Case studies
Demand & Inventory Planning

How O2 Leveraged Flexible Fulfillment to Grow Their Business in a Volatile Market

Demand & Inventory Planning
September 21, 2020
7 min read
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O2 was founded in 2014 by CrossFit trainer Dave Colina and Dr. Dan Kim, who were both committed to bringing a healthy and effective recovery drink to the market that omitted the extra sugar and artificial flavoring found in most recovery drinks. After discovering some research that touted the profound effects of ingested oxygen on the liver’s ability to process toxins, they created a unique formula of electrolytes, natural caffeine, and added oxygen that they were confident would help athletes recover faster and work out harder the next time they hit the gym. 

Revolutionizing Recovery

Dave Colina’s deep ties to the CrossFit community led them to launch their sales in independently-owned gyms, a unique approach to a traditional B2B sales channel. They found that word of mouth and the implied endorsement of gyms who stocked their products drove sales and customer loyalty. With time, they began stocking O2 on grocery store shelves and launched a Shopify-enabled eCommerce store, but their gym sales still accounted for around half of their overall revenue.

Prioritizing Flexible Fulfillment

As O2 grew, they sought out a flexible fulfillment partner that could fulfill orders to all three of their sales channels with ease — from large retailers, to independently-owned gyms, to individual residential orders. When they connected with Ware2Go, they found that they were met with refreshing enthusiasm for their product and genuine interest in their long-term growth. Ware2Go’s seamless integration with their existing Shopify store, unmatched service levels, and ability to fulfill across all of their platforms made them the perfect partner for outsourced fulfillment.

One unique problem O2 faced in their gym partnerships was in keeping inventory on the shelves. Since retail sales are not typically a gym owner’s first priority, O2 would usually be completely sold out by the time a re-stock order was placed. Without a fully responsive fulfillment system in place, the product would often spend several days in transit while shelves sat empty and consequently, sales at that gym were stagnant. By partnering with Ware2Go, O2 was able to fulfill replenishment orders to their gym partners within 1-2 days, cutting down on the time that the shelves sat empty and driving further sales through their strongest channel.

truck with shipping container driving to a gym
Ware2Go’s 2-day delivery network got cans of O2 back on the shelves faster and kept gyms stocked up.

Then Everything Changed.

When the COVID-19 pandemic hit the United States, retail was thrown into a tailspin. Many traditional brick and mortar sales channels were shut down, and digital retailers struggled to keep up with an unprecedented spike in demand. O2 was faced with a particularly unique challenge, as their grocery store and eCommerce sales channels were still functioning, but their largest sales channel was shut down indefinitely. They needed to act fast to replace the sales lost due to gym closures, and they would soon find that the flexibility they found in their partnership with Ware2Go would be an even more valuable asset than they first realized as they shifted their entire go to market strategy.

Dave Colina saw that O2 wasn’t the only business hurting. The independently-owned gyms that had for so long been the backbone of his business were struggling even more, as their primary source of revenue, membership dues, suddenly came to a halt. Colina made a bold decision, and as his own business struggled to find new ways to drive revenue, he decided to give away 50% of his profits to 2,600 independently owned gyms for 6 weeks in what he called the “50/50 Initiative”. The campaign was announced to gym members in March, and shoppers rushed to place orders in support of their local gym. In the end, O2 joined forces with 5 other brands and raised $230,000 for gym owners. 

However, at the end of the 6 weeks, it became clear that the COVID-19 crisis was far from over, and as time wore on, many gym members struggled to justify the cost of their gym memberships and began slowly dropping from the rosters. At this realization, O2 stepped up to the plate again by initiating the “Stay for May” campaign, which incentivized gym-goers to keep their membership active for the month of May in exchange for a $100 combined gift card for O2 and 3 other brands. Thousands of people responded to the campaign, and many gym owners reported that the combined efforts of the 2 campaigns kept them afloat through the shut-downs.

While forfeiting a percentage of their sales revenue in an already volatile market was a risky endeavor for O2,  the company had a great deal to gain from the initiatives as well. They not only further solidified relationships with their gym partners, they gained the respect of gym members who saw that O2 valued community over its own bottom line. Consequently, customers were also introduced to a brand new way to purchase O2. Between the 50/50 Initiative and Stay for May gift card offer, shoppers flocked to O2’s Shopify store in droves, driving up their ecommerce order volume ten fold. As O2 pivoted their sales strategy, their large shipments to gym partners had suddenly become thousands of small parcel orders that needed to be delivered directly to customers’ front doors. And they had to wow these customers on fulfillment, knowing that shoppers who made a first-time purchase in support of their gym could become lifetime O2 drinkers if they were met with an excellent customer experience equal to the product experience.

truck with boxes inside
O2’s usual retail pallet shipments were broken up into thousands of small parcel residential shipments, requiring flexibility in their supply chain.

Flexibility to Weather Uncertainty

O2 found a creative solution in a time of uncertainty, and with their largest sales channel completely shut down, it was imperative to implement that solution quickly. Founder Dave Colina stepped out on a limb and provided support to his most valued partners and in turn built brand equity in the eyes of his customers. Knowing that they had a flexible fulfillment partner in place, O2 was able to turn their entire sales strategy on a dime. Ware2Go stepped up to the challenge of pivoting their entire fulfillment operations, fulfilling 98% of their new direct to consumer orders on-time with 99.5% of customers within a 1-2 day delivery footprint. This excellent end to end experience acquired the company more new customers in the month of April than in the entire year of 2019 and grew their business overall by 5 times. As O2 looks ahead at the still-uncertain future they have the confidence that no matter what changes may come, their team has the flexibility to pivot in support of any new venture.

Key Metrics:

99% nationwide 1-2 day delivery footprint
10x order volume with 98% on-time fulfillment

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