the way they approach Black Friday.

Read Part 2: Twist or stick? How retailers are approaching Black Friday amid huge market uncertainty.

*Source: Office of National Statistics

**Source: TradingEconomics.com

The Global Logistics Crisis and What UK Retailers Can Do About It

The world is currently experiencing a crisis in the shipment of goods and it’s affecting UK businesses more than most. A combination of Brexit, Covid-19 and red tape have brought supply chains to a grinding halt, and with Christmas just around the corner, it’s a major concern for retailers.

At ILG we’re working closely with our customers to minimise the impact of the delays. But why is this happening now and how can you best manage the crisis?

Perfect storm

The problem can be traced back to before the pandemic. With the benefit of hindsight, there were growing weaknesses in the global supply chain that may have looked manageable at the time but became unmanageable in the light of Covid.

With e-commerce booming, consumer demand at the end of 2019 was at an all-time high. In the UK, the haulage industry came into the pandemic already under pressure. Lockdown turned the screw, triggering a steeper rise in online shopping and accelerating a growing shortage of lorry drivers, brought on by Brexit, the IR35 tax regulation and slow processing of new driver applications.

Prior to the pandemic, there were around 600,000 lorry drivers working in the UK, a shortfall of around 60,000, according to the Road Haulage Association. In the last two years that shortfall has grown to around 100,000. Drivers have been retiring or leaving for alternative careers and not enough have been coming on board at the bottom of the ladder.

To compound the delays, some of the world’s biggest ports were forced to close this year due to Covid outbreaks, leaving cargo ships anchored at sea, unable to unload for weeks. In August, a terminal at the third largest port in the world, Ningbo-Zhoushan in China, had to close for a month, causing a knock-on effect through other Chinese ports and adding to the backlog still being felt from the Suez blockage in March.

It was a perfect storm of swelling demand, plunging supply and major hold-ups.

Impact on retailers

For UK retailers, the crisis is having a double impact of extensive delays and soaring prices. This month we’ve received two shipments from China that were booked in April. That’s a five-month turnaround on a shipment that would normally take a few weeks. Another shipment booked in June is yet to arrive.

With everyone fighting to secure what little supply they can find, prices are going up on average £500 every two weeks. This has caught many people off guard.

Some of the world’s biggest brands have already declared that there will be shortages at Christmas and some distribution orders will not be fulfilled. And with Chinese New Year bringing its usual slowdown in January, things aren’t expected to improve until the end of Q1 2022. Even that is looking optimistic. We could well be looking at Christmas 2022 before things return to normal.

How to manage the crisis?

Our conversations with customers revolve around managing the crisis rather than finding solutions. In truth, there is no overnight solution. Eradication of the Covid threat, a revision of UK law and a streamlining of the driver qualification process will all make a positive difference, but will all take time.

In the meantime, it’s a case of being aware of the situation, managing your customers’ expectations and making sure your processes are as efficient as possible, so there are no additional delays.

Number one – get your shipment spec exactly right before submitting it. Any late changes will cause new delays, which will be magnified several times over in the current climate.

Number two – give us more notice. Shipments from China and India currently need two to three weeks’ notice rather than the usual one, so try to work to that schedule if you can.

Number three – as most quotes are only issued on a two-week basis, be prepared to book on provisional rates, so that you’re ready to go as soon as your shipment becomes available.

We’re aware that this is far from comforting news for our customers but it’s a global situation that, like Covid, we’re stuck with and must learn to live with. Along the way, we are constantly monitoring the situation, looking for solutions and helping our customers to keep their customers satisfied. It requires patience, understanding and a strong nerve but we’ll get there.

If you have any questions or need advice, we’re always here to help. Please do contact us on 0844 264 8000.

Congratulations to CEW Beauty Awards Finalists

ILG clients are set to win big at the 2021 CEW Beauty Awards. With 359 entries across 33 categories, this year’s event was the biggest CEW Beauty Awards so far and the lucky finalists have recently been revealed.

Congratulations to all brands voted for by CEW members, but we particularly wanted to toast our clients, Charlotte Tilbury, Trinny London, This Works and The Inkey List on being shortlisted as potential winners. These are the nominations:

Charlotte Tilbury – Best British Brand – Mass & Prestige

Charlotte Tilbury – Best New Eye Make Up – Prestige

Charlotte Tilbury – Best New Lip Make Up – Prestige

Trinny London – Best New Face Make Up – Prestige

The Inkey List – Best New Targeted Skincare – Mass

The Inkey List – Best New Hair Product – Mass

This Works – Best New Body Product – Prestige

This Works – Best New Wellbeing Product – Mass & Prestige

As CEW’s preferred logistics provider, ILG distributed the demonstration kits for the awards in June for CEW members to trial and vote for their favourite products across the categories.

