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Inside Retail Weekly: Marley Spoon recently reported a 56 per cent growth in revenue from Q1 2020. What has the past month been like at Marley Spoon?
Rolf Weber: It was really a very interesting challenging period but also very opportunistic if you like. Our first question was how to keep our people safe on both a global and local level, so we established committees to create policies to ensure safety in our facilities and offices. We were one of the first businesses to mandate remote working policies. We introduced the strictest measures in our facilities, as we restricted entry to purely essential workers. We had entry procedures implemented very early in March, like temperature checking and strict questionnaires in regards to health and wellbeing. We sent team members home when they had a fever, just to understand if it was a pandemic-related illness or just a normal cough in order to protect the rest of the team. We implemented very early on team separation to avoid cross-infection. One team would only go on a break with their team, never cross paths with team two.
We developed all these policies very early on as a core responsibility to team members. If and when we could avoid facilities being impacted by an infection inside the facility, we obviously have licence to keep operating and providing food. It was to keep people safe, but we had to understand the impact on the supply chain as well. We saw a sudden rush to our products and service offering across Marley Spoon and [sister company] Dinnerly. We worked hard to establish the stock for our suppliers in their warehouses across food and non-food items. When I saw China was shutting down, we understood what it meant for our packaging goods that come from China. We did a lot of work in order to secure supply, trying to predict some sort of demand and working hard with existing and new suppliers to ensure we were not running out.
Our business and operations consist of three big parts – the inbound supply of food and non-food, our own production capacity in Sydney and Melbourne, and the downstream capacity of the last mile delivery of goods. We needed to juggle all three of them and to make sure they grew at the same pace as we were ramping up our production capabilities. Our logistics partners ramped up their delivery capabilities and our supply partners also ramped up inbound delivery of goods with the rearrangement of the supply chains. It worked astonishingly well over a period of two to three weeks. We ramped up our capacity and we improved production capacity by up to 100 per cent.
In the first four weeks of April, we were 100 per cent up on the last year as a global business, and it’s the same in Australia. This was building on a strong trajectory that we’d experienced in the pre-COVID-19 part of the first quarter and where the Australian business was growing already 70 per cent year on year.
IRW: How would you describe the past year at Marley Spoon?
RW: We’ve had a very successful 12 months. We achieved many things. We invested into the product offering in both our brands, we expanded the number of choices and we launched the vegan meals on Marley Spoon at the end of last year. At Dinnerly, we went from eight to 14 meals of choice and we’re now at 20. We’ve implemented tremendous product development and customers have been accepting it really well.
We’ve implemented new pick-and-pack technologies in our facilities to enable this explosion of choice and flexibility in the back end. This was very successful mid-last year for Marley Spoon and Dinnerly.
We keep building on our data and technology infrastructure in order to support more personalisation of what we offer to our customers. When you go to a restaurant and there are 40 pages of different meals, you have a hard time finding what you like, versus having a more premium restaurant that has a curated menu of five to 10 meals, where it’s much easier to find what you like. That’s what we’re trying to achieve for customers. While we have a lot of opportunity in the total amount of meals we offer, for a specific customer, we want to recommend the ones that suit their tastes and needs best, rather than trying to sell a pork steak to someone who doesn’t eat meat.
We also reduced all non-recyclable plastics, we’ve reduced the percentage of plastic per meal shipped, we are switching to renewable energy to power our coolrooms and offices and plan to be 100 per cent renewable by the end of the year, and much more.
Woolworths was the cherry on top when we entered into June-July last year. That has supported us in finding synergies in our operations across logistics, sourcing and many other matters. But more importantly, this is a growth partnership where we’ve tapped into the Woolies customer base across the various assets, like through the Woolworths website, in emails, the Woolworths Rewards loyalty membership and the Fresh magazine. We’re doing loads of things to drive customer acquisition and promoting Marley Spoon and Dinnerly and it’s shown great success.
IRW: What’s it been like serving customers who have been affected by the bushfires?
RW: I think more broadly, this past year in Australia is the weirdest we’ve ever experienced. We’ve gone from drought to bushfires to floods and then to the pandemic. I kind of feel like we’re in the first episode of the Ten Plagues. I’m dreading to think of what is going to come next.
It’s been tremendously challenging for the communities that we serve and finding the right balance to operate in bushfires when you can’t reach customers because roads are closed and working with our logistics companies who put their drivers in danger. It makes me tear up when I think about it. There’s a lot of work that has gone into maintaining a safe food delivery to our customers during these challenging times over the last year and it’s proven that our flexible supply chains and operating model are really well suited to adapt to whatever the environment is throwing at us, our partners and customers. It’s something to be incredibly proud of.
IRW: I feel like the most successful businesses right now are the ones that have been flexible and open to change in the current environment.
RW: It’s interesting to watch how a lot of companies have adapted and there are some really cool stories out there. I’ve heard of an events-staging company that is making desks; I’ve heard from businesses moving from wholesale to direct-to-consumer. There are a bunch of other stories, especially within the food industry, where many producers who used to rely on serving premium products to high-end restaurants were faced with their market being eroded overnight. It’s been interesting to watch on one end, and you’ve got to admire the strength of those business managers and owners.
