Summer 2008

Spark Response has been steadily building up a strong business in nationwide multi-channel fulfilment and contact centre operation. Peter Rowlands went to see what makes it tick

Back in 2001, when B&Q was setting up its now-classic online business, DIY.com, Spark Response was there to take on its nationwide fulfilment operation. And when the organisation then known as Powergen was contracting out its sales and acquisition operation in the late 1990s, Spark was there, too.

Such developments, apart from summing up Spark's two main activities, serve as useful reminders that despite the current excitement about home shopping and all that goes with it, actually the direct selling market has been developing and evolving for many years. And some of the third-party contractors in it, whilst right up to the minute in what they offer today, have been fine-tuning their capabilities throughout that time.

'What we do now is a natural evolution from our past,' says Peter Slee, the present managing director, who joined the company as operations director in 2003. He points out that the focus of the predecessor company, Mailcom, was direct mail and brochure fulfilment. 'It was a logical development for us to move on into product fulfilment,' he says.

 

Spark is based in the outskirts of Gateshead, in a modern development called Follingsby Park, three miles east of the A1 and just off the A194 if you're travelling in the direction of South Shields and Sunderland. It's a high-tech setting for a company working in a contemporary market sector such as fulfilment, and Spark was the first occupant.

'Customers certainly seem to be impressed with the environment when they come to see us,' Slee says.

The site is not the only attraction of Spark's North East setting. Newcastle is said to be Britain's third-most popular location for weekend breaks, and the repute of this animated city, with its abundant shopping facilities and its vibrant night life, is enough to attract many a business visitor from the south. 'We do find clients enjoy coming on visits,' Slee says.

This appeal goes a long way to dispelling one possible reservation clients might have about choosing Spark for their fulfilment: the distance from Britain's other population centres.

'Our location is simply not an issue,' Slee says. He points out that more than half a dozen major national carriers have large depots within five miles of the company's premises. 'It doesn't make any difference whether product goes into their system from here or anywhere else.'

He accepts that past cost differentials favouring the North East as a business base have gradually been chipped away. 'We're neutral in cost terms.'

However, he says the only instance he can think of where location could be an issue is when importers are bringing containerised product in from locations such as the Far East. 'I suppose some might baulk at the extra cost of transporting goods up here from the south coast ports.' But he has a possible solution to that: bring the goods into the country via the Port of Tyne at South Shields, just over five miles from Spark, instead.

Already the Port of Tyne is primed to play another role in Spark's steady growth. The organisation has a large amount of high-bay warehousing in its portfolio, and this offers scope for invaluable extra capacity for Spark during peak periods. 'We can, and have always, racked up for peak consumer demand,' says Peter Slee. 'However, the more cost-effective short-term solution, as we continue to grow, is to look for high-quality backup capacity, and theirs is ideal.'

The final fact that underlines Spark's ability to offer a nationwide service from the North East is that virtually all its existing clients are in fact national names. Its client base includes Toys *R' Us, for which it runs a dedicated fulfilment operation, DeAgostini and Straight plc.

'We've actually been looking for clients in the North East to balance our national focus,' Peter Slee says. A major new win with a local business is about to be announced – 'but we picked it up on our merits, not because of our local credentials,' he emphasises.

In terms of the size of customer that Spark can handle, it is surprisingly flexible. Whilst the company works for some big national names, it is also ready to offer its services to relatively modest direct sales companies. 'We're particularly interested in small to medium-sized businesses,' Slee says.

He explains: 'Companies growing in this market sometimes tend to go through a cycle. They find fulfilment too much for them, contract it out, then later take it in-house again.' This was in effect the story of the B&Q fulfilment operation, which was taken back in-house in 2006.

'We try to identify customers who think strategically, and want to continue to outsource as they grow.' He adds: 'We've seen some of our clients start from scratch and steadily build their sales up to maybe 30,000 orders a year. The main prerequisite is that we expect companies to be fully up and running by the time we get involved.'