Look out for news of the winners on 24th September. Find all the results and discover more about the CEW Beauty Awards here.

Until then, keep the champagne on ice!

CEW Puts our Beauty Fulfilment to the Test

Our beauty fulfilment teams have been busy supporting the CEW 2021 Beauty Awards Product Demonstration Event. This year’s 12-day virtual event held in June invited hundreds of lucky ticket holders to access proceedings via desktop and mobile.

CEW members were able to test a wide range of fabulous beauty products and use the online event hub to discover essential background, including ‘how-to’ videos, one-to-one discussions with brands, info on product ingredients as well as webinars and panel discussions.

As CEW’s preferred logistics partner, ILG has the not-inconsiderable task of collating thousands of products from different manufacturers, assembling into pre-determined pack variants and despatching to the homes and businesses of CEW members across the UK in time for the event kick-off on 13th June.

Despite the complexity of the project, our beauty fulfilment experts were well prepared when deliveries from 173 different brands started to arrive at one of our Gatwick warehouses. Once we had the full stock of items, we set to work sorting tens of thousands of creams, cleansers, moisturisers, oils, masks, serums, mists, gels and mascaras into 650 separate demonstration kits. Even more challenging, products had to be assembled into five different variants of kit, each with a predetermined checklist of between 60 and 70 constituent items.

Despite some eye-watering deadlines, we’re pleased to say that hundreds of product demonstration kits loaded with spectacular beauty products were successfully delivered and trialled by CEW members.

Find out more about the CEW Beauty Awards here

Brexit and the Road to Poland – Part 3

The twists and turns involved in establishing a warehouse within the EU.

Part 3 – The client’s tale

By Nick Pecorelli, Founder, Little Green Radicals

My business, Little Green Radicals, sells organic, Fairtrade clothing for babies and children worldwide. Everything is manufactured in India and prior to Brexit we brought all our stock into the UK, from where we could move it freely into the EU – no duty, no paperwork.

The UK and EU each comprise about 40% of our business and in Europe, Germany is our biggest market, so we decided quite early in the Brexit journey that we would want a warehouse inside the EU, preferably close to Germany. We started talking to ILG about a year and a half ago, before the original withdrawal was agreed.

Nevertheless, the terms of the Brexit deal didn’t become clear until this January. Suddenly we started incurring duty at 10%, delivery and fulfilment costs shot up because of all the paperwork, deliveries were delayed and additional charges started being levied on us and our customers that we had not been made fully aware of. It put us in an unsustainable position.

So it made total sense for us to set up inside the EU as quickly as possible and fortunately ILG were working hard to get the warehouse in Wroclaw ready.

Doubling up on orders

We had already started making changes in preparation. We knew there was the possibility of duty, so we had two orders for everything coming out of India, one for the UK and one for the EU. Any surplus will go to Poland where, being a bonded warehouse, we can keep it and only pay the duty as and when we need to bring it into the UK.

But all this extra stock management has involved a lot of analysis. We now carry out stock analysis on a weekly basis, whereas before it was every couple of months. That’s due to the sheer amount of stock we’re having to carry overall, and that in turn will add significantly to our cost base.

There has been a lot of additional admin too, like setting up VAT registrations in every country we’re selling to, re-evaluating all our postage and delivery charges, working out with ILG which courier services could get to our customers and, on the basis of all these factors, deciding which countries we could viably sell to.

Some countries present more difficulties than others and we’ve had to vary our decisions from one country to another, such as whether we deliver duty paid or making the customer pay the duty. Each country has its own way of doing things and we’ve had to learn as we’ve gone along. It’s taken a lot of time and cost.

The benefits of keeping stock in the EU

January and February were a turbulent couple of months. Our EU market had to shrink considerably, from 40% to 20-25%, plus we had higher costs and lots more work for the customer services team to do. But having a warehouse in Poland ameliorates all that.

Brexit has increased the amount of bureaucracy we have to deal with and we have the complexity of split stock management, but being in Poland means we can shed those costs associated with moving stock from the UK and can provide a better service to Europe than we would have done historically. It’s certainly quicker.

