THG is a global ecommerce technology group and brand owner, powered by its proprietary technology platform, THG Ingenuity. The platform provides end-to-end ecommerce solutions for THG’s own Beauty and Nutrition brands, as well as powering digital experience and retail operations for a growing range of third–party FMCG, beauty and retail brands globally.
NDA recently spoke with Tom Killeen, Chief Operating Officer at THG Ingenuity about his own career journey in the world of ecommerce and the evolution of THG Ingenuity as a platform for international growth…
Tell me about your role and how your career to date has led you here.
Before I joined THG eleven years ago, my background was in sport and fitness, working mainly with gyms and spas around Europe. When THG acquired a sports nutrition brand, my contacts in that world were valuable, so I came onboard to support offline sales. Over time, those sales moved online and suddenly I was working in the world of ecommerce, obsessing over conversion funnels, localised payment and courier capability, and everything involved in improving the customer experience and innovating a huge new product portfolio, specifically creating bespoke new product development into multiple countries around the world – a huge point of differentiation versus our competitors.
Before I knew it, I was managing 120 people in the trading and ecommerce function for our Nutrition division, which had a team of 17 when I originally joined, most of whom are still with the business today. The division now employs more than 400 people globally and comprises a range of digital-first health and wellness brands, including the world’s largest online sports nutrition brand Myprotein.
As the business continued to expand into international markets, it became clear that, from an operational point of view, we needed to get geographically closer to the customer. Our revenues were climbing substantially, but our EBITDA was shrinking because it simply cost more to deliver to Germany or to Japan from the UK.
That led me down the path to where I sit within THG today. My role is varied for sure – we are brand builders, brand owners and now a technology platform that offers all the services we have built over the last 20 years, to third-party brands. Major customers like Coca Cola, P&G, Holland and Barrett and Unilever are working with us to support their internationalisation, because we’ve already experienced all the growing pains a business can go through and can share our learnings, to shortcut the route to becoming world class at a fraction of the cost and time.
My day job now is building, managing and selling global operations, using data to spot any potential issues on a daily basis. Having foresight on future developments enables us to continually deliver great service to the end customer.
What are the most common challenges brands face in relation to international ecommerce?
It depends entirely on where a brand is on its own journey with Ecommerce.
For example, we recently started working with Holland & Barrett, a fantastic UK business with 150 years of trading history. Despite their huge success domestically, they’re yet to go through the process of internationalisation to the scale THG has done across its brands. They chose Ingenuity for a few reasons, one being that they wanted the best possible fulfilment and courier management solution available for D2C in the UK. In addition, we provide the support and guidance to accelerate entry into the international markets of their choice, leveraging our technology and creative marketing capabilities.
Say, for example, you want to sell your product in Germany. We can translate your assets, both from a regulatory and content perspective with the right tone of voice, build your website, plug into localised payment methods, ensure everything adheres to local standards and regulations, and enable the entire process end-to-end with minimal integrations and cost.
Are there any current trends worth paying attention to?
In terms of back-end operations, everything is trending towards automation and sustainability. In the UK alone, labour inflation has gone up by 28% in the past three years. If you don’t pivot with your internal processes, that sort of increase in costs can commercially crush the business and leave you needing to change your operating model upstream to pay for it.
Over the past four or five years, we’ve reduced our distribution costs as a percentage of sales by about 4% to 5%, and that’s probably saved us around £70 million to £100 million a year, which we’ve reinvested into the business.
The backend operations of any ecommerce business are crucial to success but are often undervalued by brand marketers. As a platform, we’re obsessed with leveraging the speed and flexibility of ecommerce for our brands. For example, we set up very specific flash sales in Asia for a few of our brands, where we went from trading 2000 orders a day to 60,000 in a single day. That’s a difficult thing for a brand to pull off without the right support.
We specialise in Nutrition and Beauty brands, because they are always in demand and we see high levels of repeat purchase. We have a lot of expertise in that space as a business. We’re focused on partnering with FMCG clients where repeat purchase rates are high – we’re not that interested in becoming a fulfilment provider for very large two-man goods. We know our slipstream and our forward-looking investments favour this.
What are your immediate goals for THG Ingenuity?
30% of our revenue at the moment comes from the US, but there is so much more room for growth there. Likewise, other geographies where we’re targeting growth include India, the Middle East, South Africa, South America and Canada.
Our THG Ingenuity proposition consists of three main parts: technology, marketing and operations. We believe that currently the operational part can spearhead all three, because it’s something we do exceptionally well and has a very low barrier to entry. It’s often the case that brands work with us around fulfilment in the first instance – leveraging THG Fulfil, our world-class fulfilment solution designed to improve customer retention – then learn about other services: THG Studios, our in-house creative agency and THG Commerce, our high-performing D2C platform services. Likewise, we have our own infrastructure and software, and our platform often outperforms brands’ own D2C offering.
The THG Ingenuity platform is 20 years in the making so it has literally decades of ecommerce expertise built-in.