IRW: Have you gathered any interesting insights about the business during this period of time?
RW: The importance of Marley Spoon as a business in the health and wellbeing of our customers. It was always clear and a purpose of ours to bring delightful and easy cooking to people and by doing that, it’s enhanced their lives and made it easier to put a great meal on the table. If families do that more often, they can eat more often together and have a better life.
We always knew that we can play a really important part in the lives of our customers, but this has brought it home for us even more.
We’re a five-year-old business and in the first couple of months, everyone just rolled up their sleeves. Everyone had been working hard anyway, but there was a feeling of ‘let’s just get this done’.
We got things done in days that would have potentially taken us weeks and months before [the pandemic]. We doubled our capacity across our facilities in a couple of weeks. We didn’t have the need before, but if you had asked me a couple of months earlier how quickly we could double our capacity, I wouldn’t have said three weeks! You can get incredible things done in a short amount of time if you put your mind to it.
IRW: Given so much of your team is now working remotely, how are you keeping them engaged and motivated?
RW: We implemented the COVID-19 team. We implemented daily habits across the leadership team and within every team, they did a daily group check-in to ensure everyone was safe. We had a weekly survey going out where we checked on how people were coping with the new situation. We also implemented virtual pub quizzes. We have a virtual coffee chat room where you can have a break and not talk about work – it’s trying to simulate the water cooler chat.
I have sent weekly CEO emails and so has [founder] Fabian Siegel and our group CEO. There’s been a lot of communication and transparency, we’ve been trying to inject fun one way or another. I have no problems making jokes about myself in front of everybody, which can help relieve a tense situation.
Each of our team leaders has really been on the lookout to proactively find any signs of stress or burnout within our team members. We’ve also got employee assistance programs where external [professionals] can speak to someone who experiences stress. We don’t know what’s going on in people’s homes when they’re working from home and we have single parents who find it hard to look after their kids during school holidays. Everyone understands we have a flexible approach and that we can develop individual solutions for people’s requirements, rather than a blanket one-size-fits-all policy.
IRW: How has Marley Spoon managed the supply chain challenges during the pandemic, like the changing cost of produce?
RW: We’re used to dealing with price changes of ingredients for whatever reason. We’ve seen price changes due to drought, bushfires, floods. You might have a flash flood in Queensland, which impacts the spinach harvest – those things happen all the time, so we’ve built processes to manage and maintain our costs. We’ve had a lot of training in it and that’s come to the fore with our flexible supply chain. Because we offer 27 recipes Marley Spoon and 20 on Dinnerly, we can swap out ingredients, like changing green beans to broccoli, while maintaining great recipes and tastes.
We need to work out which of these price changes are short term, which ones are long term and what the right measures are to manage that. That’s what we’ve been doing for a long time and we have a lot of experience dealing with it.
IRW: What’s the meal kit sector like in Australia?
RW: Marley Spoon is only five years old in Australia and around the globe, five-and-half. We’re a very young company serving meal kits. The grocery sector in Australia is more than a hundred billion dollars, and in the US, it’s $800 billion and Europe it’s several hundred billion. We operate in a very large category.
But despite the current accelerated switch to online groceries, it’s still only a few percent of overall spend. There is a second tailwind that is operating in the category, and we’re only at the beginning of the switch from offline to online purchasing. We don’t anticipate the growth to stop anytime soon – maybe not at 100 per cent in the future, but it will be very large growth for quite some time as consumers shift their purchasing behaviours.
There are consumer trends towards more and more convenience. Nobody wants to go back to asking the question, ‘What am I going to eat next week?’ ‘How do I bring variety back onto the dinner table?’ I don’t think we’ll see a reversal of that trend, we’re in acceleration going forward, so we’re very optimistic.
Woolworths has doubled its capabilities of delivering groceries online now – they wouldn’t do it if they didn’t think it was an ongoing trend. I think this pandemic has put us forward by half a year or a year. Then from here on, we’ll continue the trend of people moving their purchasing behaviour to online. They’ve experienced that it works, so why would you go back?
At Marley Spoon, when a customer has experienced the benefits for a few weeks in a row, the likelihood that they keep purchasing another box is 97 per cent.
IRW: Are there any e-commerce or consumer trends that you’re interested in right now?
RW: I’m personally interested in trying to understand trends. A trend is one thing, but is it going to be major or is it something that’s big for only a small minority? Veganism has been around for a long, long time. Around 2 to 5 per cent of Australians are vegan, so it’s a small but vocal minority. I notice that the sentiment towards veganism has been gaining pace, like the benefits for personal well-being and the environment. We’ve worked to develop our vegan range since mid-last year. We always had one or two meals, but we never had a consistent week-on-week offering, so we worked hard to secure supply of various protein options, rather than just doing tofu, tofu, tofu.