Paradoxically, Brexit has forced us to invest in Europe, to put in extra resources and effort, to make the most of having stock there. We’ll have a separate EU website and will do more business with Zalando, the German e-commerce platform.

If we’d had to do it all ourselves, the cost would have been prohibitive and the process would have tied us up in knots. To have a third party you’ve worked with before do that for you is a massive relief.

I think we have a good future. We’re in a good place as a brand, we have a loyal customer base and I think we’ll grow very well inside the EU. But it’s certainly been hard earned.

Brexit and the Road to Poland – Part 2

Our decision to open a warehouse in Wroclaw, Poland, was signed off in September 2020 and I was assigned to manage the project the following month.

Read more

Brexit and the Road to Poland – Part 1

In January 2020, with one year left until the UK left the EU, we made the decision to prepare a contingency plan in the event of a hard Brexit.

Read more

Thinking of moving stock to the EU? We’re ready to help you. Call ILG on 0844 264 8000 or email brexit@ilguk.com.

Brexit and the Road to Poland – Part 2

The twists and turns involved in establishing a warehouse within the EU.

Part 2 – Setting up shop

By Darren Cobby, Project Manager, ILG

Our decision to open a warehouse in Wroclaw, Poland, was signed off in September 2020 and I was assigned to manage the project the following month. Up to this point, my main role as Project Manager for ILG had been overseeing the smooth opening of new accounts. Poland, I quickly learned, would be like doing all that over an assault course.

Unfamiliar hazards and obstacles cropped up frequently, not least the Covid-19 pandemic, which prevented me from visiting the site. Fortunately I had the support of Yusen Projects and Solutions in Poland, whose presence and experience on the ground was invaluable.

Learning the hard way

Work began in earnest in December. We had a 5,400m2 (58,000sq.ft) warehouse to design, including racking, office layout and a mezzanine, which would prove a major learning experience all of its own. We discovered that Polish regulations require the installation of a sprinkler system, which would not have been a requirement in the UK, so we had to rethink our initial design.

We had to wait nearly six weeks to get new drawings done but in the end we came up with a solution that made the sprinkler system much easier to configure while remaining fully compliant with all Polish regulatory guidance.

This sort of discrepancy was a common feature of the project. Everything from forklift licenses to locker room layouts presented new rules to learn and work with.

Pause and restart

The project had to pause for three or four weeks over Christmas and New Year as we all waited for details of the Brexit deal. By the second week of January, however, the picture had become clear and we were seeing a wave of client interest. My attention turned to matters like access control, the data and power layout, CCTV installation and completing the fit out and finish.

The new warehouse management system (WMS) gave me plenty to think about. Our IT support team wanted to send their choice of kit but the Polish team wanted to source something locally. We ended up agreeing that the majority will be sourced and installed locally, so it’s easier to fix. It’s up to our clients how they split stock but all they need is an EU web store and we’ll be able to tap that into our WMS.

By March I was picking up with the clients that Cliff Allen, our Head of Client Relationships, had brought on board. I began to work with them on decisions like how they planned to split orders and the documentation they needed. At the same time, preparing the warehouse had moved on to day-to-day concerns like cleaners, security, pest control and waste management.

The final push

April is when I’ll see light at the end of the tunnel. I’ll be able to visit the site and start plotting where each account goes. The racking will be in, the data and power install will be complete and the office block and canteen will be built.

We have nine Polish staff, seconded from our UK workforce (a real asset – no work permits required!), going out to get everything ready for the opening on May 3rd. They’ll be assembling picking trolleys, labelling shelf locations and tote bins (8,500 in all) and taking delivery of all the packaging and consumables, carefully sourced to make sure they’re consistent with the UK packaging.

Come August I’ll be able to breathe more freely. The team will have found their feet, there’ll be a good volume of orders going out, we’ll have a new WMS system up and running and the warehouse will be filling towards capacity.

For our clients, the EU market will be viable again and they’ll be able to focus on maximising their European sales. It’s been a unique experience for me personally and I have had some steep hills to climb, but our hope is that investing the time of a collective team of eight people for the last six months will mean a much easier transition for our clients, and now we’ve got here, there’s no looking back.

Thinking of moving stock to the EU? We’re ready to help you. Call ILG on 0844 264 8000 or email brexit@ilguk.com.