SYDNEY – The distribution center west of Australia’s largest city is operating efficiently on the warm September day.

Winc Supply Chain Director Chris Fox proudly takes visitors by rows of empty pallets neatly stacked near the loading dock.

He points to fully automated robots moving boxes of workplace supplies like headphones, cleaning products, staples, hand sanitizer and common office snacks.

Workers move about the more than 43,000 square meter facility on forklifts, placing boxes on shelves. There are multiple indicators of a thoughtful approach to sustainability.

The scene is a far cry from 2020. The facility faced many challenges during the early stages of a long and difficult merger integration process that was initially delayed by a protracted regulatory review. Issues with company culture, systems, facilities and a massive inventory SKU – exacerbated by the pandemic – threatened the viability of the Australian workplace supplies company.

Fox, who joined Winc in March 2020, recalls a loading dock of pallets filled with poorly organized products, which was problematic for the company and customers.

“It was about the service, the products, our warehouses were all totally disrupted,” Winc Merchandising Director Nick Severino said. “We had wrong products in the wrong place. Everything you could imagine that could be wrong was wrong.”

But today, the firm is on solid ground roughly seven years after the company was formed by Platinum Equity through a combination of Staples and OfficeMax assets acquired in Australia and New Zealand.

quotation mark left
We believe that the management team rose to the occasion. We were able to partner together, and we gave them the tools to survive. Additional capital provided them with the liquidity to withstand the downturn and invest in automation during a period of lighter business activity. We saw a relentless focus on driving operational efficiency.
Adam Cooper, Managing Director, Platinum Equity
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“We’re having a great year,” Winc CEO Peter Kelly said of 2023. “Our EBITDA is well ahead of budget, as it needed to be to deliver on our transformation. We believe we will significantly over deliver on our budget in Australia and New Zealand. Australia is showing us that it can be an attractive and profitable business with happy customers and employees. It’s important to me that our success is not restricted to our financial success. We’re also performing very well across all measures of success particularly customer service, employee engagement, and our contributions back to society via our social agenda.”

Platinum Equity executives and company executives credit the turnaround to a renewed commitment to customers and significant operational improvement. A mostly new management team has overseen the implementation of artificial intelligence and automation, adding another layer to customer responsiveness. Rising employee satisfaction combined with a strong social agenda that is good for business and a key Winc differentiator appears to have the company on a solid path after a rocky beginning and the disruption of the pandemic.

“We believe that the management team rose to the occasion,” Platinum Equity Managing Director Adam Cooper said. “We were able to partner together, and we gave them the tools to survive. Additional capital provided them with the liquidity to withstand the downturn and invest in automation during a period of lighter business activity. We saw a relentless focus on driving operational efficiency. That’s a focus across the entire organization from warehouse operations to sales, merchandising, and back-office systems. They spend meaningful time and effort focusing on their interface with the customers through web-based applications.

“Focusing on how to make the business better positioned the business for success as demand for workplace supplies increased.”

Winc responds to customers

Kelly, who previously was a senior executive for Coca-Cola, has a colorful description of the services Winc provides as mostly a business-to-business company.

“If you turned an office building upside down, everything that falls out, we sell it,” Kelly said. “Everything from furniture, kitchen, cleaning products, traditional stationery products and things you might use in a general office context, anything that fell out of that building, we sell it.”

The client base is diverse. It includes large businesses, government agencies, hospitals, schools and other sectors, but the business wasn’t going well when Kelly arrived in March 2020. Customer service – from call centers to deliveries – was poor. The company struggled with procurement and supplier relationships. Employees were dissatisfied.

“I did know about Winc selling into our customer base because I have been on the other side of the table,” Kelly said. “I used to run global procurement amongst other things at Coca-Cola Amatil, so I knew of Winc and its reputation, which was not in the best shape at that time. I knew what I was getting into.”

The company needed a culture overhaul.

“Typically, when things are broken, leaders have started to behave badly and many have formed silos around their teams,” Kelly said. “There’s confusion with customers, a lot of unhappiness with employees.”

In some ways, the pandemic helped. Australia was home to stringent lockdown orders, which severely impacted the office supply business. But Winc serves several important verticals, so it was deemed an essential business. With demand down and customers reluctant to leave the business during the uncertain time, Winc had a small window of opportunity to think through how to fix the company.

“One of the biggest challenges was just knowing what to do first, how to order the sequence of events so that you successfully untangle the business,” Kelly said.  “It’s like a bowl of spaghetti, it’s all mixed up. How do you actually untangle all those strands to make meaningful progress in a quick but orderly fashion?”

The first step was to improve relationships with customers. Fast forward to 2023, and the company reports that things are much better. The company’s customer retention win rate was once ~50%; in 2023 it was more than 90%. The NPS score, a global measure of customer satisfaction, used to sit beneath 20. Now, the company scores above 70 routinely.

Winc Customer Experience Director Cara Pring, who was attracted to the company because of the social agenda and Kelly’s transformation vision, says a key aspect of the turnaround was simply listening to customers. When she was hired three years ago, Winc instituted a listening program where company representatives cold-called customers for feedback.

“That led to improvements that drove our customer satisfaction up from the 80s into the 90s almost overnight,” Pring recalls. “It took about six months for us to get consistently above 94%, and now we sit around the 94% to 98% mark, which is really remarkable.”

Company officials say gross margins have recovered through a combination of both sensible pricing, improved relations with preferred suppliers, and material improvements in productivity. Winc has also worked on unprofitable customer contracts to create win-win results for everyone.

“We credit the improvement to hard work in ensuring our supply chain’s right, our website’s working well, our sales team are well-informed, our customers get what they expect; we deliver on time, in full, when they expect it,” Winc Sales Director Glenn Gunstone said.

Automation + AI

The distribution center and other sites like it stand at the center of the Winc universe since it touches all front-facing operations.

Pring said spending a day at the facility working alongside e-commerce team members, taking products off the robots led to an action item that helped operational efficiency and productivity. When customers tour the site, the commitment to automation and sustainability is highlighted.

“Our customers walk through the (distribution center) and can see how it’s clean, it’s organized, it’s big, the automation there is impressive, and it shows a commitment to sustainability,” Gunstone said. “We show them what automation can look like. They can see it; they can feel it.

“They also get a feel for the whole operation and what goes on behind the scenes. They get to see the process behind how their deliveries arrive.”

Website improvements – which heavily involve the introduction of AI – are another source of pride.

Over the last three years, improved self-service functionality has been introduced through the ability to track orders, pay invoices and process returns. Earlier in 2023, Winc introduced its chatbot, called Winnie. The chatbot attempts to resolve customer inquiries by surfacing resource articles, allowing the customer to potentially resolve the issue through self-service, which frees up call center representatives to handle more complex inquiries.

“We’ve also delivered a number of smart data models on the website designed to personalize product recommendations, drive in-stock alternatives and lifecycle product recommendations so that we’re suggesting related products to customers,” Pring said. “It also helps so that they don’t run out of items like coffee and toilet paper and things like that. That’s all more traditional, predictive AI machine learning.”

The introduction of AI, warehouse automation and other improvements require capital – something Kelly says Platinum Equity is committed to.

He recalls when he first assumed his post when Winc had to make the case for automation at the distribution center during a time of poor cash flow.

“If it was left to me, it would’ve happened later when we could have generated our own cash to do it,” Kelly said. “Platinum supported the expenditures.”

“Platinum’s support for everything we’ve asked for has been outstanding. They are great partners and intelligent operators who just get it.”


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