Thankyou closes online store as it grapples with supply chain challenges
Three months on since Australia first witnessed intense supermarket stockpiling, a second wave of panic is hitting supermarkets in Melbourne just as suppliers are starting to get back on their feet.
Social enterprise Thankyou, which has become a popular choice with consumers in the personal care category, was already facing significant challenges in the business before the COVID-19 outbreak hit Australia, and the business is still grappling with the effect on supply chain.
Thankyou co-founder and managing director Daniel Flynn told Inside FMCG, that COVID “couldn’t have hit at a worse time” for the business.
“Before COVID we went through a transition off the back of some tough challenges that we faced. We had some market challenges, some supply chain challenges, projects taking longer than we thought they would … We knew we were going to have to pull back,” Flynn said.
“We had a reduction in staff about a month before [in February] so we were already a leaner team and knew we had to think like a startup.”
While the transition forced the team to “be lean, pivot and think quick”, Flynn says nothing could have prepared them for the FMCG minefield that lay ahead.
At the height of stockpiling, the business was seeing demand at up to five times the volume typically requested for hand wash and sanitiser.
“In early March, we had customers putting through four weeks of orders in a day,” Flynn said.
“We had to ruthlessly prioritise … we knew we can’t be all things to all people.”
Thankyou has temporarily closed its online store and has halted numerous projects in order to focus all its energy on restoring product levels.
And while many businesses reported that the pandemic was a time of collaboration and businesses supporting one another, Flynn points to an uglier side of things.
“Supply chain locally and globally wasn’t ready,” Flynn said. “And the industry became like The Wild West at times.”
“I felt like supply chain for a moment was almost the same visual as when we saw people punching on for toilet paper in the supermarket.”
Flynn said the crisis brought out the best and worst in humanity, and resulted in some opting for underhand tactics to get what they needed.
“The panic button was hit and everyone had to think about themselves first.
“We definitely saw some things happen that under normal circumstances would never happen, in terms of people looking after themselves. There was some undercutting, some really interesting short-term cash grab strategies, which was disappointing.”
Flynn said some of the synergies and partnerships, that are strong under normal trading, got a lot weaker.
“It went both ways, some people really banded together and then we had a couple of scenarios where it was just very surprising to see different tactics that weren’t in the spirit of a good partnership.
“Panic causes different emotions for different people, and I think a lot of organisations, to be honest, just weren’t ready for a hit like this.”
Unable to source ingredients and components for the original products, the team had to find “creative ways to problem solve”.
Thankyou launched a new sanitiser in different packaging as it was unable to source the ingredients and packaging components for the original product.
And while demand has normalised for the most part, Thankyou is still struggling to source raw materials for many of its products.
“We’ve had ingredients and componentry that’s gone from a few weeks’ lead time to 30-40 weeks. It’s unbelievable. At one point, you could airfreight for a reasonable price, you no longer can which makes problem solving slow,” he said.
Despite the challenges of 2020, sales of hand wash and sanitiser in recent weeks have boosted the business and Flynn is feeling more positive about the future.
“At one point this year I thought, gosh this is probably one of our worst years ever, but we’re a few weeks off from the end of the financial year and it looks like we will end up in a positive position,” Flynn said.
“We’re not out of it yet. Things have calmed down but I think we’re looking beyond the barrel of a really tough six months ahead as we all try to navigate global supply chain.”
This story first appeared on sister site, Inside FMCG.