Theory of revolution

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by Emily Atkins

A new third-party logistics provider is aiming to disrupt the traditional fulfillment model to meet the unique needs of small- to medium- sized Canadian businesses.

Called Darwynn – a play on the founder’s name Wynn Xie and Charles Darwin, the father of the theory of evolution – the company offers a unique combination of IT and physical assets to serve its customers. It recently opened a new distribution centre in Toronto’s Scarborough suburb, increasing its operational assets to four across the country.

In an interview, the company’s CEO Reza Bafandeh explained the thinking behind the new venture. “Most people underestimate how complex the Canadian market is,” he said.

We’re not California

Bafandeh put it in context by comparing Canada to California. With a land size about 25 times that of the US state, we have about the same population and about half the GDP. “So as a result, you’re dealing with a country that’s exceptionally widespread, and with significantly less invested infrastructure,” he explained. “So, by default, that means companies that start up, especially in the small to medium range, have a lot of operational issues that they’re faced with to be able to compete effectively.”

Darwynn CEO Reza Bafandeh explaining how the company’s inbound replenishment works.

One of those issues is regionalization of service providers. Bafandeh pointed out that the majority of transport providers and fulfillment providers are provincially based or focused on a single channel, meaning companies have to build a diverse group of suppliers if they want national reach for their products.

For many small businesses, especially those that have risen to quick success using social media marketplaces, this creates a major headache and impediment to growth. These small businesses are left asking how to manage inventory, and how to ensure they’re able to fulfill through multiple channels, Bafandeh said.

A single portal

Providing a solution to these problems was the genesis for Darwynn. The idea was to create a single portal for companies to be able to access the Canadian market, coast to coast. The company combines market access using physical locations within reach of 80 percent of the population, and an integrated IT platform that provides real-time data and feedback to vendors, as well as managing their fulfillment requirements.

Bafandeh said Darwynn helps eliminate variations in pricing and fulfillment styles, as well as allowing smaller companies to avoid losing margin by spending on a middle-man, like a national distributor, to get their products to customers. “Our goal is to be the world’s most merchant-centric company, where we focus on the needs of the seller, focusing on how they want to operate their business, and building an infrastructure with an adequate amount of configurability, where companies can decide how their inventory is managed,” he explained.

To that end, Darwynn has no minimum limits on the amount of inventory it will hold, and charges only for the space the product takes up. “You can literally hold one case in Vancouver, and you’ll pay the storage for the cubic volume of that one case,” Bafandeh said.

Shuttles inside the ASRS.

It manages smaller inventory through a propriety in-house designed AS/RS system, while larger items and pallet or case lots reside in traditional racking.

As well, customers can configure how their inventory is handled, whether on a first-in-first-out basis, or last-in-first-out, or by expiry dates, or by item level SKUs, cases, pallets and so on, or with kitting and other value added services, Bafandeh said.

Pick your battles

“Most companies – especially when you’re starting small – you’re picking and choosing your battles,” he said. “’Where do I invest my money? Do I invest it in marketing? Do I invest it in individual operations people? Do I invest it in data analytics?’ And we’ve decided to build this infrastructure where a lot of this becomes hands free.”

Companies using the system have access to all the data about their inventory. They get insight into replenishment data, insight into costing on an order level, and transparency on nuances like expiry, or batch ID. Bafandeh said that a typical small company using third-party suppliers would have to hire two people to get this level of data and be able to use it.

A worker prepares an order at one of the outbound packing stations.

And, in keeping with the micro-enterprise model that so many are using for e-commerce, Darwynn allows companies to onboard themselves through the company’s website portal. Bafandeh espouses customer service that’s so good it doesn’t need to exist, and the Darwynn interface is designed to be simple, seamless and fun.

“Our goal is to make sure that merchants can manage their operation without calling in, having full visibility, full transparency. We’re trying to create it into a system where people, companies, individuals, owners, operational professionals, can tap into a resource where they can manage their business the way they want, not the way that it’s forced upon them.”

Major markets

With facilities in major markets – Vancouver, Calgary, Toronto, and soon in Montreal, ranging from 44,000 to 91,000 square feet – the company claims it is within easy fulfillment distance of the entire Canadian population. With its modular AS/RS system and relatively small footprints, Bafandeh said that scaling up to meet new demand can be quick and seamless. The new, 45,000 square-foot facility in Scarborough will be able to fulfill approximately 10,000 orders per day at full capacity.

Darwynn partners with carriers and last-mile providers, as well as customs brokers to facilitate customers’ cross-border needs. The software algorithms determine which carriers to use based on the parameters of the shipment and the customer’s service level agreement. The company has also begun rolling out its own fleet, with 100 percent electric vehicles.

Reinventing the wheel

If it sounds like Darwynn is reinventing the wheel by creating its own platform and hardware, that’s intentional. Bafandeh says the environmental has radically changed, and fulfillment needs to follow.

“When there’s a flood, wheels don’t work any more. You need a boat, right? And that’s the nature of where we are within the e-commerce space,” he said.

Twenty years ago it was bricks and mortar retail, and mom-and-pop shops were the small businesses of the time, he explained. If a manufacturer wanted to make the big time they’d sign with a big retailer like Walmart to reach more buyers.

“Now it’s completely changed. Companies are tapping into a global infrastructure, tapping into platforms that never existed. New platforms are arising out of nowhere. And for companies to be able to compete effectively, they need to maintain that adaptability,” Bafandeh said.

That takes us back to the name. Darwin talked about the survival of those that adapt the best, Bafandeh added. “We understand that with this technology, with this software, with this infrastructure, even though we have it, we understand we are at just the cusp of what operational fluidity and operational perfection is. We know that the business model is going to change, and we need to make sure that adaptability is the core component of our entire culture.”