A classic example of a company that has expanded dramatically since its involvement with Spark is gro-group, which specialises in baby products. It has used Spark since 2002, and emerged during that time as a leading player in its field. Another customer that is growing with Spark is Baby Curls, similarly specialising in mother and baby goods.

'One client was promoting its range purely through Google Adwords when we first took on its fulfilment,' Slee says.

Another recent client win is Gold Canyon UK, a company supplying scented candles via planned home parties. This has grown month on month since its September launch, and could turn out to be a substantial operation. Gold Canyon turns over $100 million in its native USA. And a notable current success story is FitFlop (News Update, page 10).

Spark's activities are by no means limited to business-to-consumer operations alone; it can also manage storage and despatch to business recipients. An example of a customer for which it does both B2B and B2C fulfilment is Straight plc, which is believed to be Europe's biggest supplier of recycling containers.

Until last year Straight was distributing via another third-party supplier from its own base in Leeds, but the size of the operation was making it difficult to manage effectively. The acquisition in 2005 of Blackwall, a maker of home composters and water butts, had added further complexity to the work.

Taking on this business prompted Spark to re-plan the layout of its main warehouse building. The contact centre operation, formerly housed in a dedicated area within the main warehouse, was moved upstairs to a brighter environment, freeing up 22,000 sq ft of space in the warehouse for new racking and handling. 'Finding flexible solutions is what we're all about,' Peter Slee comments.

The Straight operation is now fully under way, and includes both individual deliveries to consumers and palletised consignments bound for local authorities or commercial customers.

Where next for Spark? Further measured growth is the plan, and Peter Slee reckons that as the home shopping market continues to expand at a massive rate, Spark is ideally placed to be part of it.

One thing Slee, a North Easterner himself, is clear about: attracting national customers doesn't have to mean setting down a footprint in some other part of the country. 'If you're asking me whether it's possible to grow and develop from a single location,' he says, 'the answer is definitely yes.'

If you want any further evidence, go and have a look for yourself. You'll enjoy

the trip, and find it hard not to come away impressed.

BOX: Long history in fulfilment

Spark Response has a long history in the fulfilment market. Back in the 1980s it was part of the Mailcom business, specialising in direct mail and brochure fulfilment. By the late 1990s it had evolved into a more rounded fulfilment business, and gained the name Spark Response.

For a while it was part of the international Primedia group, which brought together a wide range of UK companies involved in business services, database management and the media. Then the group was broken up, and Spark became a fully independent company, controlled by chairman Barry Stiefel.

Spark's previous base was in Washington New Town, a few miles down the road from its present location. It moved to the showcase development at Follingsby Park in 1996, becoming the first occupant there, and has since taken on additional capacity within the estate. 'And there's room for further expansion here if we need it,' managing director Peter Slee points out.

BOX: Contact centre synergies

Spark Response's contact centre operation is run in parallel with its fulfilment business. Some customers make use of both resources; others just use one or the other. 'It's definitely a benefit to have both the businesses on the same site,' says MD Peter Slee. 'There are occasions when a call centre advisor can actually go down to the warehouse to check details of a product for a customer query, rather than spend time trying to get information from manufacturers, which can be difficult.'

There are two sides to the contact centre business – outbound and inbound. Slip into the outbound office, which employs about 50 people, and you'll find the animated buzz that seems a characteristic of flourishing operations of this kind. Customers typically include both online retailers and businesses in the utility sector – among them E.ON, the successor to Powergen.

The slightly smaller inbound contact centre office, which is run separately from the outbound, provides scope for handling enquiries from both fulfilment business customers and clients using the contact facilities alone.

Although not far from Sunderland, which is home to some of the country's biggest contact centre operations, Spark is far enough way to avoid competing with them for its workforce. 'Our location seems ideal from the point of view of staff retention,' says Colin Bongartz, head of contact centre operations.

'It's convenient for people, there's free car parking and a subsidised canteen, and there's not too much competition in the locality.' To improve access further, the company co-sponsors a bus service run by Go North East connecting the park with the nearby Metro station at Heworth.