BROSA
Client:
BROSA
Brief:
Develop recurring revenue model
Adeptx Services:
- Business modelling;
- Revenue analysis;
- Inventory review
About BROSA
Founded in 2014, BROSA is widely regarded as one of Australia’s leading online retailers. The Company is an online DTC retailer whose focus is premium design-led furniture. With a technology focused business model, BROSA disrupted standard industry practice through its DTC model thereby streamlining processes. As a result, BROSA is able to provide extremely competitive pricing for high end furniture.
Objective
BROSA had developed a complex supply chain with large international furniture manufacturers. The contract was to build BROSA designed furniture on an order by order basis. This enabled the Company to minimise the drain on capital resources and logistics requirements. Whilst BROSA was scaling rapidly as a result of its value proposition, the unpredictable nature of its revenue model meant there was little visibility over the future. Moreover, there was the overriding concern in relation to lack of a stable revenue stream.
Consequently, the objective was to develop a business model which could generate a predictable stream of recurring revenue with limited capital resource.
The Work
There were several challenges to overcome:
- Definitions of performance metrics and measurement
- Extraction of high-quality data from existing systems
- Analysis of SKU turnover, margin and supply chain capabilities
- Developing scenarios focusing on in-stock strategies and capital resource
Initially, the focus was on developing the framework for defining a successful outcome. This meant an in-depth analysis of how recurring revenue would be defined for BROSA. Given the limited capital resources, this was critical as simply expanding product portfolios was not feasible. The analysis resulted in development of an in-stock strategy.
The determination of category type and volume of SKUs for an in-stock strategy was arrived at through a matrix of key data points inclusive of volumes, margins, traffic and procurement capabilities. The major challenge was extraction of key data from various systems and challenging the integrity of such data. This was achieved through external validation.
Such data was then modelled to determine the optimal product mix which enabled sustainable revenue streams with acceptable capital returns and enhancement of the customer experience ( a key customer frustration was extended lead times from order to delivery).
Outcome
BROSA developed a product mix which had incremental stages. This enabled the Company to generate a stable revenue stream with greater visibility and predictability. Moreover, the deliberate incremental phases achieved a balance between innovation, resource capability and scaling from a solid foundation.
