Case study: Virgin Cosmetics' success story

Date: 19 September 2006
(ICT World)
ICT World Exclusive
Using a direct sales, party plan business model, which aims to help independent consultants to start their own businesses selling affordable cosmetics to the public, The Virgin Cosmetics Company started operations in SA in September last year.

In less than ten months, the company says that it had more than 1 000 consultants and had achieved more than R10m in sales. Licensed for most other African countries as well, the company expects to have 10 000 consultants by year three (2008) selling cosmetics as well as jewellery and related beauty items.

This will generate not only high volumes of transactional data with thousands of individual items as small as lipsticks to be ordered, warehoused, picked, packed, delivered and invoiced but increasingly complex calculations of commissions to be paid to thousands of consultants in different currencies.
 
As a start-up company, The Virgin Cosmetics Company of SA had an opportunity to design and implement an 'ideal' IT infrastructure without being hampered by legacy systems.
 
CEO, Luther van Zyl, who has extensive experience in financial and business management, knew exactly what he wanted his business solution to deliver.
 
His objective was to set the system up as though the company was already a billion-rand business ensuring upfront that it had the scalability and flexibility that would be needed several years down the line.

He also wanted a system that could be easily transported, replicated and localised in each country to which operations would be extended. And he wanted a financials and enterprise resource planning (ERP) system that would integrate seamlessly with the commission management system that he had already chosen.
 
Stock control and projection was another major concern, with thousands of small items needed for a constantly changing cycle of promotions and seasons.
 
Also, as a Virgin company and therefore representing a very well-known brand, two operational factors are absolutely key for us. One is value for money. The other is impeccable service and the only way to achieve that in our business is with superior IT systems, he adds.
 
Van Zyl and his team looked at all the competing products in the mid-market before deciding that mySAP All-in-One fitted their needs best in terms of functionality, purchase price and long-term return on investment. Specifically, it gave us the means of starting small and scaling up at times of our own choosing, he says.
 
In addition, mySAP All-in-One gives us a Web site facility for online sales. That is going to become crucial to the quality of our service, because it will be the most efficient, affordable way for many of our consultants in the rest of Africa to place their orders instead of having to phone our call centre.
 
He admits to adding unusual pressure to the implementation process by starting operations before the solution was fully implemented. We started the business and the implementation in September in the hopes of being able to capitalise on the Christmas season. That meant that SCT, our implementation partner, had a lot of catching up to do - as we were handling considerable volumes before the system went live in December. SCT managed well though, and the system is very robust, so I have not had to regret the decision.
 
Tackled in modular fashion, the implementation took 15 weeks and proved to be an 85% fit for the business, he says.
 
Christian Kuschke, business development manager for SCT, says that mySAP All-in-Ones templatised, best practice design, not only makes for rapid implementation but also ensures that a vanilla version of the solution will meet most business needs. And, of course, it helped that Luther was able to define his needs very clearly upfront, allowing us to map them very accurately to the solutions built-in functionality. And when we needed to adjust functionality slightly, we had the best practices to guide both us and the customer, he adds.
 
Two adjustments had to be made to the basic solution. The first involved the creation of an interface between the commission software and mySAP All-in-One. The second centred on enhancing the flexibility of the solution to accommodate Virgin Cosmetics need to continuously refresh product promotions and specials.

With only six users at the moment and a focus on basic functionality, such as stock control, financials, stock planning and warehouse management, Van Zyl believes that the company has only touched the surface of the functionality it will eventually bring on stream.